Warren Buffett’s Berkshire Hathaway currently owns 28 percent of the Graham Holding Co., aka what’s left of the Washington Post Co. after it sells the Washington Post to Jeff Bezos. It’s also the parent company of Slate.
That is a very large stake. So large as to be a bit weird. And based on regulatory filings from GHC it may end soon. Berkshire Hathaway is a classic conglomerate business. It’s a bunch of firms that Buffett and his team bought over the years because he thought they were underpriced relative to fundamentals-based value analysis. The companies operate independently and don’t have much to do with each other. And while GHC was once clearly a newspaper company that Buffett wanted to make a large investment in and then became a newspaper company with some investments in adjacent industries, it’s now really a Buffett-inspired conglomerate. It owns Kaplan, it owns Cable One (a midsize regional cable and Internet provider), it owns a half-dozen local television stations, it owns Celtic hospices, it owns a manufacturer of industrial combustion and control systems called Forney, it owns Slate, it owns Foreign Policy, and it owns Trove. Basically it owns a bunch of businesses that the management team thought were underpriced based on fundamentals-based value analysis.
There’s no particular reason for one large conglomerate inspired by that philosophy to own 28 percent of a smaller conglomerate inspired by the same philosophy. Either Berkshire should buy the whole thing, or else it should look to untangle the relationship.
The regulatory filings point to one potential path to untangling. They suggest a scenario in which instead of Berkshire owning 28 percent of GHC, Berkshire would own 100% of one of GHC’s component companies and 0% of the rest. So maybe Buffett would take the television stations, for example. The math could be evened out by the fact that GHC also owns a bunch of Berkshire Hathaway stock via a pension fund for legacy employees of the Washington Post.