Torstar and Warren Buffett's newspaper forecast Many of you might have seen Warren Buffett’s recent forecasting the end of newspapers and that most will be “toast” because of declining ad revenues.
https://business.financialpost.com/investing/warren-buffetts-outlook-for-the-newspaper-industry-is-pretty-bleak
An investor in Torstar might be spooked by a prognostication from someone with Buffett’s stature in the world of investing. He is still buying newspaper companies at reasonable prices, so he has not entirely given up on the industry. They are cutting costs and doing the best they can to adjust to the new realities in the newspaper world. Not a terribly radical strategy and one that all are following with varying degrees of success.
I was asked recently in light of Buffett’s warning what is going to happen to investments in Torstar shares in the coming years. My response was as follows:
1. The Voting Trust, even in their addled state, will come to realize they are incapable of being competent stewards of Torstar and the Toronto Star. They are all getting older, albeit not much wiser, and they will develop an exit strategy that preserves some cash and dignity on their way out the door.
2. The liquidated value of Torstar, assuming they don’t completely destroy everything they touch I would estimate using 80 million shares to be at least $6.20 broken down as follows: i) VertigoScope $2.50; ii) Toronto Star and other regional dailies $1; iii) Metroland community newspapers $1; iv) All other investments including Blue Ant, CP, Black Press, etc. $1; v) Cash $.70.
I do not lose sleep over my investment in Torstar. The dividend rolls in every quarter and the backstop is in the event of no dividends the Voting Trust eventually loses control. I don’t think it will come to that, but they are an unfortunate combination of stubborn and stupid. That can end badly for all, but when Boynton proves out to be another charlatan the Voting Trust will hit the exit button.