By early 1978, with encouragement from Susie, Astrid Menks was coming to Farnam Street from time to time, cooking and caretaking. Susie was calling Astrid to cheer her on, saying, “Thank you so much for taking care of him.” Gradually, however, the relationship with Menks became something more.
At first, he and Astrid spent time at her tiny place down in the old warehouse district. In May she moved in with him. By the time Peter came home from Stanford that summer, she was growing tomatoes in the yard on Farnam Street and searching for Pepsi at thirty cents off a gallon. After so many months, “I never gave it a thought,” Astrid says. “It just happened naturally.”1
Meeting Astrid, Buffett’s friends were taken aback at the match. She was sixteen years younger, a blue-collar girl. Nonetheless, she knew everything that Buffett didn’t about haute cuisine and fine wines, shellfish forks and chef’s knives. In contrast to Susie’s spending habits and preference for all things modern, Astrid haunted junk shops looking for bargain antiques. So parsimonious was Astrid that she made Buffett look like a wastrel. Her interests—cooking, gardening—were narrow compared to Susie’s constantly expanding and evolving tastes. Although modest, Astrid had a blunt-spoken, provocative wit that bore no resemblance to Susie’s sly sense of humor; Astrid’s down-to-earth manner was as unlike Kay Graham’s patrician refinement as could possibly be.
Their differences magnified Susie’s shock. This wasn’t what she had had in mind when she stressed to her husband that they both had needs. To her it seemed impossible that Warren could need a relationship with anyone else. But it might have been predicted. Warren had searched his whole life for the perfect Daisy Mae, and whatever he wanted, Astrid did: buy the Pepsi, do the laundry, take care of the house, give him head rubs, cook the meals, answer the telephone, and provide all the companionship he needed. Astrid never told him what to do and asked for nothing in return except to be with him. Susie had fled Omaha partly to escape this endless well of neediness. As she adjusted to the shock, she came to accept the relationship, which did make her new life easier. But she was possessive by nature. No matter how she divided her own attention, she did not want Warren to divide his. And thus it was Susie’s expectations—not Warren’s—that came to define all of their roles.
The pieces of Buffett’s life began to come back together into some sort of coherent whole. But he had been shocked into realizing the truth of Susie’s insistence that sitting in a room making money was no way to spend a life; he began to see what he had missed. While he was friendly enough with his kids, he hadn’t really gotten to know them. The reality behind the jokes (“Who is that? That’s your son.”2) meant that he would spend the next few decades trying to repair these relationships. Much of the damage could not be undone. At age forty-seven, he was just beginning to take stock of his losses.3
Warren, who placed a high value on honesty, was perfectly open about living with Astrid. Everybody knew (except Doc Thompson). Both Susie and Astrid remained closemouthed, saying merely that they liked each other. Warren made only one public statement: “If you knew the people involved, you’d see that it suited all of us quite well.” That was true, as far as it went. Oddly, the situation resembled the life of Warren’s idol, Ben Graham.
In the mid-1960s, Graham had proposed a novel arrangement to his wife, Estey, in which he would live half the year with his deceased son Newton’s former girlfriend, Marie Louise Amingues, or Malou—ML, as she was called by the family—and half with Estey. But Estey had her limits, and had reached them. Ever since she said no, the Grahams had been separated but they never divorced. Ben felt perfectly friendly toward Estey, and ML was content to live without marriage.4
Buffett was not trying to emulate Graham; he did not want two wives. At first it was a real strain for him to explain the relationships. Much later he would describe it this way: “Susie put me together, and Astrid keeps me together. They both need to give, and I’m a great receiver, so it works for them.”5 Explanations like this and statements that the arrangement suited all of them glided past the fundamental inequality of all love triangles.
The imbalance of this particular triangle was multiplied because in fact it involved two triangles—but only one of them knew that. In a state of ignorance, Warren thought of Susie as the one who had been wronged. He tried to square things by placating her in private and showering her with lavish attentiveness in public, which left Astrid exposed and vulnerable. In a similar state of ignorance, Astrid—who practically worshipped Susie—accepted that Warren would never marry her, ceded Susie the turf of all social and business events outside Omaha, and unhappily tolerated being called Buffett’s housekeeper and mistress so that his marriage to Susie would appear as intact as possible. Buffett would come to rationalize this: “Astrid knows where she fits with me. She knows she’s needed. That’s not a bad place to be.” And her role, however narrowly defined, did give Astrid a security that she had always lacked.
It had taken a literal change in geography for Susie to maintain her aura of the selfless Mrs. Warren Buffett while simultaneously seeking fulfillment in a life completely outside that role. Yet it was Warren who looked as though he were getting the best of it, even though the new relationship didn’t compensate for his loss. He couldn’t defend himself against the impression that he had driven his wife to move out through his relationship with Katharine Graham or—when people got the time line wrong—his relationship with Astrid.
He wanted desperately to hold the remaining pieces together, and would try for the rest of Susie’s life to make up for what he had done. But of course that didn’t mean he would stop seeing Kay. Buffett invited Graham to Omaha to visit the Strategic Air Command, probably as a pretext to introduce her to Astrid. On meeting an attractive woman like Astrid, Buffett says, “Kay’s first thought would be how to get her out of the room.”
Buffett took them to dinner with Stan Lipsey at the Omaha Club. Kay carried on a spirited conversation with Warren; her friend Meg Greenfield, editorial page editor of the Post, who had come along, and Stan occasionally joined in. The conversation left Astrid, who was not the type to put herself forward, entirely on her own. Except for ordering, she sat in silence for the entire meal. Buffett did nothing to help. A couple of dozen people at a huge table nearby carried on with a raucous birthday celebration, then started doing the Chicken Dance. Ever Miss Proper, Graham sat staring with a “priceless” look on her face.6 From then on, Buffett almost always saw Graham outside of Omaha. When she called the house and Astrid answered the phone, Kay had nothing to say.7 She handled the situation mostly by acting as if she believed that Astrid didn’t exist.
Susie and Astrid were on a wholly different footing; Astrid even went to San Francisco to visit Susie. Susie was grateful to Astrid for making her life easier, as long as Astrid accepted the limited public role that Susie had defined for her. Moving to San Francisco had been difficult enough because she had had to leave behind so many friends and causes she cared about. Her departure had left shock waves in its wake. Local civic organizations regrouped, but felt a huge hole had been ripped from their center. Her friends and her hangers-on had coped in varying ways. A few felt abandoned, others simply missed her. Some began going back and forth to San Francisco, considering it a sort of second home. A couple of them even followed her to San Francisco and relocated there.8
To many of the Buffetts’ friends, the explanation that Susie needed to live in San Francisco because it offered her a richer palette that she couldn’t find in Omaha conveyed a vague impression of time spent visiting art galleries, jazz clubs, and the symphony. But by the late 1970s, San Francisco was not the Paris of America. A wave of returning war veterans had washed up on the Bay Area’s shores, many of them injured physically, mentally, and spiritually. Those still drawn to San Francisco for its hedonism stepped through a growing mass of homeless on the streets. The gays had burst from the closet earlier in the decade, making San Francisco the de facto capital for an era of gay-bashing.
Among the first of Susie’s new friends were a gay couple. She added others—musicians, artists, people she met in stores, at church, while getting her nails done, at the theater. She soon had a large circle, many if not most of whom were gay men. The rebel in Susie blossomed and the former hostess of charity luncheons now threw parties that felt like being backstage at a rock concert. But, true to form, she also took up a cause, once again defying convention. As she worked the soup kitchen lines, she became the accepting mother that many of her gay friends had never had.
The part of her life that Warren still controlled was the money. She had plenty of Berkshire stock, but under the deal they had worked out, she wasn’t to sell a share. She fell in love with a Marc Chagall painting and wanted to buy it for her tiny new apartment. But she told a friend that she couldn’t do it. “It would ruin everything,” she said. Warren was equally clear: “I don’t want you selling Berkshire shares.” He still covered all her expenses. Gladys monitored her spending and paid all her bills.
Similarly, it was Warren whom Susie got to lend her friend Charles Washington $24,900. He was an Omaha activist whom she had championed through thick and thin. Buffett thought the loan was a terrible idea, and probably wouldn’t have agreed to it were he not now so eager to please his wife. Sure enough, seven months later, Washington missed a couple of payments. Rarely did anything pierce Buffett’s pleasant demeanor, but if he felt someone was trying to cheat him out of money, his eyes would flash pain and rage and revenge all at once. Within seconds, the emotion would subside while he considered a businesslike response. This time, he promptly filed suit against Washington and won a judgment of $24,450.
The Washington episode symbolized the reality of Warren and Susie’s new relationship; if Susie was to keep all her stock, his grip on the checkbook had to loosen. Warren gave her an allowance, besides covering all her bills: This was her giveaway budget. When the children had needs, she took care of expenses that Warren wouldn’t. Howie had sold some of his Berkshire stock to build a tree house for him and Marcia to live in. They were struggling with their finances as well as their marriage. “It’s just terrible that Warren won’t pay for it,” Susie grumbled. “He was going to let the ceiling fall in. He was going to let them lose the house.” But this was part of their game: Warren knew that Susie would take care of it for them, as she had taken care of Little Sooz when she was unhappy in her marriage, as she always took care of everything.
Everything, that is, except the money. Making that was Warren’s job, and all these changes and complexities and mounting bills had come at a time when the family fortunes were declining. Just as Susie was leaving for San Francisco, Warren had been dragged into court in Buffalo, New York, for a costly battle between two newspapers. Normally he was competitive enough to roll up his sleeves and relish something like this. But now, since he was facing a personal crisis, it became an absorbing episode that helped shut out the rest and blunted the pain. The Buffalo Evening News drama would be a protracted battle, one that would threaten Blue Chip’s value and rank among the most unpleasant of his career. It bore a vivid resemblance to the conflict he had faced in Beatrice many years before, one he had sworn to himself never to repeat.
In the spring of 1977, he and Munger had finally bought the daily newspaper for which they had been searching these many years. At $35.5 million this was their biggest purchase ever.9 Rusting, icebound Buffalo wasn’t the growing one-newspaper town of their dreams, but it was still a good place to own a newspaper. Buffalo’s citizens left for their factory jobs before dawn and read the paper in the evenings. The Buffalo Evening News dominated its nearest competitor, the Courier-Express, which was weak financially. Buffett had developed a well-founded theory of competition in the newspaper industry.
“Kay was always saying how competition made them better and all that stuff. I said, ‘Lookit. The economics in the business is inevitably leading to one newspaper in a town. Survival of the fattest is what I call it. And you win. There is no second place. There’s no red ribbon. In the end, there isn’t going to be any competition because that isn’t the way it works.’ ”
The Courier-Express’s staff and publisher had also figured out that there was no red ribbon in newspapers. By 1977, the number of cities in the United States that had two major newspapers was down to not quite fifty, from seven hundred in 1920. On weekdays, the Evening News sold twice as many papers as the Courier-Express. The Courier-Express clung to survival through having the only Sunday paper in town.
The Evening News had been offered to the Washington Post, which had turned it down. Kay Graham could not stomach another paper with a strong labor union. Buffett was not afraid of that. He and Munger told the unions that if they went on an extended strike, the paper would fold. The unions seemed to understand.
Buffett and Munger’s empire now had assets of over half a billion dollars,10 and controlled more than half of Berkshire Hathaway and sixty-five percent of Blue Chip. These two companies owned National Indemnity, the Rockford Bank, See’s, Wesco, ten percent of the Washington Post, a quarter of Pinkerton’s detective agency, fifteen percent of GEICO, and a bushel of other stocks—and finally the daily city newspaper he had sought for so long.11
Murray Light, the managing editor of the Evening News, quickly discussed a plan with Buffett to start a weekend edition, a plan that the imperious former owner, the aristocratic heiress Kate Robinson Butler, had never liked. The late Mrs. Butler, a diminutive tyrant with bouffant white hair, had growled at her employees, pounded her fist on the leather surface of her imported French desk, and seen no need to change with the times.12
The News’s publisher, Henry Urban, had gotten on well with Mrs. Butler, a large part of his job being to calm her on the many occasions when she took issue with the paper’s editorials. Mrs. Butler’s focus was not on profits, and neither was Urban’s. The News was paying ten percent more for newsprint than other papers just across the bridge in Canada paid. Buffett immediately negotiated $1.2 million savings in shipping costs.
But lower shipping costs alone would not cure the Evening News’s blues. Buffalo’s newspapers existed in an odd sort of equilibrium. One controlled weekdays, another weekends.13 Buffett and Munger agreed with Murray Light that the News had no choice but to extend its weekday advantage by expanding.14 “We had to do what we did if we were going to compete effectively,” says Munger. “One side or the other was going to win.”
Two weeks before the Evening News launched its new Sunday edition, the Courier-Express filed suit on grounds of antitrust, saying the News’s plan to give away free papers on Sunday for five weeks, then to sell at a discount, amounted to an illegal monopoly that was trying to run it out of business.15 The Courier-Express’s lawyer, Frederick Furth, hit upon an ingenious strategy to spin Buffett’s views about no red ribbons into a story about monopolists from out of town.
The Courier-Express launched an all-out public-relations war, portraying itself as a tiny neighborhood David fighting ruthless Goliaths from out of state. This message found eager ears in Buffalo, where jobs fell like rust flakes from the once-proud city’s oxidizing employment rolls.
No sooner had Buffett been released from the hell of the Wesco investigation than he found himself embroiled in another bitter legal fight, one that would require his presence in the frigid, unfriendly locale of Buffalo, New York.
The News began to drain Blue Chip’s coffers. Buffett’s lawyer on this case, Ron Olson,16 filed an affidavit that spoke of his client’s love of newspapers beginning with his inky-fingered childhood, and his role in the Sun’s Pulitzer Prize. Fortune favored the Courier-Express in the assignment of federal judge Charles Brieant of the Southern District of New York. The Courier-Express’s lawyer, Furth, accused Buffett of having discussed whether the News would put the Courier-Express out of business, which Buffett denied. Furth approached the witness stand waving a copy of a recent, glowing Wall Street Journal profile of Buffett. His growing fame was about to be used against him as a weapon for the first time.17 Buffett had told the reporter how glad he was to be out of money management, his ego no longer on the line. But, in fact, with his newly heightened profile, his ego was now more on the line than ever before. In this story, his friend Sandy Gottesman had been quoted by the reporter as saying, “Warren likens owning a monopoly or market-dominant newspaper to owning an unregulated toll bridge. You have relative freedom to increase rates when and as much as you want.”18
Had he said this? Furth demanded in court.
No, well, Buffett responded, “whether it is like a toll bridge I don’t remember, but it is a great business. It may be better than a toll bridge in Fremont, Nebraska. I know a lot of honest people, but when they start giving quotes they don’t necessarily get them—”
Furth bore down. Did he believe it or not?
“I won’t quarrel with that characterization.… I would like to own one.… I have said in an inflationary world that a toll bridge would be a great thing to own if it was unregulated.”
“Why?” asked Furth.
Buffett looked at the judge, to whom he was trying to teach economics. “Because you have laid out the capital costs. You build the bridge in old dollars, and when there is inflation, you don’t have to keep replacing it—a bridge you build only once.”
“And you used the term ‘unregulated’ so that you can raise prices; is that right?”
“That is true.”19
Buffett now hung twisting in a net of his own weaving. A toll bridge, the Douglas Street Bridge over the Missouri River, was, in fact, a prominent feature of his youth.20 During Buffett’s childhood, Omaha had been torn for more than a decade over how to liberate the only route to Iowa from the toll-taker’s grasp. He and Munger later tried to buy the Detroit International Bridge Company, which owned the bridge that connected Detroit and Windsor, Ontario, but wound up with only twenty-four percent of the company.21
“It was one hell of a bridge. A thousand square feet, and it made more money … I was terribly disappointed when we didn’t get it. Charlie kept telling me how well off we were that we didn’t get it. Because, he said, what could be worse for your image than a guy who raised the prices on a toll bridge?”
Indeed.
“The judge didn’t like me. For one reason or another, he just didn’t like me. He didn’t like our lawyers either. Most people like Ron Olson, but the judge did not like Ron.”
Judge Brieant’s ruling on a preliminary injunction, which was issued in November 1977, said that the Evening News was perfectly within its rights to start a Sunday paper and it was in the public interest that it should do so. But Brieant, apparently taken with Furth’s exploitation of the toll-bridge theme, took off with it on a flight to the land of metaphor, lamenting that the “readers and advertisers of Greater Buffalo [might] conclude that they can get along with only one newspaper as their unregulated toll bridge to the events of the outside world.”22 He deemed the News’s plan predatory and hamstrung its ability to promote the new edition. The Courier-Express fired a prepared publishing barrage crowing about its victory over an out-of-town bully that was trying to drive a small-fry local business into the ground. The Evening News could say nothing in response.
“Now we were going to lose or win, and we had a judge who didn’t like us, and we were operating with our hands tied and under threat of contempt.”
Five weeks later, advertisers had rallied behind the Courier-Express, and the new Sunday edition of the News could boast of only a quarter of the Courier-Express’s ad lineage.23 The Evening News swung from a modest profit to a whopping $1.4 million loss.24 Buffett was chilled by the news. No business he had ever owned had lost so much money so fast.
On a miserable, rain-driven day the week before Christmas 1977, Judge Brieant called the court into session for the beginning of a trial that would determine the terms of a final injunction. Buffett had spent the latter part of the fall sleepless and in tears, trying to digest what it meant that Susie was gone and yet not really leaving him. His idea of a distraction from his personal woes had been to cling like a junebug to Carol Loomis, Astrid, and Kay Graham in turn as he flew back and forth between New York, Omaha, and Washington. Certainly he had not wanted a distraction like this. The trial went into recess as he flew to Emerald Bay for the annual holiday family gathering, the first under the new arrangement with Susie, during which she would continue to reassure him that their lives would go on much as before. As soon as the Buffetts’ New Year’s Day party was over, Warren and Susie went their separate ways, Judge Brieant reconvened the litigants, and Olson and Munger began calling Buffett with updates on the trial as he returned to work in Omaha.
Judge Brieant’s final opinion, issued in July 1978, a masterpiece of judicial unrestraint carrying the subtitle “Mr. Buffett Comes to Buffalo,” kept in place restrictions against the Evening News. Munger and Olson planned to appeal. Characteristically, Buffett did not want to lengthen the fight with the judge. Munger had always kidded Buffett that his management technique was to take out all the cash from a company and raise prices. If that failed, Buffett didn’t have any more arrows in his quiver. This technique wouldn’t solve the problems of the Evening News. Buffett was so beaten down and wanted so badly not to get into a confrontation with the judge that he was willing to let $35.5 million go down the drain. A remnant of his last big legal battle was only now ending: The SEC had finally, at long last, approved the merger of Berkshire and Diversified. Buffett wanted desperately to be done with lawyers, depositions, subpoenas, and fighting. “I didn’t want to appeal. I just felt it would take so damned long, it would irritate the judge, and that we had more to lose by irritating him as he enforced this injunction and as the Courier came up with all these furious attacks, and he could just keep extending it. I declared, We’re not going to appeal because in a year or year and a half we’ll be dead anyway. And Ron and Charlie told me I was wrong, and I was wrong.”
In the end, he decided to go along with them. “We had to appeal. I wasn’t going to give in to a set of conditions which were going to make us noncompetitive. So basically I had no choice. We don’t bluff. It’s not my style anyway. Over a lifetime, you’ll get a reputation for either bluffing or not bluffing. And therefore, I want it to be understood that I don’t do it.”
The Buffalo Evening News was Buffett’s single largest investment, and by a wide margin. It was tying up a third of Blue Chip’s capital, losing money under Judge Brieant’s restrictions, and vulnerable to any strike that would weaken it further at a time when the stock market was falling and Buffett needed it to produce cash to buy stocks at the bargain-basement prices he always favored. The potential failure of the Buffalo Evening News risked more than setting him and Munger back their $35 million; for the man who begrudged spending $31,500 on a house because that money could ultimately turn into a million, the lost compounding potential of their investment in the newspaper made the situation much graver than it appeared superficially. So Buffett not only decided to appeal the decision, but he Tom-Sawyered Stan Lipsey, who was thinking of moving to San Francisco, into trying to turn the paper around. “What would you think about going up to Buffalo?” Buffett asked. “My heart sank,” Lipsey says, “but I couldn’t turn Warren down on anything.”25
Lipsey started spending one week a month in Buffalo. On one of his weeks in Omaha, he joined Warren and Astrid to take the temperature of Buffett’s current life. Warren was clearly relaxed in his new relationship. He let Astrid take them all to a drag show.26
By 1979, Lipsey had straightened out the paper’s management, and victory was approaching in the battle of the legal briefs with the Courier-Express. In April 1979, nearly a year and a half after Brieant’s preliminary injunction, the Second Circuit Court of Appeals unanimously reversed him, saying his opinion was “infected with legal and factual error.… Courts must be on guard against efforts of plaintiffs to use the antitrust laws to insulate themselves from the impact of competition.”27
But the reversal of Judge Brieant’s order was a victory that came almost too late. The Courier-Express immediately appealed the ruling, seeking to reinstate the injunction. The News’s lawyers wearily took up their swords to continue the ludicrous fight. The battle had cost so much in legal fees and lost advertising line age while the News operated under all the judge’s restrictions for the better part of two years that it was losing millions—a $5 million operating loss before tax in 1979—multiples more than Buffett or Munger had ever experienced in any of their businesses. It was going to take heroic work to make the money back.
“How about moving to Buffalo?” Buffett asked Lipsey. “I don’t really want to do that,” Lipsey replied. Buffett said nothing, and Lipsey continued commuting.
By mid-1979, the stock market was sunk in gloom, and orders for stocks, Buffett said, were placed “with an eyedropper.”28 The Dow had languished for a decade, bucking and stalling in snorts and gasps, like a beat-up car with a faulty carburetor. Its latest stall-out took it back down to the familiar territory of the mid-800s. Inflation galloped at double digits; and lines formed at the gas pumps. BusinessWeek declared “The Death of Equities,” as if no one would ever buy stocks again. Investors piled into gold, diamonds, platinum, art, real estate, rare coins, mining stocks, feedlot cattle, and oil; “cash is trash” was the watchword of the day.
In Forbes, Buffett wrote that it was time for investors to buy stocks. “The future is never clear,” he wrote; “you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.”29 He was the buyer of long-term values—except that he had no cash. Periodically, cash had showered on Buffett since the beginning of the decade—$16 million from distributing the partnership assets, then millions more from the sale of Data Documents stock, a private investment. But he had poured it all into Berkshire Hathaway. Buffett had always paid himself only $50,000 a year, a number that he now raised to a still-modest $100,000. He borrowed some money from banks and started to invest again.
And finally, Stan Lipsey made the move Warren had been hoping for. One day in 1980 Lipsey showed up at Warren’s unlocked back door in Omaha to say that his wife, Jeannie, wanted a divorce and that her lawyer was, from Stan’s perspective, raising hell. Buffett reminded Lipsey of something Tom Murphy had taught him. “You can always tell them to go to hell tomorrow, Stan,” he said. He invited the sparring lawyers to his office and helped mediate the end of a marriage between his friends—the second time he had done so. Not long before, Buffett had brokered peace between his friend Ed Anderson and his wife, Shirley Smith Anderson, an old friend of Warren and Susie’s. He was experienced at easing his friends through difficult transitions. He began talking to Lipsey about the need to make changes in his life. Maybe it’s time, Stan thought. As the conversation progressed, Buffett helped Lipsey talk himself into moving to Buffalo. “It was typical Warren. He wanted me to come up here in the worst way,” but in the end, just as with people investing in the partnership, it had to be Lipsey’s idea.
Lipsey went to Buffalo, and stayed. By the end of 1980, the losses had mounted to $10 million. Munger’s 1980 Blue Chip annual report repeated a warning Munger had first given in the 1978 report: “If any extended strike shuts down the Buffalo Evening News, it will probably be forced to cease operations and liquidate.”30
Munger’s viewpoint as he wrote these words and steered Blue Chip through the legal maze of the Buffalo Evening News could not have been helped by the dire and dark condition of his health. For several years he had stoically tolerated growing cataracts, until they reached the point at which his eyesight was seriously impaired. When he had cataract surgery on his left eye, it resulted in an extremely rare complication called an epithelial downgrowth: A specialized type of primary body tissue from outside the eye (probably corneal cells) got inside his eye and started growing like a cancer. The pressure and destruction of the optic nerve caused severe, disabling pain.31 When he could no longer tolerate the agony of his slowly exploding eye, Munger arranged to have it eviscerated and replaced with a glass eye. But afterward, “I was like a wounded animal for several days.”32 He could not stand up to be bathed by the nurses because he was so nauseated from the pain. He told Buffett that he wanted to die. Terrified of going through another such ordeal and facing the possibility of blindness, he decided to have the remaining cataract in his right eye scraped off without replacing the lens. Instead, he wore old-fashioned cataract glasses, thick as a jellyfish, over his “good” eye.
During Munger’s ordeal, the Buffalo Evening News’s drivers’ union—perhaps emboldened after three years with new management running the place under duress—demanded overtime for work not performed. Then in December 1980, the Teamsters, figuring that Buffett couldn’t take a strike while the battle with the Courier-Express dragged on, walked out at six a.m. after an all-night mediation attempt failed. Working with other unions, who crossed the picket line, Lipsey, Henry Urban, and Murray Light worked feverishly to get out the evening paper. Then, at the last minute, the pressmen walked off the job, pulling the page plates off the presses as they went.
Buffett figured he was sunk. From his background in newspaper circulation, he knew that, even more than the pressmen, the tiny drivers’ union—all of thirty-eight employees—had the power to shut the paper down. Other unions and volunteers could run the presses, but without the drivers to distribute the newspapers, the paper was dead. Buffett would not use nonunion replacements. “I was not going to send our people out in December, in the dark, dropping papers in some rural area where some guy can hit them with a tire iron.”
The Evening News closed its doors.
Buffett told the union, “We’re going to reopen only if there is a reasonable prospect of a viable operation.”33 That tipping point could quickly be reached.34
This time, the unions blinked. Within forty-eight hours, the Evening News was back on the streets. By then, the News, though still trailing on Sundays, had gained some ground and was crawling toward the lead while maintaining its weekday advantage.35 By the end of 1981, Lipsey and Buffett had cut the losses to $1.5 million a year, half of what the Courier-Express was suffering.36 In a war of “survival of the fattest,” it was almost certain to win—albeit at a staggering price. The Courier-Express had never given up the lawsuit trying to reinstate Judge Brieant’s injunction, but its owners saw another judge, the judge of the marketplace, heading with the blue ribbon toward the Buffalo Evening News. The Courier-Express now tried to sell itself to press lord Rupert Murdoch, but the unions wouldn’t cave in to Murdoch’s demand that they give up seniority. And with that, the Courier-Express laid down its last card in September 1982. Its next move was to fold.
The Buffalo Evening News immediately rolled out a morning edition and changed its name to the Buffalo News. With victory in hand, Buffett and Munger went to a meeting of employees at the Statler Hilton downtown. Somebody asked about profit sharing. “There is nothing that anybody on the third floor”—where the newsroom sat—“can do that affects profits,” Buffett said. Capital took the risk and reaped the rewards. He and Munger had staked $35 million on a series of decisions. They might have lost every dime; to them went all the profits that followed. The workers got a paycheck for the time and effort they put in—no more, no less. A deal’s a deal. But after everything they had all been through, the staff was stunned at his lack of empathy.
As Buffett and Munger left the office, Munger walked past publisher Henry Urban, who was “waiting for at least a small accolade,” said Ron Olson. Munger was famous for getting into cabs while people were talking to him as if he did not hear them and for disappearing through doors the second he finished talking without waiting for a response. Nonetheless Urban stood open-mouthed. Buffett followed along right after Munger without looking at anyone. Nobody said thanks. Olson, following in their wake, moved around the room shaking hands in an effort to make up for it.37
A year later, with higher ad rates and soaring circulation, the News was earning $19 million pretax, more than all the previous years’ losses combined. About half of that went straight to Buffett. And as the excitement ended, his attention waned. While he still spoke well of the Buffalo News in his annual report, his interests had moved on to the next new thing.