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  Roderick Hills, who helped start the Munger, Tolles law firm, says the reproductive rights issue first came to Charlie's attention when he read an article in the newspaper about a criminal case that would be appealed to the California Supreme Court. He promptly persuaded his law firm members to help out on a pro bono basis. The case was that of Dr. Leon Belous, a doctor who had been convicted of referring a woman to an abortionist.

  "You can go back to the Belous case, 1972 or so. We would talk about it all the time, Charlie was totally immersed in it," recalled Buffett.

  As unusual as it may seem for a devoted family man with eight children, especially one with a conservative political bent, to support legal abortions, Munger made the decision to go forward.

  "It was emotionally hard for me to become pro-choice because I do have reverence for human life," said Munger, "but when I thought through the consequences, I found it necessary to overrule that part of my nature."

  Once Munger decided that it should be a woman's right to decide whether or not to become a mother, he went about seeking change with energy and resourcefulness. He convinced Buffett, who is fiscally conservative but socially liberal, to join him in helping to pay the legal defense of Dr. Belous. Munger and his law partners, particularly Rod Hills and Jim Adler, organized themselves and did the rest.

  "Charlie took over the case, got one amicus brief from a blue ribbon group of legal luminaries and another brief from medical school professors," said Buffett. "Charlie made an enormous effort on that."

  Hills was among the lawyers who helped assemble the two friends-ofthe-court briefs. One was written by Munger himself and signed by 17 prominent lawyers. The other was signed by 178 medical school deans and professors.

  During the time the Belous case was pending before the California Supreme Court, Munger and Buffett sponsored a "church" called the Ecumenical Fellowship that counseled women on family planning. The church, run by a legitimate minister who got in trouble with his own denomination for his pro-abortion activities, sometimes helped women get safe abortions outside the United States.

  "Warren and I were revolutionaries," said Munger. "We created a church that was used as an underground railroad. We supported the Clergy Counseling Service. The minister running it was cashiered by his own church for helping women get abortions. First I tried to persuade the church to let him continue. That failed. I called Warren and asked him to help me establish our own church. That we did. For years this minister ran the thing. That was our contribution, trying to help so that society didn't force women to give birth-to be held in a system Garrett Hardin called `mandatory motherhood.'"

  When the Belous case was heard before the California Supreme Court, the outcome became uncertain when one of the justices had to recuse himself because the abortionist was his family doctor. But in September 1969, Belous won a landmark victory in which, for the first time in U.S. history, an anti-abortion law was declared unconstitutional by a major court. The replacement justice was the swing vote in a four-tothree decision. Not only has the decision been the legal precedent used in California ever since, "It was the first chink in the armor of abortion restrictions," said Munger.

  The impact of the case widened even more when two years after the California decision, Belous was cited in the appellants' brief in Roe v. Wade, in which the U.S. Supreme Court established "the fundamental right of the woman to choose whether to bear children."'

  "Charlie gives more than time," says Ron Olson. "He transforms the charities."

  Indeed, the court ruling was not the end of Munger's work. Following Belous, he was for many years a trustee and the chief financial officer for Planned Parenthood of Los Angeles, which offered family planning services and, when necessary, referred patients to clinics where abortions were available.

  "We were way ahead of the national office of Planned Parenthood in arranging abortions," said Munger. "The Planned Parenthood chapter in Los Angeles wanted to get into that business, but didn't know how. We merged our church, the Ecumenical Fellowship, headed by the same guy who headed the Clergy Counseling Service, into the Los Angeles chapter of Planned Parenthood."

  When he joined the Planned Parenthood board, there was only one major benefactor, Anna Bing Arnold, the widow of the wealthy real estate developer Leo Bing. Despite her dedication, the organization was small and thinly financed.

  "We were chronically short of money," said Otis Booth, who served on the board with Munger. The board expanded its contributor base, but as usual, with Charlie the organization took contrary positions. "There was a controversy over national dues. We told them [national] no. `You're not contributing anything useful to us, we're not paying the dues.' We finally rejoined the national organization."

  Despite the pressure from protestors and sometimes frightening actions of anti-abortion activists, Munger's fervor on the subject of abortion and population issues have not changed over the years.

  Barry Munger recalled that at a party for Keith Russell, a well loved Los Angeles obstetrician who had been Charlie's stalwart ally in the abortion rights struggle, a patient toasted Dr. Russell for all the babies he'd delivered. Charlie raised his glass and declared, "I want to toast Dr. Russell for the thousands of babies he didn't deliver."'

  In 1990, Munger fired off a stinging letter to Fortune, claiming that a review of Paul and Anne Ehrlich's book, The Population Explosion, had missed the point. The book reviewer, said Munger, "argues that human welfare will continue to improve as a result of desirable population growth accompanied by even faster technological development. Alas, it is not so simple. In a finite world system, subject to the laws of physics, two variables (population and per capita welfare) can't both be maximized forever."

  Munger said it was nonsensical to expect, as the reviewer had suggested, that some technology, now unknown, will step forward to solve all the problems of pollution, erosion, and so forth: "No one contemplating the prospective environmental burden described by the Ehrlichs can be confident that such a 'benign demographic transition' will occur or that the population-growth-driven conditions won't be ghastly in 100 years or less. For one thing, the technological development that is necessary to permit a peacetime population increase will also make weapons both more effective and more generally available in a more crowded world."'

  Buffett is just as solid in his view. In 1994, Buffett declared that the world would have far fewer problems, "if you could make every child born in this country and this world a wanted child ... the closest thing we have to that is Planned Parenthood. Until women have that right to determine their reproductive destiny, we're in an unequal society," Buffett said.`

  C H A P T E R T H I R T E E N

  THE BUFFALO

  EVENING NEWS

  If thou faint in the day of adversity, thy strength is small.

  The Bible, Proverbs

  HE MUNGER CHILDREN HAVE NEVER forgotten the summer of 1977 after their father and his partner Warren Buffett bought the Buffalo Evening News. The youngsters scurried around their lakeside Minnesota cabin collecting coins, then went with Charlie to the telephone booth at the marina across the lake to help him feed money into the pay phone as he and Buffett plotted their strategy for the paper.

  "The Buffalo Evening News was a big deal. In my mind a really big deal," said Molly Munger.

  Molly said that with the acquisition of a well-known eastern newspaper, she felt that Buffett and Munger had stepped up to a higher plain. They were taking on a broader scope, moving away from small, regional companies and going for more visible properties. It was the beginning of a trend to buy companies with names that other people would recognize when you tried to explain what your father did for a living.

  The Buffalo Evening News was among the most impressive acquisitions made with Blue Chip Stamps' float account, and for a long time, it was the most aggravating.

  The Buffalo Evening News was established in 1880, and for years was operated by a single family, the Butlers. After Kate Robinson Butl
er died in 1974, the establishment-oriented Republican-leaning newspaper was put up for sale by her estate. It wasn't until the first Saturday after New Year's Day, 1977, that Buffett and Munger arrived in Weston, Connecticut, to talk to Vincent Manno, a newspaper broker who was handling the deal. Buffett first offered $30 million for the paper, but his price was refused. He then raised the bid to $32 million. The offer was high, considering that the Evening News had earned only $1.7 million pretax in 1976. However, the offer again was rejected. Buffett and Munger excused themselves to confer. They returned with a price written on a sheet of yellow legal paper. The amount, $32.5 million, was accepted. It was a daring move, since the acquisition price represented nearly 25 percent of the net worth of Berkshire Hathaway at that time.

  Once the price was settled, Buffett and Munger flew to western New York to work out the details of the contract. They arrived there in the middle of the worst snowstorm in Buffalo's history. For someone who had become acclimated to California, Buffalo's severe winter climate may have been a shock to Munger. In a letter to Katharine Graham, Charlie referred to Buffalo as "a town where the statue of George Washington wears a Masonic apron, and the wind blows so hard that the mail in the chute goes up and not down."

  When touring the newspaper's relatively new offices and printing plant Munger snapped, "Why does a newspaper need a palace to publish in?" Buffett jokingly dubbed it the Taj Mahal.'

  Munger, with his passion for good architecture, was repelled by the design of the building's famous architect, who had impressed old Mrs. Butler by driving the same model of Rolls Royce that she did. He put in big balconies that were unusable in windy Buffalo and employed an "artsy-craftsy" construction method that caused unfixable leaks-all at great cost. This was not Charlie's concept of successful design.

  But in the year 2000, the boxy cement-like building in the center of Buffalo's aging downtown seems reasonably spacious, though austere. It certainly is no more opulent than most other metropolitan daily newspaper facilities.

  Like Graham's Washington Post, a newspaper in which Buffett had made a major investment in 1973, the Buffalo Evening News proved to be a difficult business proposition. In both situations, Munger and Buffett proved that though they prided themselves on fair dealing, they also could take tough positions and stick to them.

  When Blue Chip bought the Buffalo Evening News, it had a solid readership base in western New York, although Buffalo was gradually becoming a classic rust-belt city. The newspaper had several other problems. Like the Washington Post, the Evening News had several extremely active unions. It also had a strong competitor in the Buffalo CourierExpress, a historic newspaper once edited by Mark Twain. Additionally, the Evening News published no Sunday paper. Though the Evening News outsold the Courier-Express four-to-one during the week, its lucrative Sunday edition kept the Courier-Express in business.

  The new owners knew that long term, only one newspaper could survive in Buffalo, and that their new property would either perish or stand alone. The Buffalo Evening News plainly required a Sunday edition, hazards be damned. Immediately after Blue Chip bought the newspaper, Buffett and Munger dropped the "Evening" from the newspaper's name and started to publish on Sunday. At first the paper was given away to current subscribers and for racks and news stands, the price was only 30 cents a copy. The Courier-Express and other newspapers in western New York charged 50 cents for their Sunday paper.

  The special introductory offers to subscribers and advertisers prompted the Courier to sue the News, claiming that it was violating the Sherman Anti-trust Act. On November 9, 1977, a U.S. District judge agreed that it might be the case and granted injunctive relief that stopped short of spiking the new Sunday paper.

  "They bought a lawsuit when they bought that paper," said Al Marshall, "But I never did believe they could lose."

  Munger knew a good buy when he saw it, and his keen sense of what legal points could be lost or won served especially well when he and Buffett acquired the Buffalo Evening News. They knew full well that launching a Sunday newspaper would not be easy and in fact, might instigate an old fashioned newspaper war.

  Despite the best efforts of Munger and lawyers he recruited to help, the injunction remained in place for two years. A Los Angeles friend of Munger and Marshall, Ernest Zack, was hired to help with the legal battle in Buffalo, which was so difficult and trying that Zack became exhausted. When Zack got so weary or frustrated that he complained, Munger admonished him, "Oh, it's good for you."

  During the drawn out legal and business siege, people began to notice that Munger, 52, was having difficulty with his vision. "You would work with Charlie, go to his office and talk to him about whatever the situation was, Charlie was very good at reading documents," said Bob Denham. "A lot of people don't read them well, but it became difficult for him. He would struggle through, and as reading oriented as Charlie is, he must have been very concerned."

  Even so, said Denham, "He was pretty stoic. I think he found it quite frustrating. He didn't take it out on other people."

  Finally Munger had to admit he was not able to read paperwork the way he once did, and warned his colleagues not to count on him to discover errors the way he used to. He told Denham that the responsibility for carefully reviewing documents was now his.

  At a relatively young age, Munger learned that he was developing rapid and severe cataracts. While the eye damage could have been from over-exposure to the bright California sunshine without the benefit of sunglasses, Charlie suspects that the more likely cause was using a sunlamp when he was a very young boy. For some reason, Munger said, he became enamored with the lamp and used it extensively without eye protection, unaware of the possible future consequences.

  Despite his worsening health problems, Munger continued conferring on the telephone, and to Buffett the situation didn't seem all that serious-at first. Buffett was amazed that Charlie didn't complain about his problems.

  "It was awful," recalled Molly Munger. "This horrible thing happened to him. He practically ran the boat into the dock, he couldn't see. He was afraid of being blind. But finally he had to [have the surgery]. He was losing his vision."

  In the meantime, although it took five difficult years, the problems at the Buffalo News began to be resolved. An appeals panel reversed the injunction decision, finding no evidence of actual injurious intent.

  "The original judge thought giving away the newspaper for four weeks, or whatever, violated rules of the Marquis of Queensbury," said Ron Olson. "The overturning judge said he could find nowhere in case law the Marquis of Queensbury. Charlie was confident and ready to stand by the lawyers as it played out."

  Both the Courier and the News continued publishing at a financial loss. In 1979 the News was $4.6 million in the red, a large amount of money for two small operators from Nebraska and California. Charlie recalled, "I went through the calculations personally-I figured out exactly how much my share would cost me and exactly how much the Munger family could afford to lose.' 2

  The United States experienced a serious recession in the early 1980s, which made a bad situation even worse. The Courier-Express, which in the midst of the territorial battle was sold to the Cowles family of Minneapolis, finally raised a white flag and folded on September 19, 1982.3

  Even with lighter competition for readers and advertisers, profits came slowly for the Buffalo News. The Buffalo area lost 23 percent of its manufacturing jobs in the 1980s with the closing of many Bethlehem Steel operations. Unemployment in Buffalo during that time ran more than 15 percent, and one retailer after another went out of business, thus depressing advertising lineage. Between 1981 and 1982, operating profits dropped by half, and the outlook for the next few years appeared no brighter. Buffalo was hit harder than most American cities by the recession, but the economy wasn't the only problem. Newspapers everywhere were losing ground to television and other news media.

  Munger, who all the while struggled with the possibility of total blindness, insisted th
at Blue Chip shareholders hold management responsible for lost opportunity costs far in excess of reported losses. In 1981, he wrote to Blue Chip Stamps shareholders: "We would now have about $70 million in value of other assets, earning over $10 million per year, in place of the Buffalo Evening News and its current red ink. No matter what happens in the future in Buffalo we are about 100 percent sure to have an economic place lower than we would have occupied if we had not made our purchase." 4

  In time however, Munger proved wrong as a forecaster. Buffalo's economy started to turn around, which boosted newspaper profits. The U.S.-Canada free trade agreement also helped revive Buffalo, which is now the U.S. center for many Canadian companies. News profits rose and rose.

  Buffett was at the forefront of the News episode, highly visible in the struggle to resolve competition and problems with the Newspaper Guild. Munger remained mostly behind the scenes, but he was in constant contact with his partner to discuss business and legal strategies.

  "Charlie was very much involved in the purchase of the Buffalo Evening News," said Stanford Lipsey. Lipsey had been the editor of the Omaha weekly newspaper, The Sun, which Buffett owned. Under Lipsey's direction, the Sun won a 1973 Pulitzer prize for its expose of Boys Town. Lipsey began going to Buffalo during its darkest hours to help the publisher and editor, and he finally stayed to run the paper.

  Though the newspaper went through trying times, said Lipsey, "I've never seen Charlie get angry. If Warren and Charlie believe in the principle of something, they don't deviate from it, even if it's not popular with the individuals around them."

  The Buffalo News is the last remaining metropolitan daily newspaper in Buffalo and serves a 10-county area of western New York with eight daily and three Sunday editions. About 80 percent of the population read it on Sunday and 64 percent on weekdays, putting the News among the top 50 newspapers in the country as far as market penetration is concerned. The Buffalo News claims a significantly higher percentage of space for news than any major market daily. With a daily circulation of nearly 300,000, the company now brings in around $157 million in revenues and $53 million in pretax profit. It is said to be the most profitable newspaper in the United States, delivering a 91.2 percent return on assets.