Katharine Graham

Katharine Graham (1917-2001) was the American publisher who led her family's newspaper, The Washington Post, from 1963 until 1991. Thrust into leadership following the tragic death of her husband, Graham evolved from a hesitant heiress into one of the most powerful and respected figures in American media. Her tenure is most famous for two monumental journalistic achievements: the publication of the Pentagon Papers against intense government pressure and the relentless investigation of the Watergate scandal, which ultimately led to the resignation of President Richard Nixon. For investors, Graham's story is inextricably linked with that of her close friend and mentor, Warren Buffett. Their relationship provides a masterclass in how exceptional management and a brilliant investor can create immense value together. Graham’s leadership and the Post’s dominant market position made it a quintessential example of the wonderful businesses Buffett seeks, transforming it into one of his most successful investments ever.

Katharine “Kay” Graham's ascent was anything but planned. She inherited control of The Washington Post Company, which included the newspaper and several TV stations, in an era when boardrooms were exclusively male. Initially filled with self-doubt, she navigated the complexities of business and politics with a growing confidence, guided by an unwavering commitment to journalistic integrity. Her leadership was defined by courage. In 1971, she made the momentous decision to publish the Pentagon Papers, a top-secret government study on the Vietnam War, risking federal prosecution and the company's financial stability. A year later, she stood firmly behind her reporters, Bob Woodward and Carl Bernstein, as they uncovered the Watergate scandal. These decisions not only defined her legacy but also solidified The Washington Post's brand as a fearless and indispensable institution, creating a powerful competitive moat that any investor would admire.

In 1973, Warren Buffett began quietly buying shares of The Washington Post Company. He saw what the market was missing: a media “franchise” with a near-monopoly in a major city, trading for a fraction of its true worth. The stock market valued the entire company at around $80 million, yet Buffett calculated its intrinsic value to be closer to $400 million. It was a classic value investing opportunity—a wonderful business on sale. After accumulating a significant stake, Buffett met Graham. What began as a business relationship blossomed into a deep and lifelong friendship. Buffett joined the Post's board and became Graham's trusted advisor, not on journalism, but on the principles of business and capital allocation. He taught her to think like an owner and an investor, showing her how to use the company's prodigious cash flows to repurchase shares and make other shrewd investments, rather than squandering them on poor acquisitions. Graham, in turn, provided Buffett with an inside look at a world-class business and the non-financial value of integrity-driven leadership.

The story of Katharine Graham and The Washington Post offers timeless wisdom for every investor. It’s a perfect illustration of how superior business economics and stellar management combine to create extraordinary long-term returns.

• Management Matters Profoundly: Graham's courage and integrity were not just admirable personal traits; they were immense economic assets. Her decisions enhanced the Post's reputation, strengthened its brand, and widened its moat. When evaluating a company, look beyond the balance sheet to assess the quality and character of its leadership.
• Buy Wonderful Businesses: This investment marked a key point in Buffett's evolution from buying cheap “cigar-butt” companies to buying wonderful companies at fair prices. The Post was a fantastic business with pricing power and a durable franchise. The best returns often come from owning great enterprises, not just statistically cheap stocks.
• Invest Within Your Circle of Competence: Buffett understood the newspaper business. He recognized the value of a dominant local paper at a time when others were pessimistic about the industry. Sticking to what you understand gives you an edge in identifying true value.
• Patience is a Virtue: Buffett held his investment in The Washington Post for decades, allowing the value to compound spectacularly. Likewise, Graham led the company for nearly three decades. Great wealth is built not by frantic trading, but by identifying quality and holding on for the long run.