Charlie Munger at Daily Journal Annual Meeting (2013)

Date: February 6, 2013 Company: Daily Journal Corp (NASDAQ: DJCO) Source: RBCPA Notes

Overview

Charlie Munger has been chairman of Daily Journal Corp since 1986. This detailed notes from the 2013 annual meeting reveals his thinking on business disruption, the decline of traditional media, and the responsibilities of the "fourth estate."

Daily Journal's Three Businesses

Munger described Daily Journal as "really three businesses":

1. Traditional Lawyer Information

The original newspaper business providing legal decisions to lawyers. This was once a monopoly — lawyers had no choice but to subscribe.

"We had something that lawyers had to have, and there was no way in the old technology for them to get it on time except through our newspaper."

2. Public Notice Publishing

Required legal notices that governments mandated be published in newspapers. This proved more durable than expected:

"The public notice business is an ancient business... The people who pass laws have not been quick to change from the old printed method to the modern post ink and storage basis."

3. Software Business

Munger honestly assessed this as "a form of venture capital":

"A lot of meaningful money has not been made, and a fair amount has been lost."

On Technology Disruption

Munger was brutally honest about the newspaper industry's collapse:

"The traditional information business is suffering tremendous headwinds... When the electronic stuff came, the lawyers were all trained to use electronic media to keep up with the courts."

The lesson: When technology creates a better alternative, traditional businesses face existential threats regardless of how well-run they are.

The Fourth Estate Lament

Munger reflected on what America is losing:

"The country is going to pay a terrible price for losing this constructive influence... Nobody who created the Constitution had any thought of deliberately creating local monopolies. That we would have a separate branch of the government that just sort of arose through accident and had this enormous power, but that system which evolved by accident served this country very well."

On Journalistic Integrity

Munger explained why Daily Journal never pushed personal political opinions:

"I don't think either Rick or I felt at all comfortable telling somebody else what we thought on every subject as if we were God, and so we never did it."

"We always wanted the paper to be trusted, and I think it by and large is. I think the judges and lawyers who read it, they don't think we've got some crazy personal agenda."

The business lesson: Trust is a long-term moat that takes decades to build and moments to destroy.

Key Quotes

"I don't think either Rick or I felt at all comfortable telling somebody else what we thought on every subject as if we were God."

"The country is going to pay a terrible price for losing this constructive influence."

Related

• charlie-munger — Chairman of Daily Journal
• berkshire-hathaway — Munger's main vehicle
• moat — The importance of durable competitive advantages
• capital-allocation — Munger's discipline with Daily Journal's capital