B000U5KFIC EBOK (30 page)

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 that 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.

Despite an avid early interest in newspapers, Buffett and Munger
say they are no longer the bulletproof franchises they used to be, since technology such as television and the Internet has changed the way people get their information and has dimmed newspaper prospects. In fact,
says Munger, the Internet will increase competition and make it hard for
all companies to show a profit.

BEFORE SUCCESS CAME TO THE Buffalo News, Wendy Munger remembers her
father as a good looking, well-dressed man with excellent vision. "I had
this movie star father-I just want people to know he didn't always wear
thick glasses. That was only after his surgery."

Though the problems of the Buffalo News were resolved in his favor,
Charlie lost an eye and he lost his mother.

When it became obvious he would lose his vision to cataracts, in
1978, Munger underwent what he described as an old-fashioned cataract
operation at the Good Samaritan Hospital in Los Angeles.

"This all happened 25 years ago," said Munger. "A new and better operation had been invented, but I didn't pay attention-I just went along
with the doctor that recommended the old one that he knew how to do.
The new type of surgery had a complication rate of no more than 2 percent while the (surgery) I had had a 5 percent complication rate. The man
who did the first operation? I won't tell you his name. A perfectly nice
guy. Our family eye doctor. I made the mistake-the fault was mine."

After the surgery, Munger fell victim to a rare and devastating
complication.

"I developed an epithelial downgrowth," he explained. "A few cells
of the outside of the eye got inside the eye, which is virtually impossible
with the new operation. When that happens, the cells from the outside
just proliferate. They take over the interior of the eye and raise the pressure, and that kills the optic nerve."

The condition is similar to cancer, except that the growth does not
spread outside the eye. Munger was in such agony that he decided there
was one thing worse than a blind eye, and that was a blind eye that hurt.
In 1980 Munger had the doctors eviscerate, or scoop out, the innards of
the left eye and cover the eyeball with a glass eye.

"You cannot believe the pain and suffering from an evisceration. I
was like a wounded animal for several days. I was in so much pain and
had so much nausea that when the nurse came in to give me a bath I
couldn't stand for her to bathe me," said Munger.

While all this was going on with his left eye, a cataract was slowly
growing on his right eye as well. Munger knew for sure he didn't want to
repeat the experience he was now going through. Charlie decided to
adopt a strategy with absolute minimum risk for the right eye.

"I told the doctor to just get the clouded lens out of there, and I'll use
cataract spectacles. Don't put in a new manmade lens," said Munger.
Cataract eyeglasses were commonly worn by older people when Munger
was a child.

"You almost don't see cataract glasses anymore. I may have the last
pair on earth," he said. Munger keeps a file folder on his desk full of medical reports, his own notes written on a yellow pad, and other details of
the event.

Except for his new bottle-bottom glasses, Munger says, "Life didn't
change a bit. I lack peripheral vision, my straight ahead vision is excellent." Charlie had the sight in his right eye tested in 1999, and with his
glasses, he had 20/15 vision.

Despite his blind left eye, Munger drives, and has learned how to
change into lanes on his blind side by counting the cars in the rearview
mirror, and knowing after which one there will be a gap. He drives a
Lexus with a powerful engine because it gives him the ability to move
quickly when he needs to. He tends to make what out-of-state drivers call
California stops-slowing down to a near-stop at a sign, then zooming
out when the way seems clear. That may not have anything to do with his
vision.

His former partner Al Marshall insists Munger was never a good
driver even when he had excellent eyesight because Charlie usually was
thinking about something other than driving.

"He used to carry a gallon of gas in the trunk, which wasn't safe at
all," said Marshall, "because he could never remember to put gas in the
thing."

When the Mungers and the Marshalls were vacationing in Hawaii,
Charlie was driving a rental car down a small back road, talking, gesturing, and looking around at everything as he drove. Al looked up and
saw that a bridge ahead of them was washed out. "Stop," he shouted to
Charlie, who didn't slow down a bit. "Why?" Charlie asked. Marshall was
so frightened he couldn't find the words to explain, but Munger finally
noticed the problem and screeched to a halt just before going over
the edge.

"When he lost his eyesight, he handled it in a pragmatic fashion," recalled Otis Booth. "He got some books on braille to see if that would work
for him."

When he figured out he would have enough vision to read well, Charlie gave up all thoughts of braille.

Even so, said Hal Borthwick, "It's not pleasant for a man who loves to
read. He's a voracious reader. In every one of our houses there will ibe
three, four, five books stacked by his chair and three, four, or five more stacked by the bed. He has certain things he wants to read. He's not a
fiction reader so it's either a business book or a biography or a history or
science hook. It's always based on facts."

Though Munger plays golf, travels, and reads constantly, there are
times when the glass eye becomes a real inconvenience. Booth says that
when Charlie went to the Department of Motor Vehicles to get his driver's license renewed, he was required to take an eye exam.

"He told the person at the desk that he was blind in one eye," explained Booth. "The examiner said he'd have to have a doctor's letter on
that. Charlie said, `Hell, I can prove it to you right here. It's a false eye. I'll
take it out and lay it on the counter if you like.' The examiner still insisted
on a doctor's note until Charlie demanded to speak to a supervisor. It
took about a half hour to sort out."

DURING A TIME WHEN so much was happening, Charlie's mother passed
away. Toody Munger lived on for fifteen years after her husband died. She
and Dorothy Davis, Dr. Ed Davis' widow, spent much of their time together and especially enjoyed traveling.

"Mother and Toody went to France once," said Willa Davis Seemann.
"By the time they got home they were rather sick. They took turns pushing each other around the airport in wheel chairs."

Molly said that her grandmother strove to maintain her intellectual
edge and to keep up with times as they changed. "Grandma Toody and I
went out to dinner with her other Omaha widow friends. One said, `This
summer, I think it's time to reread Tolstoy.' She was not a grandmother
that you remember for cookies or anything-you remember what she said.
My cousin Rodger was a hippy. She was taking one of her widow-ladies
tours of Europe, which she did a lot. She'd say to a new friend, `Does
yours hake bread?' If the woman said yes, their eyes would light up and
they knew they both had hippy grandsons."

At Toody's funeral, Charlie looked out on the faces of his Aunt
Oofie, and Toody's good friends. He remembered his father and his
grandparents, the Russells, and he realized that his mother's had been a
"blessed life."