Berkshire Hathaway has agreed a deal to sell a portfolio of newspapers, weekly publications and web sites to news provider Lee Enterprises for $140m in cash, marking a reversal of Warren Buffett’s decade-long media buying spree.
The conglomerate is providing about $576m in long-term funding at a 9 per cent annual rate to Lee, which will use the proceeds of that refinancing to pay for the BH Media Group (BHMG), which includes a bevy of local publications, as well as The Buffalo News, which is separately owned by Berkshire Hathaway.
Mr Buffett said in a statement on Wednesday that he and business partner Charlie Munger had known and admired Lee for more than 40 years, and the company has managed BHMG’s publications under an agreement since July 2018.
“We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges. No organisation is more committed to serving the vital role of high-quality local news, however delivered, as Lee,” the billionaire said.
Mary Junck, Lee’s chairman, said the transaction was “compelling and transformative” for the company, refinanced its long-term debt on attractive terms and provided new revenue opportunities.
Mr Buffett has had a decades-long relationship with media. He delivered newspapers as a young boy, but things became more serious with Berkshire Hathaway’s purchase of the Buffalo Evening News in 1977. The company bought US press release agency Business Wire in 2006, and started its BHMG subsidiary in late 2011.
The rise of the internet in the new millennium put newsrooms — and their revenue streams — under pressure. Mr Buffett conceded in 2006 that the financial decline of newspapers had sped up and that readership was going in the wrong direction. Reluctant to exit the sector, he changed tack slightly at the start of the previous decade, with the new BHMG acquiring dozens of local-focused daily and weekly titles through the $142m acquisition of Media General.
Signs Mr Buffett may have had a change of heart have emerged more recently. “The world has changed hugely and it did it gradually. It went from monopoly to franchise to competitive to . . . toast,” he said in a 2019 interview with Yahoo! Finance.
BHMG owns the print and digital operations of 30 daily newspapers, 49 paid weekly subscriptions with digital sites, and 32 other print products, serving communities in 10 US states. It had revenues of $373.4m in 2019. Lee said the acquisition will increase its portfolio of daily newspapers to 81 from 50 and nearly double its audience size.
More to follow.