Berkshire Hathaway said it will sell its newspaper holdings to Lee Enterprises for $140 million. The deal does not include any of BH Media's real estate holdings, Philadelphia Business Journal reports.
BH Media includes dailies in Alabama, Iowa, Nebraska, North Carolina, Oklahoma, South Carolina, Texas and Virginia. BH Media's largest papers are the Omaha World Herald and the Buffalo News.
Berkshire began its BH Media Group subsidiary with the December 2011 purchase of the Omaha World-Herald, which included six other daily newspapers and several weeklies across Nebraska and southwest Iowa. The following year, it purchased 63 newspapers from Media General, including the Richmond Times-Dispatch and Winston-Salem Journal, for $142 million in cash and two Texas dailies — The Eagle in Bryan-College Station and the Waco Tribune-Herald.
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| Warren Buffet |
In an interview last April with Yahoo, Buffett expressed doubt about the viability of newspapers outside of The New York Times, Wall Street Journal and Washington Post. “They're going to disappear,” he said.
Rick Edmonds, a media business analyst at the Poynter Institute in St. Petersburg, Florida, was not surprised by the sale.
"Buffett was for many years positive about the local newspaper business, but then he soured. BH hired Lee to manage the papers several years ago and that looked — and turned out to be — a run up to a sale," Edmonds said.
Berkshire Hathaway is providing approximately $576 million in long-term financing to Lee at a 9 percent annual rate. The proceeds from the Berkshire financing will be used to pay for the acquisition, refinance Lee’s approximately $400 million of existing debt, and provide enough cash on Lee’s balance sheet to allow for the termination of Lee’s revolving credit facility. Subsequent to the deal closing, Berkshire Hathaway will be Lee’s sole lender.
BH Media had 2019 revenues of $373.4 million. Lee's revenues declined to $509.9 million in 2019 from $544 million the previous year.
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