Warren Buffett’s Newspapers Unit to be Sold to Lee Enterprises

Warren Buffett’s Berkshire Hathaway Inc. (Berkshire) had agreed to sell its newspaper business to an American media company, Lee Enterprises Inc. (Lee) for $140 million in cash. The old American billionaire, who had been defending his long-term associated newspaper business, has finally quit it as the revenue of the industry was slowing down over the years.

Declining Buffett’s Newspaper Business

Berkshire, one of the World’s leading holding companies, has more than 90 diverse operating businesses such as the BNSF railroad, Geico auto insurer,  General Re finance. Among these, the newspaper business was one of Buffett’s highly-preserve units although the business was a small earner of the conglomerate’s overall revenue. The old billionaire had acquired most of the newspaper-based companies in the last decade and he is selling the entire newspaper operating business to a local media company, Lee.

Buffett had been involved in the media business for quite a long time. He once invested in the Washington Post’s former publisher for four decades and became one of its board executives, and he remained a confidant of one-time chief executive, Katharine Graham. Buffett’s news business had been severely hampered over some past years as he described the reason that the internet had deprived the traditional newspapers and their revenue sources.

In April 2019, the old legend told Yahoo Finance that the newspaper industry was “toast” and he showed indication of selling the slowdown business. Prior to that, he spoke to Berkshire shareholders in May 2018 that the Wall Street Journal, the New York Times and perhaps the Washington Post that had strong digital platforms only could fight the rapid decline of print circulation and ad revenue.

Berkshire’s newspaper units reduced its employment at 23% to 3,685 by the end of 2018 from 4,761 three years earlier. The World-Herald was also facing the similar problem and eliminated dozens of jobs including nearly all its business reporters

Selling the Business to Lee Enterprise

In a statement, Buffett earlier had told to Berkshire shareholders that he had “zero interest” in selling the slowing down newspaper unit to anyone other than Lee. He also added, “No organization is more committed to serving the vital role of high-quality local news, however, delivered, as Lee.” Citing the downfall of the newspaper business, he told shareholders on Berkshire’s website that he had “no interest at all” in selling good businesses, and was “very reluctant to sell sub-par businesses.”

As Reuters reported, the sale transactions between Berkshire and Lee consisted of “31 daily newspapers and 49 weeklies including the daily Omaha World-Herald in Berkshire’s hometown in Nebraska, Buffalo News in New York, Richmond Times-Dispatch in Virginia, and Tulsa World in Oklahoma.”  Lee, a local American media company, owns 50 daily newspapers including the St. Louis Post-Dispatch and has been managing Berkshire’s papers other than the Buffalo News since July 2018. Berkshire bought the leading newspaper, the Buffalo News in 1977.

As part of the transaction, Berkshire would be Lee’s sole lender as it offered a fund lending of $576 million at a 9% interest rate for refinancing the media company. The transaction of sale deal would be closed in mid-March 2020. Reuters reported, “Lee shares more than doubled in early trading on Wednesday and were last up 67 percent at $2.10.”

I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.

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