Tuesday, April 16, 2024

Warren Buffett selling his N.C. newspapers as part of $140M deal

Warren Buffett is offloading his six North Carolina-based news outlets as part of Berkshire Hathaway Media Group’s $140 million sale to Lee Enterprises Inc. that was announced today. The Iowa-based newspaper chain has been managing BH Media Group since 2018.

The sale, which is expected to close in March, will transfer ownership of 31 daily newspapers (including New York’s The Buffalo News, which is separately owned by Berkshire Hathaway), 49 paid weekly publications with digital sites, and 32 other print products. It will bring Lee Enterprises’ portfolio to 81 news outlets from 50, and mark the company’s first expansion into North Carolina.

The six North Carolina publications that will change hands include: The Winston-Salem Journal; Greensboro News & Record; The News Herald in Morganton; The McDowell News; Statesville Record and Landmark; and Hickory Daily Record.

Lee Enterprises says the deal will nearly double its audience size and drive revenue up 87%. BH Media Group reported $373.4 million in revenue for 2019. The company is also expecting $20 million to $25 million in cost savings over the next two years due to company synergies.

Berkshire Hathaway will provide financing to Lee Enterprises to help facilitate the sale and pay down debts, according to the announcement. Berkshire will provide $576 million in long-term debt financing at a 9% annual rate over the next 25 years. Lee will use the funds to pay for the acquisition, refinance its $400 million of existing debt and eliminate its $23 million revolving credit facility, making Berkshire the company’s sole lender when all said and done.

Berkshire Chairman and CEO Buffett, nicknamed the Oracle of Omaha for his investing prowess, says he’s very confident about the new ownership.

“They [Lee Enterprises] have delivered exceptional performance managing BH Media’s newspapers and continue to outpace the industry in digital market share and revenue,” Buffett said in a news release. “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 organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee.”

Lee’s website lists more than 300 weekly publications in its portfolio with 73 million monthly digital views and 1.1 million newspaper subscribers. The North Carolina publications alone will add about 3.6 million monthly digital views and hundreds of thousands of print subscribers, according to BH Media Group’s website.

Lee Enterprises’ (NYSE: LEE) stock closed trading at $1.26 per share yesterday. The stock was trading at $2.22 a share, up 75%, at the time of publication.

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