Berkshire Buys 63 Newspapers From Media General
Media General is getting out of the newspaper business and Warren Buffett is jumping in feet first, with a deal transferring 63 Media General newspapers to Buffett’s Berkshire Hathaway for $142 million in cash -- along with a $400 million loan to Media General, plus a line of credit up to $45 million.
In return, Media General is giving Berkshire Hathaway warrants for 4.6 million Class A shares, representing about 19.9% of the company’s stock.
Media General is holding on to the Tampa Tribune, its largest newspaper property, for the time being, while selling newspapers across the Southeast, including The Richmond Times-Dispatch and The Winston-Salem Journal, along with related digital assets like Web sites and tablet applications.
The company said it is in talks with another prospective buyer for the Tampa Tribune.
While newspapers face a number of challenges, including the transition to digital consumption and the concurrent collapse of print advertising revenues, they also enjoy some long-term advantages, including their primacy as news sources in local markets, according to Buffett, who stated: “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper.”
This is the second major newspaper acquisition by Berkshire Hathaway in less than a year. In December 2011, the company acquired the Omaha World-Herald -- Buffett’s hometown paper -- for $150 million in cash plus the assumption of $50 million in debt. The deal also gave Berkshire Hathaway possession of a handful of daily and weekly newspapers located in smaller towns around Nebraska and Iowa.
Berkshire Hathaway has long been the owner of The Buffalo News in Buffalo, NY, and also owns a stake in the Washington Post Co.