• by Erik Sass  @eriksass1, June 6, 2012

Warren Buffett is on a newspaper binge, or at least is sampling the wares. On Tuesday, his investment company, Berkshire Hathaway, disclosed that it owns 1.66 million shares -- a 3% stake -- in Lee Enterprises, which publishes the St. Louis Post-Dispatch and the Lincoln Journal Star in Nebraska, among 47 daily newspapers and 300 weekly and community papers.

Buffett reportedly acquired the stake by buying $85 million of Lee’s debt from Goldman Sachs at $0.65 on the dollar in November of last year. Berkshire wanted to keep its ownership of Lee stock confidential, but was forced to disclose it by the Securities and Exchange Commission. After the disclosure, Lee’s stock increased from $1.15 at the close of business Tuesday to $1.39 at the time of writing -- a 20.9% increase.

Any interest from Buffett would be a shot in the arm for Lee, which faces the same challenges as other major newspaper publishers, including the switch to digital media and the collapse of print ad revenues. Lee declared bankruptcy protection in December 2011 and exited Chapter 11 a month later. The company carries about $1 billion in total.

This is just one in a series of moves by Buffett to increase his newspaper holdings. He acquired 63 daily newspapers from Media General for $142 million in May, and the Omaha World-Herald for $150 million (plus $50 million in debt) in November of last year.

In a letter to editors and publishers of the Media General papers, Buffett hinted at plans to acquire more newspapers over the next few years. On the business side, Buffett said newspapers can no longer afford to give their content away for free, which he called “an unsustainable model,” hinting that online paywalls may be coming to the newspapers acquired by Berkshire.

This move would be in keeping with an industry trend, as online paywalls have proliferated at other small and midsized regional newspapers in recent months.