Iowa-based Lee Enterprises is buying Warren Buffett's BH Media Group’s publications and The Buffalo News for $140 million in cash.
The deal means Lee, now in 50 markets, will own 81 newspapers, almost doubling its size. BHMG has a presence in 10 states, owning 30 daily newspapers, as well as 47 paid weekly publications with digital sites and 32 other print products.
Other newspapers included in the deal:
The Press of Atlantic City (NJ), Tulsa World (Oklahoma.), Winston-Salem Journal, Greensboro News & Record (NC), Omaha World-Herald (Nebraska) and Richmond
On the financial front, Buffett’s Berkshire Hathaway, BH Media parent, is providing approximately $576 million in long-term financing to Lee at a 9% annual rate. That will pay for the acquisition and refinance Lee’s debt, estimated at $400 million.
BHMG had 2019 revenues of $373.4 million and adjusted EBITDA of $47.4 million.
Lee, which had been managing BHMG’s pubs for 18 months, says it anticipates $20 million to $25 million in revenue and cost synergies.
Lee added it expects to earn $10 million in the first year of the deal, suggesting the Berkshire Hathaway papers are generating operating earnings of about $49 million, while staff is being cut, reports the Los Angeles Times.“We believe that Lee is best positioned to manage through the industry's challenges," stated Warren E. Buffett, CEO of Berkshire Hathaway. "I am confident that our newspapers will be in the right hands going forward."
However, in various interviews in 2019, Buffett was pessimistic about the survival of newspapers, aside from The New York Times, The Wall Street Journal and The Washington Post.