Media General to sell most of its newspapers to Warren Buffett’s Berkshire Hathaway
Marketwatch | Omaha World-Herald | Richmond Times-Dispatch
When Warren Buffett said earlier this month that his Berkshire Hathaway might be buying more newspapers, he meant: right now. Media General announced this morning that it would be selling its newspapers, except its Tampa properties, to Berkshire Hathaway. The Tampa properties, which compete with Poynter's Tampa Bay Times, are being considered by another company, according to the press release. Halifax Media is a likely contender for the Tampa papers, as it now owns other papers nearby after buying 16 regional papers from the New York Times Company.
Media General announced in February that it was exploring the sale of its papers. During an April conference call about its first quarter results, CEO Marshall Morton said, “Our future is as a broadcast and digital company.”
Media General will receive $142 million cash for its 63 papers and a $400 million loan that will allow the company to pay off its debt, which was becoming increasingly problematic.
Last November, Buffett's company bought his hometown paper, the Omaha World-Herald.
The Omaha World-Herald reports:
At Berkshire's shareholders meeting May 5, Buffett was asked by a shareholder whether The World-Herald purchase involved “self-indulgence,” given the fact that Buffett loves newspapers and reads several each day.
Buffett replied that while newspapers are no longer the only source for some types of news, such as stock prices and major league sports scores, they still deliver news and advertising information that people can't find elsewhere. He said he wanted to buy more newspapers in cities where people are interested in their communities.
“The World-Herald tells me every day things that I can't find out elsewhere,” Buffett said at the meeting. “Most of those items, overwhelmingly, are local. They do tell me a lot about my city, about local sports, my neighbors, about things I want to know.”
In today's release, the billionaire investor reiterated his faith in journalism:
"In towns and cities where there is a strong sense of community, there is no more important institution than the local paper," said Warren Buffett, Chairman of Berkshire Hathaway. "The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway."
BH Media president Terry Kroeger and Douglas Hiemstra, an executive at the Omaha World-Herald Company, met with Times-Dispatch employees at their downtown Richmond newsroom Thursday. He had a message from Buffett: "Tell those people I wish I was there and I did this because I love newspapers." Hiemstra, who will be in charge of the transition, told the staffers Berkshire Hathaway didn't generally make cuts to staff after it bought something.
"I’ve walked through the building three or four times, and they're
smiling," Times-Dispatch publisher Tom Silvestri said of the paper's
staff when reached by phone, "because we have certainty, and they’re
smiling because we have a company that believes in not just newspapers
but also digital transformation." Silvestri said he was pleased by the
staffers' reactions: "To see them come downstairs and cheer the new
owners, I think that’s the best we can ask for at this point." He
doesn't foresee any changes for the paper at the moment. Well, maybe
one: "We’re gonna make sure Cherry
Cokes are in our refrigerator."
In an interview with the World-Herald, Buffett said there was no bidding war for the papers because Berkshire Hathaway could also refinance Media General's debt: "We came up with a solution to all of their problems, and they knew we were good for it," he told Steve Jordon. Buffett paid $200 million for the World-Herald last November; but "The Media General purchase price also reflected Berkshire's ability to resolve Media General's debt problems," Jordon writes.
The papers had another appeal to Buffett, he told Jordon:
“They're in good communities,” he said, and it's important that their potential readers care about their communities. “People buy papers to learn something that they don't know that they want to know.”
Berkshire Hathaway also owns The Buffalo News and is the largest shareholder of The Washington Post Co.
The deal is expected to close June 25.
Andrew Beaujon contributed to this report.