Warren Buffett gets out of the newspaper business

Marco Green
January 29, 2020

Newspapers make up a small part of Berkshire Hathaway, which owns an assortment of more than 90 companies and holds major investments in companies like Coca-Cola Co., Apple and Wells Fargo. Lee Enterprises will buy Berkshire Hathaway's BH Media Group publications and The Buffalo News for $140 million, the company said Wednesday, Jan. 29, 2020.

Buffett, one of the world's richest people known for his investing acumen, said he agreed to sell to Lee, which has been managing the operations of BH Media since 2018.

Buffett's holding company Berkshire Hathaway said it would sell its BH Media Group publications and The Buffalo News for US$140 million (RM742.9 million) in cash to Lee Enterprises, which owns more than 40 USA daily newspapers and other print operations.

Lee has said 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.

Billionaire investor Warren Buffett announced plans today to sell his media operations including more than 30 United States dailies, following a high-profile bet on newspapers eight years ago.

Buffett tells shareholders on Berkshire's website that he has "no interest at all" in selling good businesses, and is "very reluctant to sell sub-par businesses" if they are expected to generate cash, be run well and have good labor relations.

As TWSJ notes, Berkshire has not yet responded to a request for comment on which criteria the company's newspaper business failed to meet, but it seems most likely it was the "generate at least some cash" part since it is selling to the management company running the business now.

Lee's portfolio will grow to 81 daily papers and almost double its audience size, the company said. The proceeds from Berkshire's financing will be used to pay for the acquisition and refinance Lee's approximately $400 million of existing debt.

The past decade has seen tremendous losses for the country's local and metro newspapers. Buffett owned the Omaha Sun in the 1970s that won a Pulitzer Prize, the highest honor in journalism.

Other reports by Click Lancashire

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