CNBC's Brian
Sullivan, Kate Rogers, Dominic Chu and Contessa Brewer discuss Berkshire
Hathaway's sale of its newspaper business.
Warren Buffett’s Berkshire Hathaway
is leaving the newspaper business and selling its operations to publisher Lee
Enterprises for $140 million in cash.
The deal includes Berkshire Hathaway
Media Group and The Buffalo News, a paper covering western New
York and owned as a separate entity by Berkshire .
Lee said the purchase of Berkshire ’s newspaper
assets will “add significant size and scale” to its operations, lift its
portfolio of daily newspapers to 81 from 50 and nearly double its audience.
In
a statement released with Lee’s announcement, Buffett said: “My partner Charlie
Munger and I have known and admired the Lee organization for over 40 years.
They have delivered exceptional performance managing BH Media’s newspapers and
continue to outpace the industry in digital market share and revenue.”
“We had
zero interest in selling the group to anyone else for one simple reason: We believe
that Lee is best positioned to manage through the industry’s challenges,” he
added.
Lee said the acquisition will have an immediate boost to profitability
and will cut its leverage ratio — a measure of a business’s debt as part of its
total capital — before any cost and revenue synergies.
The deal will include
local news organizations such as the Omaha World-Herald in Nebraska
and the Tulsa World in Oklahoma .
Davenport, Iowa-based Lee Enterprises already owns outlets such as the St.
Louis Post-Dispatch and The Bismarck Tribune in North Dakota .
“This highly collaborative
relationship has driven digital and subscription revenue growth, margin
expansion and continued innovation,” Lee CEO Kevin Mowbray said in a release.
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