Jan 29, 2020

Warren Buffett gives up on newspapers

Photo: Johannes Eisele/AFP via Getty Images

Berkshire Hathaway, the corporate holding company owned mostly by billionaire Warren Buffett, will sell its newspaper operations to publisher Lee Enterprises Inc. for $140 million, per a Wednesday announcement.

Why it matters: Buffett loves the newspaper business. His first job was a newspaper delivery boy for the Washington Post — and he has long been a vocal supporter of local news. The fact that he is finally giving up on the industry, which he has warned in recent years is "toast" due to terminal advertising decline, is significant and symbolic.

Details: The deal will expand Lee's newspaper audience by about 50% percent and add titles to its portfolio in new parts of the country.

  • The publishing conglomerate will acquire BH Media Group (BHMG) and the Buffalo News. BHMG owns 30 daily newspapers and more than 100 weekly publications in the Midwest and Southeast.
  • Included in the deal is the Omaha World-Herald, Buffett's hometown paper, as well as North Carolina's Winston-Salem Journal and Texas' Waco Tribune-Herald.
  • The deal, expected to close in March, gives Lee Enterprises $576 million in long-term financing at a 9% annual interest rate in order to help refinance its existing debt of $400 million. Its shares were up 57% in pre-market trading with the news.

The state of play: The deal isn't shocking to investors. Berkshire inked a deal with Lee in 2018 to have it manage those papers in order to produce efficiencies.

The big picture: The newspaper business has been in serious decline over the past two decades, coinciding with the rise of the internet. The internet has taken up much of the advertising market share that used to be owned primarily by print newspapers.

  • Regulators, aware of the realities that the newspaper and local media industries face in a digital world, have tried to level the playing field by trying to roll back decades-old rules that may be keeping them from growing, but their efforts have mostly been moot.

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National newspapers thrive while local outlets struggle to survive

Illustration: Sarah Grillo/Axios

While big national newspapers grow stronger, local newspaper chains that have for decades kept the vast majority of the country informed are combusting.

Why it matters: The inequity between giants like the New York Times and the Wall Street Journal and their local counterparts represents a growing problem in America as local communities no longer have the power to set the agenda for the news that most affects them.

Warren Buffett releases annual letter, reassures investors about future of Berkshire Hathaway

Warren Buffett. Photo: Daniel Zuchnik/WireImage

Warren Buffett released his annual letter to Berkshire Hathaway shareholders on Saturday morning, sharing investment reflections and eyeing the future of the Omaha, Nebraska-based holding company and the market at large.

Details, via Axios' Courtenay Brown: Buffett turns 90 this year, though there’s no indication he plans to step aside, there is speculation about Buffett’s successor. Berkshire also notably exited the newspaper business last month.

If Buffett's job splits, Berkshire Hathaway could be in for a makeover

Warren Buffett speaks to the press in Omaha, Nebraska in May 2019. Photo: Johannes Eisele/AFP via Getty Images

Warren Buffett turns 90 in August, and his holding company Berkshire Hathaway could be in for a stock-boosting makeover after he eventually retires, Andrew Bary of Barron's writes (subscription).

Why it matters: Many investors believe that new leadership could allow room for new value as the conglomerate breaks up, Bary writes — "or at least be more amenable to an idea that Buffett opposes."