Lee Enterprises is buying Berkshire Hathaway Media Group's newspaper publications, of which The Free Lance-Star is a part, for $140 million in cash, according to a news release Wednesday morning.
The deal includes 29 other BH Media newspapers as well as The Buffalo News. Lee will now own and operate 81 daily newspapers, nearly doubling its size from 50.
Berkshire Hathaway will provide approximately $576 million in long-term financing to Lee at a 9% annual rate, according to the release. The proceeds will be used to pay for the acquisition, refinancing of Lee's approximate $400 million of existing debt and provide cash to allow for the termination of Lee's revolving credit facility, the release said.
BH Media has papers in 10 states, including 10 in Virginia, owning an operating 30 daily newspapers and 49 weekly publications and 32 other print products.
In June of 2018, Lee took over managing all BH Media publications.
“This is a compelling and transformative transaction for Lee," Mary Junck, Lee’s Chairman, said in a news release. "It both refinances our long-term debt on attractive terms and provides new revenue opportunities as well as operational synergies across an expanded portfolio. We have enjoyed a strong, long-term relationship with Berkshire Hathaway, which has been a significant investor across our capital structure for years. As manager of BH Media for the past 18 months, we have developed a deep knowledge of these properties and tremendous respect for their operators. We know first-hand the power this acquisition brings for further accelerating our industry-leading digital revenue growth while maintaining our focus on delivering high-quality local news. We look forward to capturing the tremendous value of this transaction for readers, advertisers and shareholders.”
Warren E. Buffett, Berkshire Hathaway’s Chairman and CEO, 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. No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee. I am confident that our newspapers will be in the right hands going forward and I also am pleased to be deepening our long-term relationship with Lee through the financing agreement.”
Kevin Mowbray, Lee President and CEO, said: “Over the past 18 months, we have developed a strong bond and shared culture with the outstanding operators at BH Media. This highly collaborative relationship has driven digital and subscription revenue growth, margin expansion and continued innovation. We are confident we can achieve even greater success as one, integrated company. This unique transaction is immediately accretive to earnings, decreases leverage and provides compelling refinancing terms, while avoiding tens of millions in fees associated with traditional refinancing agreements and no intermediaries were involved. Most gratifying, it expands our partnership with a single long-term lender who shares our passion for the indispensable services we provide to our communities.”
The acquisition includes the following daily newspapers and their digital operations:
ALABAMA: Dothan Eagle, Opelika-Auburn News
IOWA: The Daily Nonpareil in Council Bluffs
NEBRASKA: Omaha World-Herald, The Grand Island Independent, Scottsbluff Star-Herald, The North Platte Telegraph, Kearney Hub, York News-Times
NEW JERSEY: The Press of Atlantic City
NEW YORK: The Buffalo News
NORTH CAROLINA: Winston-Salem Journal, Greensboro News & Record, The News Herald in Morganton, The McDowell News, Statesville Record and Landmark, Hickory Daily Record
OKLAHOMA: Tulsa World
SOUTH CAROLINA: The Florence Morning News
TEXAS: The Eagle in Bryan-College Station, Waco Tribune-Herald
VIRGINIA: Richmond Times-Dispatch, The Daily Progress in Charlottesville, The Roanoke Times, Bristol Herald Courier, News & Advance in Lynchburg, Martinsville Bulletin, Danville Register & Bee, The Free Lance-Star in Fredericksburg, Culpeper Star-Exponent, The News Virginian in Waynesboro.