Industries

Media General to sell newspapers to Berkshire Hathaway

  •  | 
Print this page

                                                             
Media General Inc. plans to sell almost all of its newspapers for $142 million in cash to a subsidiary of Berkshire Hathaway Inc., the Omaha, Neb.-based company run by legendary investor Warren Buffett.

“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said in a statement.  “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.”

As part of the deal, Berkshire Hathaway will provide Richmond-based Media General with a $400 million term loan and $45 million revolving credit line. The loan, which will mature in May 2020, has an initial interest rate of 10.5 percent. It will be used to repay Media General’s existing bank debt due next March.

The Berkshire Hathaway subsidiary, BH Media Group, will buy 63 daily and weekly newspapers in Virginia, North Carolina, South Carolina and Alabama plus their websites and mobile applications. Not included is The Tampa Tribune, which has seen its daily circulation drop 12 percent in the past year. Media General said it is talking with prospective buyers for the Florida newspaper.

BH Media Group will own eight daily newspapers in Virginia: the Richmond Times-Dispatch, The Daily Progress in Charlottesville, The News & Advance in Lynchburg, Bristol Herald-Courier, News & Messenger in Manassas, Danville Register & Bee, The News Virginian in Waynesboro and Star-Exponent in Culpeper.

BH Media Group already includes the Omaha World-Herald Co., Buffett’s hometown newspaper, which Berkshire Hathaway bought last year. The company also owns the Buffalo News in New York and is the largest owner of Washington Post Co. stock.

The recent purchases reverses a stance Buffett took in 2009 when he said he would not buy newspapers at any price.

The Media General deal is expected to close June 25. Berkshire Hathaway will receive warrants for about 4.6 million Class A shares representing almost 20 percent of Media General’s outstanding shares. In addition, Berkshire Hathaway has the option to nominate a director to Media General’s board of directors.

After selling its newspapers, Media General’s operations will include 18 network-affiliated television stations and their associated websites.

“Selling our newspapers represents a monumental change for us,” Marshall N. Morton, president and chief executive officer of Media General, said in a statement. “This single transaction for virtually all of our newspapers accelerates the timing of our strategy to focus on our broadcast television business and its future growth opportunities, including digital content and Mobile DTV.”

Morton also said the new credit agreement the company’s long-term capital needs and gives it significant financial and operating flexibility.

Media General announced in February it was exploring the possible sale of its newspapers after getting inquiries from several outside parties.

The company started Virginia Business in 1986 and sold it in 2009. The magazine now is a portfolio company of Richmond-based Virginia Capital Partners LLC.

 


Reader Comments

comments powered by Disqus


showhide shortcuts