Category Archives: BH Media

Berkshire Hathaway Completes Sale of Newspaper Assets to Lee Enterprises

(BRK.A), (BRK.B)

Berkshire Hathaway’s portfolio of newspapers now officially have a new home, Lee Enterprises. The company is a local news provider and leading platform for advertising in 77 markets.

Lee Enterprises has completed its acquisition of BH Media Group’s publications and The Buffalo News.

The acquisition nearly doubled Lee’s audience size and added 30 daily newspapers, more than 49 paid weekly publications with digital sites, and 32 other print products from BHMG, as well as The Buffalo News, to Lee’s portfolio of high-quality local publications.

Lee’s portfolio is now comprised of 77 publications in 77 communities.

Additionally, after the elimination of the management agreement and adding operating expenses from the lease agreement, the transaction is expected to drive an 87% increase in revenue, a 40% increase in adjusted EBITDA, and immediately reduce Lee’s leverage to 3.5x, even before $20-25 million in anticipated annual revenue and cost synergies.

As previously announced, and in connection with the transaction, Berkshire Hathaway provided approximately $576 million in long-term financing to Lee at a 9% annual rate.

The proceeds from the financing were used to pay for the acquisition and refinance Lee’s existing debt, and also allowed Lee to terminate its revolving credit facility.

Berkshire Hathaway is now Lee’s sole lender.

Mary Junck, Chairman, said, “We are pleased to complete this compelling and transformative transaction, which enhances Lee’s position strategically, operationally and financially. This transaction reinforces our conviction in the value and power of local news, adding 31 publications with deep roots in their communities, enabling Lee to serve even more readers and advertisers. Further, this transaction allowed Lee to address our long-term debt on attractive terms while deepening our relationship with Berkshire Hathaway – now our sole lender – to enable more flexibility as we continue to invest in our business with a digital-first mindset. We join our shareholders, publishers, employees and audiences in their excitement about this transaction and the opportunities that lie ahead for Lee.”

Kevin Mowbray, President and Chief Executive Officer, said, “Lee today leads the industry in digital revenue growth and operating performance, and this transaction unlocks new opportunities to grow our top line and further accelerate our digital transformation. After over 18 months of managing the BH Media Group publications, Lee looks forward to leveraging our deep knowledge of this portfolio to drive further efficiencies across our expanded and integrated operation. This transition, which is already underway, is underpinned by shared values and an alignment around our mission to deliver high-quality local news. We are confident that we have the right strategy and operational expertise to realize the full benefits of this transaction for our readers, advertisers, shareholders and communities we serve.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Special Report: Berkshire Hathaway to Make $1.3 Billion on Sale of Newspapers to Lee Enterprises

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Berkshire Hathaway’s sale of its BH Media newspaper empire to Lee Enterprises will get Warren Buffett and Berkshire out of the newspaper business, and the good news it won’t be at a loss. Berkshire Hathaway will make a bundle on the deal.

Berkshire is selling BH Media Group’s publications and The Buffalo News for $140 million in cash, and providing approximately $576 million in long-term financing to Lee at a 9% annual rate.

What’s more, Lee Enterprises will lease also the existing newspapers’ facilities from Berkshire, including assuming the maintenance and upkeep costs, giving Berkshire an additional long term revenue stream.

Anyone that worries about Berkshire’s ability to collect on its loan can take comfort that the deal actually strengthens Lee’s balance sheet.

The proceeds Lee receives from the Berkshire financing will be used to pay for the acquisition, refinance Lee’s approximately $400 million of existing debt, and provide enough cash on Lee’s balance sheet to allow for the termination of Lee’s existing revolving credit facility. The financing requires no fees, will result in approximately $5 million of interest rate savings on Lee’s refinanced debt annually.

The transaction is expected to drive an 87% increase in revenue for Lee Enterprises, a 40% increase in adjusted EBITDA and immediately reduce leverage to 3.4x before synergies. Based on Lee’s work managing BHMG publications over the last 18 months, Lee expects $20-25 million of anticipated annual revenue and cost synergies. As a result, Lee will benefit from a stronger financial profile and be positioned to de-lever more rapidly.

Subsequent to the deal closing, Berkshire Hathaway will be Lee’s sole lender, putting Berkshire in first position in case of default.

The deal will reduce Lee’s leverage from 3.5x to 3.4x, before any cost and revenue synergies. Lee has identified approximately $20-25 million of highly achievable annual synergies, including revenue synergies from the management of digital advertising and subscriber programs, and cost synergies, primarily from the reduction of administrative expenses. Lee expects to achieve the full synergy run-rate within 24 months of closing, which is expected in mid-March 2020, subject to customary regulatory approvals.

Lee Enterprises is a longtime favorite of Warren Buffett, and it has moved in and out of his portfolio at various points. Lee has managed BHMG’s publications since July 2018 under a management agreement, and Buffett was clearly positioning Berkshire to get out of the newspaper business, no matter how much affection he had for ink stained paper.

A Windfall for Berkshire

In the end, Berkshire gets out of a declining business that had negligible impact on its balance sheet, can look forward to $1.296 billion in interest payments on its loan to Lee, and another $80 million in lease payments for the 10 years of its lease agreement. There could be significantly more if those leases renew.

How does Buffett feel about it? 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. 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.”

Warren Buffett has built Berkshire Hathaway into a half-trillion-dollar conglomerate through acquisitions, but he’s not afraid to sell on occasion, especially when the deal means long term profits with no costs.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BH Media Making $10 Million Investment in North Carolina Plant

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Berkshire Hathaway’s media company, BH Media, is investing $10 million to expand its existing facility in Winston-Salem, North Carolina.

The 12,000-square-foot expansion includes a new building next to its current facility that will house a new press.

When the project is completed, the new press will print papers covering Morganton, Marion, Statesville, Hickory, Mooresville, Concord and Rockingham County.

BH Media publishes 31 daily newspapers and websites, and a number of associated weekly publications.

BH Media also owns operates WPLG, an ABC television affiliate in Miami.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BH Media Job Cuts Less Than First Reported

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The newspaper business continues to slide and Berkshire’s BH Media Group, which owns 31 daily newspapers,47 paid weekly newspapers and 32 print and on-line products. , has trimmed its workforce by 289 positions across its publications.

While the number most have reports have focused is 289, the number is actually far less, as 108 are vacant positions that will not be filled.

“While more readers than ever turn to our digital products, our digital revenue is not growing fast enough yet to offset print revenue losses from both advertising and circulation,” Terry Kroeger, president and chief executive of BH Media, wrote in a memo to employees.

Kroeger emphasised the cuts were need to preserve profitability.

“It is imperative that we take this action. Otherwise some of our operations will become unprofitable. And, like it or not, profitable news organizations are necessary to practice exceptional journalism.”

The company will also reduce the number of pages it will print in some publications.

BH Media cites slumping regional advertising, as one of the sources of its problems.

Just last week, HHGregg, a regional retailer of consumer electronics and home appliances with a strong presence in the Midwest, went belly up, and as retailers shutter brick and mortar stores, newspapers lose one of their major sources of display advertising.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BH Media Group Among Newspapers Outraged By New Browser That Substitutes Advertising

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A new browser that substitutes online publishers’ ads with its own ads, thereby denying site owners of revenue, has drawn the ire of a consortium of newspaper publishers, including BH Media Group.

Brendan Eich, one of the founders of Mozilla, is launching Brave, a new Web browser that substitutes its own ads for those of content creators.

The move immediately drew the wrath of newspaper publishers belonging to the Newspaper Association of America, including Newsday, McClatchy Company, The Washington Post, Dow Jones & Company, Gannett Co., Tribune Publishing, The New York Times Co., and Berkshire Hathaway’s BH Media Group.

In a joint letter they accuse Eich of engaging in behavior that takes their creative content and sells advertising in a manner that “everyone else has recognized that it would be blatantly illegal for one company to hijack all the content on the Web for its own benefit.”

They also state, “Your plan to use our content to sell your advertising is indistinguishable from a plan to steal our content to publish on your own website.”

As newspapers struggle with declining print readership, they count on online advertising to continue to keep them viable. Newspapers have invested hundreds of millions in recent years to develop and manage their online platforms.

“We publish some of the most highly valued and widely read sites on the Web. Our sites and mobile applications provide news reporting, photojournalism, video content and feature writing that is researched, reported, edited, and produced at extraordinary cost. Our industry spends more than $5 billion per year on reporting in the United States alone. We distribute that reporting online for free or at highly subsidized rates, in no small part due to revenue from online ads.”

In response, Eich says that the “NAA sent a letter to Brave Software that is filled with false assertions.” And claims that the “NAA has fundamentally misunderstood Brave. Brave is the solution, not the enemy.”

It is unlikely that Eich’s letter will draw any converts, and the whole matter looks headed to court.

The NAA threatened potential legal actions to protect their rights.

“We reserve the right to seek all remedies for this infringement, including but not limited to statutory damages of up to $150,000 per work pursuant to 17 U.S.C. § 504.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BH Media Group Adds Fredericksburg Newspaper to Virginia Print Media Outlets

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Berkshire Hathaway’s BH Media Group has acquired The Free Lance-Star, a newspaper serving Fredericksburg, Virginia. The paper was purchased from the investment firm Sandton Capital Partners, which picked up the paper through bankruptcy in June 2014.

BH Media Group acquired The Free Lance-Star daily newspaper, its website fredericksburg.com, the Star Weekly, and a commercial printing facility.

Published for more than 140 years, The Free Lance-Star has a Monday through Friday daily circulation of 36,991, Saturday circulation of 40,685, and Sunday circulation of 43,070. In addition, the Star Weekly newspaper has a total circulation of 79,400.

The acquisition gives BH Media Group a total of 37 newspapers, publications and websites serving Virginia.

In total, BH Media Group owns 73 newspapers and other titles located in 10 states, including: Alabama, Florida, Iowa, Nebraska, New Jersey, North Carolina, Oklahoma, South Carolina, Texas and Virginia. They also own and operate WPLG-TV, an ABC affiliate in Miami, Florida.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BH Media Partners With McClatchy’s Tru Measure

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BH Media Group’s digital ad agency, BH Digital Services, has formed a partnership with the McClatchy Company. BH Media will use McClatchy’s Tru Measure solutions to help run BH Digital’s offerings for small- to medium-sized businesses in local markets.

Tru Measure is a metrics-driven, technology services company that focuses on capturing consumer engagement generated from media and advertising. Its core products enable non-obtrusive collection of engagement analytics for all media types, including print, online, and mobile.

BH Media’s white-label brand will offer Tru Measure solutions that provide aggregated and consistent analytics in order to effectively optimize local advertising budgets.

Tru Measure was founded by Charity Huff in 2009, and acquired by the McClatchy Company in 2013.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BH Media Launches Midwest Agricultural News Website

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Berkshire Hathaway’s wholly-owned BH Media Group has launched a new website called agNET.net that focusses on agricultural news for the Midwest.

The website is a product of the Farm and Ranch family of publications. The focus of the website is agricultural news that directly impacts farmers, and has everything from reports on Federal legislation, USDA rule making, and international trade agreements, to farming tips such as “Tips and Tricks for Avoiding and Removing Ticks.”

News and information for the site is culled from BH Media’s publications throughout the Midwest, and additional news comes from wire services, including the Associated Press.

Robert Pore, who writes for BH Media’s The Grand Island Independent in Grand Island, Nebraska, is the site’s editor.

While agNET.net has a full-range of banner advertising and classified advertising, BH Media has also launched a sister site called agstuff.com, which focuses on the sale of agricultural equipment.

Playing to BH Media’s Strengths

BH Media owns 71 newspapers and other titles located in 10 states, and all of the newspapers are regional or community papers. With agNET.net, BH Media is showing that its focus on rural communities gives it new ways to reach often overlooked consumers, and the ability to create targeted online platforms to monetize that readership.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BH Media Group Picks Up Oklahoma Publications

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BH Media Group has added six Oklahoma weekly community newspapers, and one Tulsa-based business daily, to its growing print media empire.

The acquisitions come only three weeks after it acquired the Franklin News-Post, which covers Rocky Mount, Virginia, and the Martinsville Bulletin, which covers Martinsville, Virginia.

The Tulsa Business & Legal News, Broken Arrow Ledger, Sand Springs Leader, Coweta American, Wagoner Tribune, Owasso Reporter, and the Skiatook Journal were all acquired from Community Newspaper Holdings of Montgomery Alabama.

Each of the newspapers has a website in addition to its print version.

The seven newspapers purchased by BH Media give it a greater reach in the Oklahoma market, which already includes its ownership of the Tulsa World, the second highest circulation paper in the state after The Oklahoman.

The Tulsa Business & Legal News is a daily paper that focuses on business news, happenings and profiles in Green County. It publishes a print and digital version and runs the website TulsaBusiness.com. According to the paper, 79% of its readers have an income of over $100,000.

The six weekly’s circulations are all small, with the largest being the Broken Arrow Ledger at 22,500. The others are the Sand Springs Leader (circulation 4,500), Coweta American (circulation 3,000), Wagoner Tribune (circulation 4,000), Owasso Reporter (circulation 5,100), and the Skiatook Journal (circulation 2,800).

A Focus on Community News

BH Media Group focuses on community newspapers, which report on local government, police and fire calls, high school news and sports, community events, and operate in a different niche than major market newspapers.

BH Media Group currently has a portfolio of 73 newspapers and other titles located in 10 states, including Alabama, Florida, Iowa, Nebraska, New Jersey, North Carolina, Oklahoma, South Carolina, Texas and Virginia. They also operate WPLG-TV, an ABC affiliate in Miami, FL.

BH Media Group does not have a national news gathering operation. It uses wire service for national news, but does cover regional news and state governments, sharing that information across its newspapers.

To read a Special Report on BH Media Group’s revenues and acquisition strategies see BH Media Finds Multiples Success.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Continues to Snap Up Community Newspapers

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Newspaper acquisitions don’t make a lot of news these days, as the high-tech online content providers get most of the attention. Meanwhile, Berkshire Hathaway, through its BH Media Group, continues to snap up newspapers in small and medium-sized markets.

BH Media’ Group’s latest acquisitions are the Franklin News-Post, which covers Rocky Mount, Virginia, and the Martinsville Bulletin, which covers Martinsville, Virginia. The papers have a combined circulation of just over 17,000.

Martinsville Bulletin’s publisher, George Harris, is retiring after a 43-years working at the newspaper.

A Focus on Community News

The acquisitions are in line with BH Media Group’s emphasis on community papers that are still the go to source for local news, sports and events.

BH Media Group currently has a portfolio of 71 newspapers and other titles located in 10 states, including Alabama, Florida, Iowa, Nebraska, New Jersey, North Carolina, Oklahoma, South Carolina, Texas and Virginia. They also operate WPLG-TV, an ABC affiliate in Miami, FL.

BH Media Group does not have a national news gathering operation. It uses wire service for national news, but does cover regional news and state governments, sharing that information across its newspapers.

To read a Special Report on BH Media Group’s revenues and acquisition strategies see BH Media Finds Multiples Success.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.