Buffett’s Berkshire Hathaway Makes Print Play, Acquires 63 Media General Newspapers
RICHMOND, VA—May 17, 2012—Media General has signed agreements with Warren Buffett’s Berkshire Hathaway investment firm for the purchase of newspapers and new financing. A subsidiary of Berkshire Hathaway, BH Media Group, will purchase all of the newspapers owned by Media General, with the exception of the Tampa group, for $142 million in cash.
The newspapers being purchased include 63 daily and weekly titles in Virginia, North Carolina, South Carolina and Alabama, in addition to digital assets, including websites and mobile and tablet applications. The newspapers also have a substantial commercial printing business.
Under a separate credit agreement, Berkshire Hathaway will provide Media General with a $400 million term loan and a $45 million revolving credit line. The new loan will be used to fully repay the company’s existing bank debt due March 2013 and will mature in May 2020.
“These newspapers are great institutions and powerful brands in their respective markets,” said Terry Kroeger, president of BH Media Group. “We are honored to have the opportunity to work with our new colleagues as we continue to produce top-notch news and advertising products in both print and digital platforms.”
The Media General newspapers will be part of BH Media Group, along with the Omaha World-Herald Co. newspapers. World Media Enterprises will manage the Media General newspapers.
“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” said Warren Buffett, chairman of Berkshire Hathaway. “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.”
Marshall N. Morton, president and CEO of Media General, added, “Selling our newspapers represents a monumental change for us. We’re very happy that our newspapers will become part of Berkshire Hathaway’s BH Media Group, a company with a strong commitment to local news leadership and community engagement. 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.”
“We are extremely pleased to enter into a new financing partnership with the highly respected Berkshire Hathaway organization. Our new credit agreement addresses Media General’s long-term capital needs and provides the company with significant financial and operating flexibility,” continued Morton.
Media General said that in recent years its model has shifted toward its broadcast and digital businesses. Broadcast television accounted for 77 percent of total platform cash flow for the full year 2011; in the first quarter of this Political year, it accounted for 87 percent. Morton said Media General is capitalizing well on this year’s event-driven revenue opportunities in broadcast.
The newspaper transaction is expected to close on June 25. A transition will take place over several months, in coordination with Media General personnel. World Media Enterprises president Douglas Hiemstra will closely oversee the transition and operations of the acquired newspapers for Berkshire Hathaway.
About Media General
Media General is a leading provider of news, information and entertainment across multiple media platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern United States. Following the sale of newspapers to Berkshire Hathaway, the company’s operations will include 18 network-affiliated television stations and their associated websites. Media General owns eight NBC affiliates, eight CBS, one ABC and one CW. Six of its stations operate in the Top 40 markets in the United States, including WFLA-TV in Tampa, Florida, the country’s 14th largest DMA. Media General’s stations reach more than one-third of TV households in the Southeast and more than 8 percent of U.S. TV households. Media General expects to enter into a transaction with one of several prospective buyers for its Tampa, Florida print properties.
Source: Media General.