Warren Buffett’s Berkshire Hathaway agreed to sell its newspaper enterprise to Lee Enterprises for $140 million in cash, leaving an industry the billionaire investor had long defended even as its financial prospects declined.
The deal consists of 31 daily newspapers and 49 weeklies along with the daily Omaha World-Herald in Berkshire’s hometown in Nebraska, Buffalo News in New York, Richmond Times-Dispatch in Virginia, and Tulsa World in Oklahoma.
Lee owns 50 daily newspapers along with the St. Louis Post-Dispatch and has since July 2018 managed Berkshire’s papers apart from the Buffalo News, which Berkshire purchased in 1977.
As a part of the transaction, Berkshire will also become Lee’s sole bank, refinancing the Davenport, Iowa-based firm’s existing debt and lending $576 million at a 9% rate of interest.
Closing is expected in mid-March. Lee shares doubled in early trading on Wednesday and had been last up 67% at $2.10.
Berkshire has over 90 operating businesses such as the BNSF line and Geico auto insurer and acquired most of its newspapers in the past decade.
While newspapers are a small unit of the conglomerate, it nonetheless stays unusual for Buffett, who delivered newspapers as an adolescent, to sell an entire working enterprise.
Buffett tells shareholders on Berkshire’s website that he has “no interest at all” in selling good businesses, and is “very hesitant to sell sub-par enterprises” anticipated to generate cash, be run properly and have functional labor associations.
However, he has regretted the newspaper trade’s decline, as the Internet deprives traditional newspapers of income streams.