In a press release, Media General, based in Virginia, today announced an agreement with Berkshire Hathaway, for the latter to buy up dozens of Southeast daily and weekly news products.
There are some others going about this kind of media product collecting, but not at this massive rate. Buffett to buy 63 newspapers
Media General, Inc. (NYSE: MEG) today announced that it has signed agreements with Berkshire Hathaway, Inc., (NYSE: BRK.A and BRK.B) 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. Media General said it is in discussions with other prospective buyers for its Tampa print assets.The newspapers being purchased by BH Media Group 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.“These newspapers are great institutions and powerful brands in their respective markets,” said Terry Kroeger, president of BH Media Group.The newspaper transaction is expected to close on June 25.
An article from Warren Buffett's hometown paper's site, the Omaha World-Herald's Omaha.com, which his Berkshire Hathaway picked up in December 2011, offers some background and links to related stories:
Warren Buffett made good Thursday [May 17, 2012] on his promise to buy more newspapers, agreeing to buy 63 daily and weekly newspapers in the Southeast for $142 million from financially troubled Media General Inc. of Richmond, Va.Buffett said Thursday he may buy more newspapers. “Any time we can add properties we like, to management we like, at a price we like, we're ready to go.”
At the time he acquired the World-Herald, Buffett said he would not interfere with its editorial or news policies and he expected the newspaper company to continue doing its best work. He has a history of acquiring companies with good managers in place and letting them run their businesses with minimal control from his office. Berkshire owns about 80 businesses with more than 300,000 employees, and Buffett has said he and his 20-person office rely on each company's managers to conduct their businesses as if they were the owners. Buffett has often said that newspapers were an excellent business when the owner of a newspaper had “the only megaphone in town.” In 1992, before digital media arose, he said newspapers are “enormously valuable.” But in 2009 he said, “For most newspapers in the United States, we would not buy them at any price. They have the possibility of going to just unending losses.”
In three short and tumultuous years, Buffett significantly modified his opinion of the business value of newspapers, seeing this large purchase. I mention this without any suggestion of wishy-washiness on his part, because news media is an industry that is anything but stagnant. Especially after desktop publishing and the Web changed things in two massive ways during the 1990s, news media has been an increasingly tough gamble for investment.
No doubt, the price for these media products was enticing. Perhaps Buffett also went for this purchase since local "megaphones" (as he has called local papers) have taken a respectable footing in multimedia, and are treading water or swimming (and not drowning) financially, despite the vibrant growth of competing info-media, including television, the Web, blogs, and social media. I cite all of those as distractions from issue coverage as much as they can be legitimate sources of news. News is competing for attention with mind candy in all media -- such things as Dinner with Barack and "Keeping Up with the Kardashians" are not news, simply.
The site also noted some factors about the company handing over some operations to Buffett, which I find worth quoting:
“I think newspapers . . . have a decent future,” he said at the time. “It won't be like the past. But there are still a lot of things newspapers can do better than any other media. They not only can be sustained, but are important.” At Berkshire's shareholders meeting May 5, Buffett was asked by a shareholder whether The World-Herald purchase involved “self-indulgence,” given the fact that Buffett loves newspapers and reads several each day. Buffett replied that while newspapers are no longer the only source for some types of news ... they still deliver news and advertising information that people can't find elsewhere. He said he wanted to buy more newspapers in cities where people are interested in their communities.
Media General, with 18 network-affiliated stations, said Thursday it expects strong TV advertising revenue this year from the political campaigns, the Olympics and the Super Bowl. It said its television stations accounted for 77 percent of its cash flow in 2011 and 87 percent in the first quarter of this year. Media General originated as a newspaper company in Richmond in 1850 and later diversified into TV, selling stock as a public company in 1969. It has about 4,200 employees, having cut its workforce by nearly 35 percent since 2007. Its presses print more than 150 publications for outside customers, including some markets for the Wall Street Journal, the Washington Post and the New York Times. It has launched niche products, such as “Gotcha!,” which reports police incidents with mug shots of those arrested. And it has centralized some of its newspaper operations, producing the same national news pages for three of its daily newspapers at its Richmond office.
I can't help but connect this to other magnates, such as Sam Zell (to a lesser degree) and the Aussie media mega-magnate, Rupert Murdoch. This is an interesting move by the prolific and very diverse investor.
- Jon Osterholm
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