Warren Buffett, who is considered the world’s greatest investor, is divesting his company’s ownership of all but one newspaper in what is being perceived as a lack of confidence in the industry’s future.
Buffett’s company Berkshire Hathaway will sell all its newspapers to Lee Enterprises which has been managing the papers for the company since mid-2018 for $140 million. Other newspapers in Berkshire’s collection include the Tulsa World in Oklahoma, the Richmond Times-Dispatch in Virginia and Buffett’s hometown paper the Omaha World-Herald in Nebraska. The company spent at least $376 million to acquire the papers over the years.
The announcement caught industry observers by surprise, as Buffett rarely sells any of his operating businesses. He told shareholders in 2018 that the company has “no interest at all in selling any good businesses that Berkshire owns.”
But as earnings have declined, Buffett made the decision to sell while the papers still had some value though there is still some risk for the company as it is lending Lee $576 million to help finance the acquisition and refinance existing debt.
“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,” Mr. Buffett said in a statement Wednesday.
Even though Buffett had owned the Buffalo News since 1977, he was part of a small club of billionaires who purchased distressed newspapers in the last decade — John W. Henry owner of the Boston Globe and Jeff Bezos owner of the Washington Post who were willing to accept little or no profit in exchange for the appreciation of the communities that they served.
Buffett’s exit will likely only accelerate the push for more industry consolidation and turning to a non-profit model neither of which is a guarantee for success in an industry that continues to shed readers and jobs alike.
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