Berkshire Hathaway has just unloaded its entire newspaper and print business in a deal estimated to be worth $140 million. Warren Buffet's multinational holding company announced that it has agreed to sell its newspaper business to Lee Enterprises in an all-cash deal.
The selloff of the company's business unit came as a surprise for most investors as Buffet himself has continually defended the profitability and stability of his newspaper empire. Buffet famously started out delivering newspapers when he was a teenager, years before he had amassed his wealth and established his empire.
However, Buffet likely realized the industry's rapid decline as the growth of the internet ate into its traditional revenue streams. In 2018, Buffet commented that the newspaper industry was likely "toast" and that only the largest ones will be able to survive in the coming decades.
Buffet specifically mentioned that papers such as The Wall Street Journal and the New York Times should be able to weather the storm thanks to their strong digital models. Apart from his own newspaper business, Buffet also heavily invested in other newspaper companies such as the Washington Post. The billionaire served as past the newspaper's board for over four decades.
The sale of Berkshire Hathaway's newspaper business will involve a total of 31 daily newspapers and 49 weeklies, all of which will be turned over to the new owner. The sale will even include the Omaha World-Herald, a daily newspaper circulated in Berkshire Hathaway's hometown in Nebraska.
Lee Enterprises is currently one of the largest publishing companies in the United States, publishing 46 daily newspapers in 21 states and 300 weeklies, classifieds, and specialty publications throughout the country. Since 2018, Lee Enterprises has been managing Berkshire's newspaper portfolio, with the exception of the Buffalo News. Following the announcement of the deal, Lee's stock prices skyrocketed to as high as 67 percent.
As part of the all-cash deal, Lee Enterprises has agreed in making Berkshire Hathaway its exclusive lender. The deal also involved the refinancing of Lee Enterprises' existing debt. Berkshire Hathaway also granted the company an additional $576 million loan at a fixed 9 percent interest rate.
Buffet mentioned in a previous statement that he has no interest in selling his newspaper empire unless the buyer was Lee Enterprises. The deal is expected to be closed by the middle of March this year.
Berkshire Hathaway's newspaper business is only a small portion of its empire, spanning 90 different businesses in various industries. These businesses include its BNSF railroad business and its Geico Auto insurance.
