Berkshire Hathaway agreed to pay $142 million for Media General’s newspapers, as investor Warren Buffett bets community-focused publications will weather an advertising slump.
Berkshire will also provide Media General a $400 million term loan with an interest rate of 10.5%, MEG said today in a statement. The deal includes all of the company’s newspapers except for the Tampa Tribune group, according to Bloomberg News.
In recent trading, MEG rocketed 37%, to$4.33 a share. Other newspaper publishers were mixed, however: GCI was down 2 cents, to $13.33.
Earlier: For many, Buffett says, advertisements are the "most important news."
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In recent trading, MEG rocketed 37%, to$4.33 a share. Other newspaper publishers were mixed, however: GCI was down 2 cents, to $13.33.
Earlier: For many, Buffett says, advertisements are the "most important news."
Community Newspapers are not dead. They will adapt. In the past newspapers served a real need in most places, publishing news and facts while keeping their opinions on the editorial page. Professional journalists made the papers what they were instead of the blogosphere, hate radio and biased TV news networks.
ReplyDeleteI worked for USAT and a local Gannett paper for 17 years, then the last 6 at Media General, have been so happy since leaving Gannett in '06
Buffet is no fool. In the end he will make money on this. He only paid $162 million for 63 papers. That is a bargain basement price. Reading between the lines Media General was up the creek without a paddle as evidenced by the low price and the loan to repay a bank debt. You can be sure thier other assets are worth the loan value. The price of $162 million means an average of 2.5 million a paper. I would certainly have thought the RTD was worth more than 2.5 million.
Think he'd have interest in a national newspaper?
ReplyDeleteOn Romenesko:
ReplyDelete"The Tampa Tribune isn’t included in the deal; Media General says it’s talking to people interested in that paper."
Either Halifax or Gannett, IMHO.
"Either Halifax or Gannett, IMHO."
ReplyDeleteMore speculation. Just what people need.
11:35, it's Buffett. Two T's. Two. Count them. He's the main person in the story. Is it so hard?
And so newspapers slowly return to the province of plutocrats, as they had been for the previous centuries save for the past few decades. Newspapers are no different - business-wise - than an office building or strip mall. Once the value has been extracted and tax advantages used, the property gets sold and the process begins again.
ReplyDeleteNotice that Buffett does what he's always done, which is buying when everyone else is selling. And NO ONE is paying for newspapers. They're capital-intensive and labor-intensive. Who needs that?
The declining value of newspapers is due to the declining ENTERPRISE value. But the UNDERLYING value is the archives, print and photo. This is what Buffett is buying.
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ReplyDeleteAnon@1247: Because of FCC rules on cross-ownership, Gannett can't buy the Tampa Tribune without having to sell WTSP-TV.
ReplyDelete10.5% interest? That's like borrowing from a Shylock.
ReplyDeleteBuffett will indeed make money, but the ROI is not strong. He can afford to be sentimental, but can't be around forever. His successor at Berkshire Hathaway will likely dump all papers.
ReplyDeleteRE: Cross-ownership rules . . .
ReplyDeletesee the Telecommunications Act of 1996, which relaxed this provision.
Media cross-ownership is EVERYWHERE. Here in Phoenix, The Republic and KPNX are both owner by Gannett. In Tampa, The Tribune and WFLA are both owned by Media General. As in Phoenix, both operations share the same building.
The only reason anyone thinks media cross-ownership is a problem is because Murdoch had to sell the Boston Herald when News Corp wanted to buy a Boston TV station back in the 1990s. The cross-ownership "ban" is sometimes known as the "Ted Kennedy rule".
Cross-ownership is supposed to be periodically reviewed for "public interest" reasons.
GCI already owns WTSP in the Tampa market. Any potential deal for their paper would have to pass FCC scrutiny.
ReplyDeleteThose FCC rules are dinosaurs in today's Internet-driven news market.
ReplyDelete