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Billionaire Warren Buffett has bailed on the news industry. His holding company, Berkshire Hathaway, is selling its stable of 31 newspapers to the Iowa media operation Lee Enterprises for $140 million in a deal announced Wednesday morning.
Buffett’s decision to offload his newspaper investments shouldn’t come as a surprise, even as he has long been regarded as a savior of local news. The 89-year-old investor was particularly pessimistic about the state of the business last April when he bluntly described newspapers as “toast” in an interview with Yahoo Finance. “They’re going to disappear,” he said.
But one aspect of the sale is somewhat curious — that Buffett is offloading the Buffalo News.
It had always seemed as if Buffett had a soft spot for the paper, which he has owned since 1977 and whose former longtime publisher, Stanford Lipsey — who died in 2016 — was an old friend and business associate. Two years ago, in a move that would presage today’s sale, Buffett announced that Lee would manage Berkshire Hathaway’s stable of local newspapers, including the
Employees of the News were taken off guard by Wednesday’s announcement. The paper’s executive team only found out about the sale just before the news broke earlier today, according to a newsroom source who spoke to Mediaite on the condition of anonymity. “So there was a tense and hastily summoned newsroom meeting this morning in which they gave out free donuts and tried to assure everyone that Warren Buffett loves the paper too much to sell it to a company that would gut it,” the source told Mediaite.
For his part, Buffett was sanguine about the sale. “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,” he said in a statement announcing the deal. “No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee.”
Berkshire Hathaway, which did not respond to a request for comment, financed the acquisition with a $576 million loan to Lee at an annual interest rate of 9 percent.
In the statement, Lee said it had “identified approximately $20-25 million of highly achievable annual synergies, including revenue synergies from the management of digital advertising and subscriber programs, and cost synergies, primarily from the reduction of administrative expenses.”
A spokesperson for
This morning, the Buffalo Newspaper Guild released a strongly worded statement in response to the sale.
“We are shocked and deeply concerned about the sale of @TheBuffaloNews to Lee Enterprises. We care deeply about all the employees here that this affects, including the more than 200 staffers represented by the Guild,” the Guild said in a statement posted to Twitter. “Our leadership team is meeting, and we are in the process of researching and sharing what this means for our members. We will continue to do everything possible to safeguard the outstanding local journalism product that our @BuffaloGuild colleagues produce.”
Guild president Sandra Tan, a reporter for the News, told Mediaite in a phone interview this afternoon that there are “lots and lots of questions that need to be answered,” adding: “We have no idea what it means specifically for us at the Buffalo News.”
It seemed as if Tan was still adjusting to the fact that Buffett had given up on the paper he has owned for the past 43 years. “It was very surprising to find that the Buffalo News has been sold along with all of the other papers that Berkshire Hathaway owns,” Tan told Mediaite. “That was really a part of the shock for everybody.”