Warren Buffett’s Berkshire Hathaway (BRK-A) is seeking the service of industry experts to revamp its newspaper business, which is a small part of the multi-billion-dollar empire, after a significant fall in circulation and advertising revenue last year prompted the company to embark on a headcount reduction recently.
Beginning next month, the newspaper and digital businesses of Berkshire company BH Media Group will be managed by Davenport-based Lee Enterprises (LEE), which owns popular regional daily St. Louis Post-Dispatch. As per an agreement signed between the companies, Lee will take over the operations in around 30 markets for a period of five years. The terms include a fee of $5 million to be paid annually to Lee, which will also receive a part of the profit on achieving certain milestones.
The deal is the continuation of Lee’s existing association with Berkshire, which has made significant investments in the former in recent years. While editorial control will continue to be vested in BH Media, major decisions will be taken jointly by both the parties.
Beginning next month, the newspaper and digital businesses of Berkshire company BH Media Group will be managed by Lee Enterprises
Meanwhile, the television business of BH Media and Buffett’s own newspaper Buffalo News have been excluded from the agreement, which requires Lee to take measures to boost revenue by enhancing readership and attracting more advertisers. Lee will also formulate strategies to transform BH Media’s newspaper business in line with its own operations that cover as many as 49 markets.
“I love our newspapers and am passionate about the vital role they serve in our communities. Although the challenges in publishing are clear, I believe we can benefit by joining efforts. Lee Enterprises’ growth in digital market share and revenue has outpaced the industry,” said Buffett. The Omaha-based investment guru runs 30 dailies, including Omaha World-Herald, Richmond Times-Dispatch and Winston-Salem Journal, and 47 weekly newspapers.
Lee expects to enhance its cash flow through the association, while also enjoying seamless access to the additional markets. Following the announcement, shares of Lee jumped around 25% in Tuesday’s early trading hours and reached the highest level in more than a year.