Lee Enterprises announced that it is purchasing Berkshire Hathaway Media Group’s newspaper publications, including The Daily Progress, for $140 million in cash, according to a Wednesday morning news release.
The deal covers a total of 31 daily papers, including nine others in Virginia and the Buffalo News in Buffalo, NY. Berkshire Hathaway will provide Lee with approximately $576 million in long-term financing at a 9% annual rate as part of the purchase. The financing will restructure Lee’s existing $400 million debt and pay for the purchase, according to the release.
Lee expects the purchase provide $20 million to $25 million in revenue and cost synergies annually, the release said.
“This is a compelling and transformative transaction for Lee. It both refinances our long-term debt on attractive terms and provides new revenue opportunities as well as operational synergies across an expanded portfolio,” Lee Chairwoman Mary Junck said in the release. “We have enjoyed a strong, long-term relationship with Berkshire Hathaway, which has been a significant investor across our capital structure for years.”
BH Media in July 2018 entered a management deal with Lee for its 30 papers, in which Lee was paid to manage BH properties while BH retained ownership. Today’s purchase means Lee now owns 81 newspapers around the country.
Berkshire Hathaway Chairman and CEO Warren Buffett said in the release that Lee was the only buyer he considered.
“No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee,” he said, according to the release. “I am confident that our newspapers will be in the right hands going forward and I also am pleased to be deepening our long-term relationship with Lee through the financing agreement.”