The Daily Progress and the Richmond Times-Dispatch are under new ownership.
Lee Enterprises Inc. completed the purchase of BH Media Group and of The Buffalo News in New York from Warren Buffett’s Berkshire Hathaway Inc. on Monday. The sale, announced in late January, was for $140 million in cash.
The deal added 30 daily newspapers, including The Progress and nine other daily newspapers in Virginia, as well as more than 49 paid weekly publications and 32 other print products from BH Media.
Davenport, Iowa-based Lee Enterprises had managed the publications for Berkshire Hathaway since July 2018.
Lee Enterprises now owns and operates 77 daily newspapers, including those in St. Louis; Davenport; Lincoln, Nebraska; Madison, Wisconsin; Billings, Montana; and Tucson, Arizona.
As part of the deal, Berkshire Hathaway becomes Lee Enterprise’s sole lender, providing about $576 million in financing to Lee at a 9% annual rate for 25 years with no performance covenants. The proceeds were used to pay for the acquisition, to refinance Lee’s existing debt of about $400 million and to provide cash to allow for the termination of Lee’s revolving credit facility.
The sale does not include the real estate properties of the newspapers. Berkshire Hathaway continues to own those properties, including production equipment, and is leasing them to Lee Enterprises under a 10-year agreement initially for $8 million a year.
After eliminating the management agreement and adding operating expenses from the lease agreement, the transaction is expected to drive an 87% increase in revenue and a 40% increase in adjusted operating profit, Lee Enterprises said.
Lee Enterprises also expects to have between $20 million to $25 million in revenue and cost synergies from combining the operations.
“This transaction reinforces our conviction in the value and power of local news, adding 31 publications with deep roots in their communities, enabling Lee to serve even more readers and advertisers,” Mary Junck, chairwoman of Lee Enterprises, said in a statement.
“Further, this transaction allowed Lee to address our long-term debt on attractive terms while deepening our relationship with Berkshire Hathaway — now our sole lender — to enable more flexibility as we continue to invest in our business with a digital-first mindset,” she said.
Kevin Mowbray, president and chief executive officer of Lee Enterprises, said the company is looking forward to leveraging its knowledge of the BH Media newspapers after managing the portfolio since July 2018 to drive further efficiencies across its expanded and integrated operation.
“We are confident that we have the right strategy and operational expertise to realize the full benefits of this transaction for our readers, advertisers, shareholders and communities we serve.” Mowbray said in a statement.
Berkshire Hathaway, the Omaha, Nebraska-based conglomerate managed by Buffett, acquired The Daily Progress and 63 other newspapers and related real estate properties from then-owner Richmond-based Media General Inc. in 2012. Berkshire Hathaway bought The Buffalo News in 1977.
In Virginia, BH Media owned The Roanoke Times, Bristol Herald Courier, News & Advance in Lynchburg, Martinsville Bulletin, Danville Register & Bee, The Free Lance-Star in Fredericksburg, Culpeper Star-Exponent and The News Virginian in Waynesboro, in addition to The Progress and Times-Dispatch.