Warren Buffett’s Berkshirt Hathaway has announced plans to purchase 63 newspaper company’s from parent owner Media General Inc.
Media General is based out of Richmond, Virginia but plans to sell all of its newspapers in that area while holding onto its Tampa, Florida owned operations which includes the Tampa Tribune. Media General says that particular newspaper is in talks to be sold off to another outside vendor.
Buffett is spending $142 million to purchase the 63 newspapers which includes the Richmond Times-Dispatch and the Winston-Salem Journal
This is not the first foray into the newspaper publishing business for Berkshire Hathaway which also owns the Buffalo News of New York and which recently bought its own hometown paper the Omaha World-Herald.
While many newspapers around the world have witnessed declining revenues because of increased competition from the Internet, Berkshire has defended their business operations with Warren Buffett claiming that newspapers need to offer information that can’t be found elsewhere. The Berkshire Hathaway CEO also says newspapers must stop offering news for free online in order to increase their offline appeal for buyers.
The deal also includes a $400-million loan to Media General and a $45-million credit line which will give Berkshire Hathaway a 20% stake in the company and the right to nominate a director to the Media General board.
Warren Buffett started out his carrier as a paper boy, for some reason I have a feeling that buying 63 newspapers is a slightly different experience than delivering papers.
Are you surprised by Warren Buffett’s decision to buy up a whole lot of newspapers during a transition period for that particular media industry?