Several people have called my attention to Warren Buffet’s sale of his newspaper empire, the BH Media Group of his Berkshire Hathaway conglomerate. I’m not surprised at his action, which includes the Omaha World Herald, his home town publication.Despite a professed love for newspapers and newspaper people, Buffet is always a business man first, and a legendary one, too, noted for his astuteness.

The purchaser of the Oracle of Omaha’s 30 daily papers is Lee Enterprises, whose headquarters is just a few hundred miles to the east in Davenport, Iowa. The Lee company already prints 46 daily newspapers in 21 states, as well as 300 weeklies, classified and specialty publications. Besides Buffet’s dailies, Lee will pick up 100 weeklies Buffet owned in the Midwest and southeast.

Since 2018, Lee has managed Buffet’s papers in exchange for a $5 million annual fee and a cut of the profits above a set benchmark level.

As the Markets Insider said: the deal ends Buffet’s dalliance with being a news mogul. But a year ago, Buffet signaled his feelings when he claimed newspapers were “toast.”

Frankly, the sale of the Washington Post by the Graham family a few years ago to Jeff Bezos, the owner of Amazon, shook me more than this one. Buffet held a sizable minority interest in the Post. When he bought-in, he wrote a letter to Kathrine Graham, publisher of the Post, saying his stock buy was a business deal only and he would not interfere in any way with editorial operations. The two became close friends and bridge partners.

It was the same with papers Buffet’s BH Media Group owned, including the Winston-Salem Journal in North Carolina, the Waco Tribune-Herald in Texas, the Richmond Times-Dispatch in Virginia, and the Buffalo News in New York. His interest was always in the financial operations, where advertising and circulation revenues are rapidly declining in the new digital age.

So, Let’s look at his wizardry in the sale to Lee. It would seem on the surface that Buffet was a loser since his sale of his papers to Lee for $140 million was a fraction of at least $380 million he spent on acquisitions. At the same time, however, Buffet is loaning Lee $576 million at 9 per cent interest annually for 25 years. If Lee pays off the interest in full each year, Buffet could net close to $1.3 billion.

It’s problematic that Lee, as a newspaper corporation, will be around a quarter of a century from now given the increasing signs of demise of the industry. Buffet, 89 years old, certainly won’t.

So, it goes!

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