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“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said in a statement.
Former paperboy and current Omaha, Neb., billionaire Warren Buffett is throwing the weight of Berkshire Hathaway Inc. behind the newspaper industry, buying the majority of Media General Inc.’s papers months after picking up his hometown publication.
Berkshire will spend $142 million in cash purchasing 63 daily and weekly papers, including the Richmond (Va.) Times-Dispatch and the Winston-Salem (N.C.) Journal, along with their commercial printing businesses.
Media General’s Tampa, Fla. papers, including the Tampa Tribune, aren’t included because the company is currently in talks with other prospective buyers.
The Berkshire deal also involves a $400-million loan to Media General and a $45-million credit line. In return, Buffett’s company gets what amounts to a nearly 20% stake and the option to nominate a director for Media General’s board.
The sale “represents a monumental change” for Media General, according to Chief Executive Marshall N. Morton, who said the Richmond, Va. company will begin focusing on its revenue-generating broadcast television business and digital content.
The Media General papers — as well as some websites, mobile and tablet applications — will be run under a newly formed Berkshire subsidiary: the BH Media Group. They’ll join the Omaha World-Herald newspaper that Buffett bought in November.
The investment guru also owns the Buffalo (N.Y.) News and a stake in the Washington Post.
Media General’s stock surged as much as 58% after the agreement was announced Thursday morning. In late morning trading in New York, the stock was up 40%, or $1.26, to $4.40 a share.
“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said in a statement. The Berkshire chairman was recently diagnosed with prostate cancer but has reassured shareholders that he feels fine and will have a successor ready if necessary.
The Media General deal is expected to close June 25.
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