Deal includes 31 local daily news publications owned by Warren Buffet’s BHMedia Group

DAVENPORT, Iowa – News provider Lee Enterprises, Inc. of Davenport has entered into a definitive agreement with Berkshire Hathaway to acquire BH Media Group’s publications, including the Press of Atlantic City and its Current publications, $140 million in cash.

Lee Enterprises announced the acquisition today in a press release and held a conference call with employees Wednesday morning. The live webcast is accessible at www.lee.net/webcast.

Lee has managed BHMG’s publications since July 2018 under a management agreement. The transaction also includes The Buffalo News of Western New York.

“This is a compelling and transformative transaction for Lee,” Chairwoman Mary Junck said. “It both refinances our long-term debt on attractive terms and provides new revenue opportunities as well as operational synergies across an expanded portfolio. We have enjoyed a strong, long-term relationship with Berkshire Hathaway, which has been a significant investor across our capital structure for years. As manager of BH Media for the past 18 months, we have developed a deep knowledge of these properties and tremendous respect for their operators. We know first-hand the power this acquisition brings for further accelerating our industry-leading digital revenue growth while maintaining our focus on delivering high-quality local news. We look forward to capturing the tremendous value of this transaction for readers, advertisers and shareholders.”

“My partner Charlie Munger and I have known and admired the Lee organization for over 40 years,” Berkshire Hathaway Chairman and CEO Warren E. Buffett said. “They have delivered exceptional performance managing BH Media’s newspapers and continue to outpace the industry in digital market share and revenue. We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges. No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee. 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.”

Berkshire Hathaway is providing approximately $576 million in long-term financing to Lee at a 9% annual rate. The proceeds from the Berkshire financing will be used to pay for the acquisition, refinance Lee’s approximately $400 million of existing debt, and provide enough cash on Lee’s balance sheet to allow for the termination of Lee’s revolving credit facility. Subsequent to the deal closing, Berkshire Hathaway will be Lee’s sole lender.

Serving communities in 10 states, BHMedia Group owns the print and digital operations of 30 daily newspapers, and more than 49 paid weekly publications with digital sites and 32 other print products. BHMG had 2019 revenues of $373.4 million and adjusted EBITDA1 of $47.4 million., which is separately owned by Berkshire Hathaway. BHMG’s real estate (including permanently attached equipment) and cash are excluded from the acquisition.

The addition of Berkshire Hathaway’s robust portfolio of high-quality local publications will add significant size and scale to Lee’s operations, bringing its portfolio of daily newspapers to 81 from 50 and nearly doubling its audience size. The transaction is expected to drive an 87% increase in revenue, a 40% increase in adjusted EBITDA and immediately reduce leverage to 3.4x before synergies. Based on Lee’s work managing BHMG publications over the last 18 months, Lee expects $20-25 million of anticipated annual revenue and cost synergies. As a result, Lee will benefit from a stronger financial profile and be positioned to de-lever more rapidly.

The acquisition includes the following daily newspapers and their digital operations:

ALABAMA: Dothan Eagle, Opelika-Auburn News

IOWA: The Daily Nonpareil in Council Bluffs

NEBRASKA: Omaha World-Herald, The Grand Island Independent, Scottsbluff Star-Herald, The North Platte Telegraph, Kearney Hub, York News-Times

NEW JERSEY: The Press of Atlantic City

NEW YORK: The Buffalo News

NORTH CAROLINA: Winston-Salem Journal, Greensboro News & Record, The News Herald in Morganton, The McDowell News, Statesville Record and Landmark, Hickory Daily Record

OKLAHOMA: Tulsa World

SOUTH CAROLINA: The Florence Morning News

TEXAS: The Eagle in Bryan-College Station, Waco Tribune-Herald

VIRGINIA: Richmond Times-Dispatch, The Daily Progress in Charlottesville, The Roanoke Times, Bristol Herald Courier, News & Advance in Lynchburg, Martinsville Bulletin, Danville Register & Bee, The Free Lance-Star in Fredericksburg, Culpeper Star-Exponent, The News Virginian in Waynesboro.