BH Media newspaper and digital operations in its 30 markets are now managed by Lee Enterprises under an agreement that took effect July 2.
The agreement provides Lee with flexibility to implement revenue initiatives and business transformation consistent with how it manages its own newspaper and digital operations in 49 markets, while Berkshire Hathaway continues as owner of BH Media.
Warren Buffett, chariman and CEO of BH Media parent Berkshire Hathaway, said the properties will benefit from what he said were the synergies with Lee and its record of innovation and growth.
“Lee Enterprises’ growth in digital market share and revenue has outpaced the industry,” Buffett said. “Lee also has led the industry in overall innovation and performance, all while faithfully fulfilling its public trust as an indispensable source for local news, information and advertising. Our missions and goals match exactly, our markets are similar, and we both have excellent managers. Operating together will strengthen both of us, and Lee is logical to lead the process.”
Lee Executive Chairman Mary Junck noted that the two companies have had a relationship going back several years.
“Berkshire Hathaway has been a significant investor across our capital structures for years, most recently in the $94 million refinancing of our Pulitzer Notes, which we redeemed in 2015, two years ahead of schedule,” Junck said. “Our relationship has been positive for both and has become a foundation for us to come together in this agreement.”
The Pulitzer Notes were related to Lee’s 2005 acquisition of Pulitzer Inc. for $1.46 billion in cash plus the assumption of $306 million of Pulitzer debt in the era of blockbuster newspaper deals.
Junck said the alliance with BH Media would enable Davenport, Iowa-based Lee to “generate more cash flow, speed our debt reduction, enhance our industry leadership and further advance our abilities as we introduce our digital and print strategies at BH Media properties.”
She said she was optimistic about the future of publishing, saying “many print opportunities remain and digital audiences and revenue continue to grow and flourish.”
Kevin D. Mowbray, Lee president and CEO, said the management agreement has an initial term of five years and that Lee will receive an annual fixed fee of $5 million plus a “significant percentage of profits” over benchmarks.
While the management framework gives Lee “broad latitude to manage,” Mowbray said, strategic decisions will be agreed upon jointly.
He noted that BH Media will retain editorial control, consistent with Lee’s policy of local editorial decision-making.
“In addition to the primary benefit of deploying Lee’s successful strategies at BH Media, this alliance provides a significant expansion of operating scale, adding 30 markets to our own 49,” Mowbray said. “Together, we will have new opportunities across the board, especially in digital sales, advertising customer relationships, shared services and contracts with vendors and suppliers.”
In addition to 30 daily newspaper and digital operations, BH Media Group includes 47 paid weekly newspapers with websites and 32 other print products.
The daily newspapers included in the management agreement are the following, listed by state:
ALABAMA: Dothan Eagle, Opelika-Auburn News
IOWA: The Daily Nonpareil, 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
NORTH CAROLINA: Winston-Salem Journal, Greensboro News & Record, The News Herald, Morganton and Landmark, Hickory Daily Record
OKLAHOMA: Tulsa World
SOUTH CAROLINA: The Florence Morning News
TEXAS: The Eagle, Bryan-College Station, Waco Tribune-Herald
VIRGINIA: Richmond Times-Dispatch, The Daily Progress, Charlottesville, The Roanoke Times, Bristol Herald Courier, News & Advance, Lynchburg, Martinsville Bulletin, Danville Register & Bee, The Free Lance-Star, Fredericksburg, Culpeper Star-Exponent, The News Virginian, Waynesboro.
Both companies noted the agreement excludes management of BH Media television assets, as well as Berkshire Hathaway’s separate newspaper, The Buffalo News.