The Omaha World-Herald and several other local newspapers will soon no longer be under local ownership.

Lee Enterprises announced last Wednesday it is buying BH Media Group publications, along with The Buffalo News in New York, for $140 million in cash.

BH Media owns the Omaha World-Herald, Council Bluffs Daily Nonpareil and several weekly newspapers papers in the area, including the Bellevue Leader, Papillion Times, Gretna Breeze and Ralston Recorder.

The combined company will control most of Nebraska’s daily newspapers. In total, Davenport, Iowa-based Lee Enterprises will nearly double its audience, going from 50 to 81 daily newspapers.

While the acquisition is part of a larger, long-term trend toward consolidation in the newspaper industry, many outlets will still remain outside of the company.

The Daily Record is independent, privately held daily newspaper. Other independent local papers in the metro area include the Omaha Star, Omaha Catholic Voice, Omaha Jewish Press, The Reader, Mundo Latino Omaha, Douglas County Post Gazette and the Creightonian and Gateway college newspapers.

In greater Nebraska, a handful of daily papers also remain under independent ownership, such as the Norfolk Daily News and Hastings Tribune. The majority, however, will be owned by Lee Enterprises following this deal.

Lee already owned the Lincoln Journal Star, Beatrice Daily Sun, Columbus Telegram and Fremont Tribute, among other titles. BH Media Group’s Nebraska papers include the Kearney Hub, Grand Island Independent, North Platte Telegraph, York News-Times and Scottsbluff Star-Herald.

Buffett told Yahoo Finance last April that he believes the newspaper industry went from “monopoly to franchise to competitive to ... toast.” He said that national papers like the New York Times, Washington Post and Wall Street Journal would survive but that other papers are doomed to “disappear.”

Buffett’s comments last year prompted the union representing the World-Herald newspaper to change its Twitter profile photo to read “We Don’t Toast” – a pun on the Greater Omaha Chamber’s “We Don’t Coast” slogan.

Buffett’s Berkshire Hathaway bought the World-Herald in 2011. Prior to that, the newspaper group had been owned by employees – in fact, it was the largest employee-owned newspaper in the U.S.

In a statement last Wednesday, Buffett said he didn’t look to sell BH Media Group to anyone other than Lee Enterprises, which he said he has admired for decades. He said he’s confident the papers are going into the right hands.

“We believe that Lee is best positioned to manage through the industry’s challenges,” Buffett said. “No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee.”

Mary Junck, chairman of Lee Enterprises, said the company is looking forward to “capturing the tremendous value of this transaction for readers, advertisers and shareholders.”

Lee used the acquisition to refinance its long-term debt on attractive terms, it said. After the deal closes, Berkshire Hathaway will remain as its sole lender.

“This is a compelling and transformative transaction for Lee,” Junck said in a statement. “We have enjoyed a strong, long-term relationship with Berkshire Hathaway, which has been a significant investor across our capital structure for years.”

Lee has been operating as the manager of BH Media papers for about 18 months, which includes 30 daily newspapers, more than 49 paid weekly publications with digital sites and 32 other print products across 10 states.

Rick Edmonds, a media business analyst with The Poynter Institute, said this deal reinforces that the newspaper industry is out of favor with most investors.

“It’s a further unfortunate event for an industry that’s already been having a lot of tough times,” Edmonds said.

Lee said it expects the deal to close by mid-March. It said that it has identified about “$20-$25 million of highly achievable annual synergies.”

Newspapers make up a small part of Berkshire Hathaway, which owns an assortment of more than 90 companies and holds major investments in companies like Coca-Cola Co., Apple and Wells Fargo.

“I think Buffett is trying to clean some things up. These little pieces aren’t worth his time,” said Andy Kilpatrick, who wrote “Of Permanent Value: The Story of Warren Buffett.”

This report contains material from the Associated Press.

# # #

Updated: Media Company Backed by Hedge Fund Buys Nearly 6% Stake in Lee Enterprises

By Scott Stewart
The Daily Record

A national newspaper chain backed by a hedge fund invested in the new owner of the Omaha World-Herald and other local and state newspapers following news of the purchase last week.

MNG Enterprises Inc., which does business as Digital First Media, purchased a 5.9% stake in Lee Enterprises Inc. following Lee’s announcement that it was acquiring BH Media Group – publisher of the World-Herald, the Council Bluffs Nonpareil, metro area weekly papers and several Nebraska daily papers, among others – from Berkshire Hathaway last Wednesday.

Digital First Media is backed by Alden Global Capital LLC and is known for aggressive cost-cutting. They have overseen significant newsroom layoffs and buyouts at the Denver Post, Chicago Tribune, St. Paul (Minn.) Pioneer Press, Boston Herald and other papers they own or have invested in.

In a Securities and Exchange Commission filing about the purchase of Lee stock last Wednesday, MNG Enterprises said that it intends to engage in discussions with Lee “about certain operational and strategic matters,” including “the recently announced acquisition of Berkshire Hathaway’s newspaper operations.”

Meanwhile, the president of the labor union representing the World-Herald’s newsroom told the Wall Street Journal that the union had been seeking a local owner for the World-Herald prior to being “blindsided” by the announcement of the  sale to Lee Enterprises, which had been managing the World-Herald and other BH Media Group newspapers since 2018. The Journal reported that a portfolio manager with Berkshire Hathaway said the Lee deal came together quickly.

Todd Cooper, president of the Omaha World-Herald Guild, said in a statement shared on the union’s Twitter account that the process to seek a local owner had just begun.

The union sought the approval of Berkshire Hathaway chairman and CEO Warren Buffett, and Berkshire Hathaway approved approaches to specific would-be buyers, Cooper said in the statement.

“They knew about, and approved, an impending approach when they announced today they had decided to put the World-Herald into the hands of an out-of-state national chain,” Cooper said.

In a statement about the transaction with Lee Enterprises, Buffett said that he had “zero interest in selling the group to anyone else.”

Lee Enterprise Chairman Mary Junck said the media environment is evolving rapidly, but that her company will continue to focus on local news and information.

“It’s a compelling transaction that positions Lee for success,” Junck said in a conference call. “We are honored that Warren Buffett has again endorsed Lee for our track record of innovation and deep-rooted commitment to local news.”