It was in a small box on Page 7 of the Missoula Independent (I couldn’t find it in the online version). Warren Buffett’s Berkshire Hathaway is paying Lee Enterprises $50 million over five years to manage its BH Media Group, a collection of 30 daily and 47 weekly newspapers.
Lee Enterprises owns daily newspapers in Billings, Missoula, Helena and Butte, the Ravalli Republic (printed Wednesday, Friday and Sunday) and the weekly Missoula Independent. Lee also publishes 42 dailies in 20 other states, almost all are in midsize markets, just like the papers it will be managing for Berkshire Hathaway.
This management agreement will affect the BH Media Group more than the Lee papers. Much of the production — layout, headline writing and photo cutlines, for example — will be centralized for the BH publications. Lee has been doing this for sometime (which explains the occasional weird headline or bizarre cutline).
No one can deny that the newspaper business has fallen on tough times. Perhaps this agreement will bring more revenue to all the papers in terms of economy of scale, and Lee is picking up some decent dollars for managing Buffett’s newspapers. There will undoubtedly be some layoffs at the Berkshire Hathaway publications as jobs are streamlined.
I was surprised when Buffett got into the newspaper business. Although many of the papers he purchased were most likely undervalued, it doesn’t seem like a growth industry. But what do I know? I mean look at the two stocks’ values. According to the Washington Post, Lee’s shares jumped 23 percent to $2.95 Tuesday afternoon. Berkshire Class A shares rose slightly to $286,000 each (emphasis mine).
We’ll have to wait and see if the quality of the Montana newspapers is affected by this new management arrangement.