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The
Lee Enterprises
Inc.
manage dozens of daily and weekly newspapers belonging to
Warren Buffett
Berkshire Hathaway
Inc.
early July 2, the company said Tuesday.
Lee, based in Davenport, Iowa, who owns newspapers and other print products in 21 states, said she would implement revenue strategies consistent with the way she manages its own operations. Berkshire will continue to own newspapers, which are currently held in a unit called BH Media Group Inc.
Lee's shares rose 19% to $ 2.85 in the middle of the session.
Under the agreement, which has an initial term of five years, Lee will receive annual compensation of $ 5 million, plus a percentage of adjusted annual profit of more than $ 34 million, according to a securities deposit. Lee said he expects to earn about $ 50 million in total costs over five years.
This arrangement underscores Mr. Buffett's disappointment with his newspaper division, which he says has declined faster than expected due to a loss of advertising and subscription revenues.
Lee will lead the print and digital operations of BH Media's 30 daily newspapers, 47 weekly pay and 32 other print products. It will not handle Buffalo News, which is owned by Berkshire but is run separately from BH Media, or Berkshire-owned WPLG TV in Miami.
BH Media General Manager
Terry Kroeger
will stay in Berkshire for a short transition period, according to a person familiar with the arrangement.
Mr. Buffett acquired most of Berkshire's newspapers, including his hometown Omaha World-Herald, in 2011 and 2012. At the time, he expressed his optimism that local newspapers would withstand some of the pressures that are confronted major newspapers.
However, in recent years, Buffett has said that expectations are wrong. For most US newspapers, "it's hard to see how the printed product survives over time," he told the Berkshire annual meeting in Omaha, NB, in May. "We will continue to search to see if there is a way to do it."
In a press release on Tuesday, Buffett praised Lee's growth in digital market share and revenue. "Although the challenges of publishing are clear, I believe we can benefit by joining forces," he said in a statement.
Berkshire newspapers have already faced rounds of layoffs. BH Media had 3,719 employees at the end of 2017, up from 4,194 the previous year, according to Berkshire's annual report.
-Colin Kellaher contributed to this article.
Write to Nicole Friedman at [email protected]
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