Warren Buffett's newspaper group will be managed by Lee Enterprises, a larger group of community newspapers based in Davenport, Iowa, starting Monday.
The agreement between publicly traded Lee and Buffett's Berkshire Hathaway Inc. of Omaha represents a combination intended to enhance the newspapers' print and digital businesses, the two companies said in a press release Tuesday.
The press release said the five-year agreement gives Lee "broad latitude to manage, while strategic decisions will be agreed upon jointly." Berkshire's BH Media Group would retain editorial control of the newspapers, which the announcement said is consistent with Lee’s policy of local editorial decision-making.
“I love our newspapers and am passionate about the vital role they serve in our communities," Buffett said in the announcement, adding:
"Although the challenges in publishing are clear, I believe we can benefit by joining efforts. Lee Enterprises’ growth in digital market share and revenue has outpaced the industry. 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.”
Berkshire will retain its ownership of 30 local daily newspapers, including The World-Herald. Lee owns publication in 49 U.S. markets, including Lincoln. The agreement does not include Berkshires television properties or the Buffalo News in New York.
The Berkshire daily newspapers have lost 15 percent of their Sunday print circulation since 2015, down to a combined 765,000 at latest report. While their digital audience has grown, the alliance is intended to increase digital subscriptions and advertising revenue.
Following disclosure of the management agreement early Tuesday, Lee's stock price jumped by nearly 20 percent at the start of New York Stock Exchange trading, although it's down by half since March 2014 and down about 95 percent since March 2004.
Mary Junck, executive chairman of Lee Enterprises, said Berkshire has invested in Lee for years.
"Our relationship has been positive for both and has become a foundation for us to come together in this agreement,” Junck said. “This is an attractive strategic alliance for Lee, as it enables us 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.
"Also, we are honored to be trusted by Warren Buffett and Berkshire Hathaway, among the most admired business icons in history. The publishing business is in transition, to be sure, but we remain positive about our future, as many print opportunities remain and digital audiences and revenue continue to grow and flourish.”
Lee's president and CEO, Kevin Mowbray, said the agreement has an initial term of five years and Lee will receive $5 million a year plus a percentage of profits earned over a certain amount. Further details weren't immediately available.
“Together, we will have new opportunities across the board, especially in digital sales, advertising customer relationships, shared services and contracts with vendors and suppliers,” Mowbray said.
Berkshire's news division, called BH Media Group, operates 30 daily newspapers, 47 paid weekly newspapers and 32 other print products.
Besides The World-Herald, The Berkshire dailies are the Dothan Eagle and the Opelika-Auburn News in Alabama; the Daily Nonpareil in Council Bluffs; the Grand Island Independent, Scottsbluff Star-Herald, North Platte Telegraph, Kearney Hub and York News-Times in Nebraska; The Press of Atlantic City, New Jersey; the Winston-Salem Journal, Greensboro News & Record, The News Herald in Morganton, The McDowell News, Statesville Record and Landmark and Hickory Daily Record in North Carolina; Tulsa World in Oklahoma; the Florence Morning News in South Carolina; the Eagle in Bryan-College Station and the Waco Tribune-Herald in Texas; and, in Virginia, the 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, and the News Virginian in Waynesboro.
Lee has daily newspapers and nearly 300 weekly and specialty publications in markets including St. Louis, Missouri; Madison, Wisconsin; Billings, Montana; Bloomington, Illinois; and Tucson, Arizona.