Warren Buffett is giving up on his newspaper empire.
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Berkshire Hathaway agreed to sell its BH Media Unit and its 30 daily newspapers to Lee Enterprises, which publishes 46 newspapers across 21 states, for $140 million in cash.
“We believe that Lee is best positioned to manage through the industry’s challenges,” Buffett said in a news release. “No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee.”
The news does not necessarily come as a surprise: Buffett’s company tapped Lee in 2018 to manage its newspapers in hopes of boosting readership and ad sales as circulation declined. That same year, newspaper circulation in the U.S. fell to its lowest levels since 1940, according to the Pew Research Center. While digital readership did rise in 2018, it wasn’t enough to offset the overall decline in circulation.
The deal, expected to close in March, gives Lee $576 million in long-term financing at a 9 percent annual interest rate. Its shares climbed in pre-market trading before leveling off.
Included in the deal is the Omaha World-Herald, Buffett’s hometown newspaper, as well as North Carolina’s News & Record and Virginia’s Roanoke Times.
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Last year, Buffett -- who got a job delivering newspapers as a teenager -- said the newspaper industry gradually transitioned from “monopoly to franchise to competitive to toast,” largely because of declining advertising sales.
“The world has changed hugely,” he said.
In 2018, echoing some of his most recent comments, the Oracle of Omaha suggested that newspapers were destined to fail because they hadn’t figured out how to make a profit from their digital business models.
“If you look, there are 1,300 daily newspapers left,” Buffett told CNBC almost two years ago. “There were 1,700 or 1,800 not too long ago. Now, you’ve got the internet. Aside from the ones I mentioned, [most of them] haven’t figured out a way to make the digital model complement the print model.”