Lee Enterprises Inc. has joined with BH Media Group Inc. in an agreement for Lee to manage Berkshire Hathaway’s newspaper and digital operations in 30 markets, beginning July 2.
The agreement provides Lee with flexibility to implement revenue initiatives and business transformation consistent with how it manages its own newspaper and digital operations in 49 markets, while Berkshire Hathaway continues as owner of BH Media. Locally, the Bristol Herald Courier and TriCities.com are BH Media properties.
Warren Buffett, chairman and CEO of Berkshire Hathaway, said: “I love our newspapers and am passionate about the vital role they serve in our communities. 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,” Buffett said.
“We’ve known Lee Enterprises for years as a neighbor and industry partner,” said Mike Reilly, former executive editor of The World-Herald and vice president for news of BH Media Group. “I’m hopeful we can learn more from Lee in our shared challenges to deliver great journalism, advertising and customer service for print and digital readers.”
Mary Junck, executive chairman of Lee Enterprises, said, “Berkshire Hathaway has been a significant investor across our capital structures for years, most recently in the $94 million refinancing of our Pulitzer Notes, which we redeemed in 2015, two years ahead of schedule. Our relationship has been positive for both and has become a foundation for us to come together in this agreement.”
Kevin D. Mowbray, Lee president and CEO, said that the management agreement has an initial term of five years and that Lee will receive an annual fixed fee of $5 million plus a significant percentage of profits over benchmarks. He said the operating framework gives Lee broad latitude to manage, while strategic decisions will be agreed upon jointly. He noted that BH Media will retain editorial control, consistent with Lee’s policy of local editorial decision-making.
“In addition to the primary benefit of deploying Lee’s successful strategies at BH Media, this alliance provides a significant expansion of operating scale, adding 30 markets to our own 49,” he said. “Together, we will have new opportunities across the board, especially in digital sales, advertising customer relationships, shared services and contracts with vendors and suppliers.”
In addition to 30 daily newspaper and digital operations, BH Media Group includes 47 paid weekly newspapers with websites and 32 other print products, reinforcing its position as, like Lee, the primary source for local news, information and advertising.
