Following the growing demand for automated marketing that is digital marketing by giant business corporates, Warren Buffett is selling his newspaper business for $140 million — a fraction of the $344 million he spent acquiring the daily papers less than a decade ago.
The billionaire investor’s Berkshire Hathaway conglomerate will hand over more than 30 daily newspapers, including the Omaha World-Herald and The Buffalo News, to the publisher Lee Enterprises.
Lee Enterprises took over management of Berkshire’s publications in exchange for a $5 million annual fee and a cut of profits above a benchmark level.
“We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges,” Buffett said in a press release.
He added that he and his investment partner, Charlie Munger, “have known and admired the Lee Organization for over 40 years” and that the publisher had managed Berkshire’s papers exceptionally well.
As part of the sale, Berkshire will provide Lee with $576 million in financing at a 9% annual interest rate for 25 years, allowing the publisher to pay off its existing debts and save about $5 million in interest each year. If Lee pays off the interest on the full amount each year, Berkshire could net close to $1.3 billion.
What does this signal from an investment expert of Buffet’s stature, this is the message being pass on in a layman’s language: – The traditional media of marketing are slowly losing touch at the expense of the rapidly growing Online Branding & Digital Marketing.
Buffett bought The Buffalo News for about $36 million in 1977 and added another 28 daily papers to Berkshire’s stable in the early 2010s. While he was wary of declining circulation and advertising revenue, he defended the papers as solid investments at the time.
However, as they say the only constant is change, the fourth industrial revolution is here and business will have to adjust fast to the changing technological advancements in order to gain a competitive advantage