By Emily Greenhalgh
PBN Web Editor
RICHMOND, Va. – Media General – parent company of WJAR-TV NBC 10 – has signed an agreement with Berkshire Hathaway Inc. to sell the majority of its newspapers, the company announced Wednesday.
Berkshire Hathaway subsidiary BH Media Group will purchase all of the Media General newspapers, except for the Tampa group, for $142 million in cash.
Media General, which owns a number of television stations in addition to WJAR, reported revenue losses in eight of the last nine quarters, and said it was in discussions with other prospective buyers for its Tampa print assets.
“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” said Warren Buffett, chairman of Berkshire Hathaway.
“The many locales served by the newspapers we are acquiring fall firmly in this mold, and we are delighted they have found a permanent home with Berkshire Hathaway,” said Buffett.
The newspapers include 63 daily and weekly titles in Virginia, North Carolina, South Carolina and Alabama – including the corresponding websites, mobile and tablet applications.
“Selling our newspapers represents a monumental change for us,” said Marshall N. Morton, president and CEO of Media General.
“This single transaction for virtually all of our newspapers accelerates the timing of our strategy to focus on our broadcast television business and its future growth opportunities, including digital content and mobile DTV,” said Morton.
In the 2011 fiscal year, broadcast television accounted for 77 percent of Media General’s total platform cash. In the first quarter of 2012, it accounted for 87 percent.
Under a separate credit agreement, Berkshire Hathaway will provide Media General with a $400 million term loan with an interest rate of 10.5 percent and a $45 million revolving credit line.
The new loan will be used to fully repay the company’s existing bank debt - due March 2013.
As part of the credit agreement, Media General will issue Berkshire Hathaway penny warrants for 4.6 million Class A shares – 19.9 percent of the company’s existing shares outstanding.
Under the deal, Berkshire Hathaway also has the option to nominate a director to Media General’s board of directors.
The Media General newspapers will be part of BH Media Group, along with the Omaha World-Herald Company newspapers.
A sister company of the Omaha World-Herald Company, World Media Enterprises, Inc., will manage the Media General newspapers.
The deal is expected to close on June 25.