(2012-05-18) Berkshire Buys63 Newspapers

*Warren Buffett's Berkshire Hathaway Inc. agreed to buy 63 Newspaper-s from Media General Inc. for $142 million, significantly expanding Berkshire's presence in the depressed newspaper market.

Print Advertising in newspapers peaked at $48.6 billion in 2000, and today is less than half that, according to the Newspaper Association of America.

Media General's problems aren't solely the result of the decline of the newspaper industry. In 2006, the company bought four television stations from Nbc Universal for roughly $600 million. Mario Gabelli, whose investment fund owns about 35% of Media General's shares, said "they overpaid by a couple million," and the acquisition contributed to the current debt troubles.*

Note that Buffett left behind the group's Pension obligations.

• Jul10 update: David Carr's look at Newspaper finances notes that dodging Pension-s will drive additional Bankruptcy filings in the future...

May23 update: a letter from Warren Buffett to the employees of the purchased newspapers. Clay Shirky says: The actual text, however, merely makes it clear that Buffett doesn’t understand that business... Buffett wants to talk like a philanthropist and an investor at the same time, not understanding that the public good and the bottom line have diverged. A newspaper used to be both a profitable business and a public service, but this was just an accident of the competitive (or rather uncompetitive) media landscape. His commonsense approach to saving papers won’t work, because there is no longer any commonsense business model for a former monopoly that is still seeing its revenues erode faster than its costs.