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Media General is also receiving a $445 million loan from Berkshire Hathaway, in exchange for a 19.9 percent stake in the media company and a seat on its board.
Media General has sold 63 newspapers to Warren Buffett's Berkshire Hathaway for $142 million in cash, the struggling publicly-owned communications company announced Thursday.
BH Media Group, a division of Berkshire, is also extending a $445 million loan to Media General in exchange for a 19.9 percent stake in the company, which will still own 18 TV stations and several websites, Bloomberg Businessweek reported.
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The deal involves weekly and daily papers in the Southeastern United States, Tennessee and Ohio, including the Richmond Times-Dispatch and the Winston-Salem Journal, but excludes the company's Tampa Bay paper, which reportedly has other prospective buyers, the Tampa Bay Times reported.
This is not Buffett's first foray into the newspaper business: BH Media Group has owned the Buffalo News of New York for decades, and it bought the Omaha World-Herald, its home-town paper, in December, according to Bloomberg. Buffett's company also holds a 23 percent stake in the Washington Post Co., making it the media corporation's biggest shareholder.
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“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said in a statement, the Louisiana Daily Comet reported. “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.”
Buffett has also suggested there may be more newspaper deals in the company's future, telling investors at Berkshire's annual shareholders' meeting last month, “We may buy more,” according to the Comet.
Media General's shares increased $1.06, or 34 percent, to $4.20 in afternoon trading yesterday, according to Bloomberg. Share value opened at $4.25 Friday morning, and was down to $3.89 as of Friday afternoon, according to Yahoo! Finance.
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