◼ FINANCE Bloomberg Businessweek February 10, 202026
THEBOTTOMLINE Financiersarestillinterestedin newspapers,
but some journalists think the papers would be better off in the
hands of local owners or nonprofits.Hathaway’s 2018 annual meeting. “To the extent
we miscalculated, we may have done it because
we both love newspapers.”
Buffett’s exit wasn’t a total surprise. He was
already inching out the door: About 18 months ago,
Berkshire asked Lee, which owns the St. Louis Post-
Dispatch and more than 40 other dailies, to man-
age most of its papers. In a statement, Buffett said
he was confident that his newspaper empire was
in the right hands: “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’s former newspapers may soon find
themselves under pressure from other investors.
Just hours after the deal was announced, MNG
Enterprises Inc. disclosed it had bought a 5.9%
stake in Lee, becoming its third-largest shareholder,
and said it wanted to talk with Lee’s management
about the Berkshire deal, among other issues.
MNG is majority owned by Alden Global Capital,
a New York hedge fund, and has a stable of about
50 daily newspapers, including the Denver Post. It’s
gained a reputation for making deep cuts to news-
rooms, and its journalists once protested outside its
New York offices, carrying signs that read “Invest or
Sell Now” and “Stop Bleeding Our Newsrooms Dry.”
Alden didn’t respond to a request for comment.
Alden’s investment might be the start of a battle
for what to do with the Berkshire papers and other
Lee assets. Alden could buy a larger stake, gain
board seats, and pressure Lee to make further cuts
or sell. A year ago, Alden made an unsuccessful
takeover bid for the Gannett Co. newspaper chain.
Gannett was eventually bought by New Media
Investment Group Inc. In November, Alden bought
a 32% stake in Tribune Publishing, becoming its
largest shareholder. In response, two Tribune jour-
nalists published an op-ed in the New York Times
in January calling for a new “civic-minded local
owner,” saying Alden’s influence could lead to a
“ghost version of the Chicago Tribune.”
Alden is one of several Wall Street firms that have
gained control over the newspaper industry. Others
include Chatham Asset Management LLC, the larg-
est shareholder in McClatchy, publisher of the
Charlotte Observer and Miami Herald. New Media
Investment Group Inc., which became the largest
U.S. newspaper chain after the Gannett merger, is
managed and controlled by the private equity firm
Fortress Investment Group.
The financial firms’ strategy centers largely
around buying other newspapers to boost rev-
enue, then cutting costs by centralizing opera-
tions and laying off journalists. But some investorshave devised additional strategies to make money.
Alden also owns a real estate business that buys and
leases newspaper offices and printing plants. Apollo
Global Management, a private equity firm, issued
a loan to New Media Investment Group to buy
Gannett at an 11.5% annual interest rate, an even
higher rate than Buffett’s 9% loan to Lee. Fortress
collected about $20 million in both 2018 and 2019 for
managing New Media Investment Group, according
to Doctor, the media analyst. “If you can extract the
cash as you’re managing the decline, you can make
a lot of money,” he says. “But they do not posit a
long-term strategy and turnaround.”
Financial firms have also assumed control of
newspapers because they’re willing to shrink them,
Doctor says. “The reason you see them in the busi-
ness and not others is because they do the dirty
workofcontinuingtocutanoperation,”hesays.
Many newspapers were once owned or
controlledbyfamilieswhostayedintheindustry
for decades. Buffett had served as a bridge between
the old andnew generationsof owners.He
believedintheroleofnewspapersbutcouldstill
begimlet-eyed about the business. “If horses had
controlledinvestmentdecisions,therewouldhave
beennoautoindustry,”hesaidina shareholder
letter published in 2015.
Buffett didn’t breathe new life into his news-
papers the same way billionaires Jeff Bezos
and Patrick Soon-Shiong have since buying the
Washington Post and Los Angeles Times, respec-
tively. Buffett’s papers sometimes struggled to
embrace change, with his hometown newspaper,
the Omaha World-Herald, continuing to publish an
afternoon edition until 2016.
Journalists at the World-Herald didn’t want a
national chain to own them. Todd Cooper, who
leads the paper’s union, says they’d been in touch
with Buffett and his deputy Ted Weschler to see
if they would be willing to sell if the union could
find another buyer. They’d even started to petition
local foundations last year to take over the paper.
“We just felt that the best fit for journalism and the
future of journalism is either single local owner-
ship or ownership groups, or nonprofits, founda-
tions,” Cooper says.
He says he was blindsided by the news about
the sale to Lee. Buffett was an investor who had
long ties to the industry, yet even he wasn’t able to
make it work. “He loved journalism and probably
still loves it,” Cooper says. But “he’s totally a num-
bers guy.” —Gerry Smith and Katherine Chiglinsky“To the
extent we
miscalculated,
we may
have done
it because
we both love
newspapers”