OMAHA, Neb. β Berkshire Hathaway and Lee Enterprises β the company that owns the Arizona Daily Star β announced Tuesday that Lee is taking over the management of Berkshire Hathawayβs newspaper and digital operations in 30 markets.
The five-year management agreement between Lee and BH Media Group begins July 2.
Lee will receive an annual fixed fee of $5 million plus a significant percentage of profits over benchmarks, according to Lee President Kevin Mowbray.
βIn addition to the primary benefit of deploying Leeβs successful strategies at BH Media, this alliance provides a significant expansion of operating scale, adding 30 markets to our own 49,β he said.
Billionaire Omaha investor Warren Buffett, chairman and CEO of Berkshire Hathaway, said that, βalthough the challenges in publishing are clear, I believe we can benefit by joining efforts. Lee Enterprisesβ growth in digital market share and revenue has outpaced the industry.β
After the news Tuesday, Leeβs shares jumped 47 cents, or nearly 20 percent, to close at $2.88 per share in trading on the New York Stock Exchange. Berkshire Class A shares rose slightly to nearly $285,000 each.
The Omaha World-Herald, the Richmond (Virginia) Times-Dispatch and the Winston-Salem Journal in North Carolina are among properties owned by BH Media, which is based in Omaha with Berkshire Hathaway.
Leeβs larger daily papers include the St. Louis Post-Dispatch, the Lincoln (Nebraska) Journal Star and the Wisconsin State Journal.
The company is based in Davenport, Iowa.
Mary Junck, executive chairman of Lee Enterprises, said the alliance βenables us to generate more cash flow, speed our debt reduction, enhance our industry leadership and further advance our abilities as we introduce our digital and print strategies at BH Media properties.β
The contract excludes management of BH Media television assets, as well as Berkshire Hathawayβs separate newspaper, The Buffalo (New York) News.
