The Buffalo News is now part of Lee Enterprises.
Lee's deal to buy 31 daily newspapers, including The News, from Berkshire Hathaway and its BH Media Group closed on Monday, making Lee the third owner of the paper in its 140-year history. The deal ends Berkshire's 42-year run as the owner of The News.
The $140 million deal, first announced in late January, nearly doubles Lee's audience size and also adds more than 49 weekly publications to its group of 77 publications. Lee had managed all of the 30 newspapers owned by Berkshire, except for The Buffalo News, since the summer of 2018.
“We are pleased to complete this compelling and transformative transaction, which enhances Lee’s position strategically, operationally and financially. This transaction reinforces our conviction in the value and power of local news," said Mary Junck, Lee's chair, in a statement.
Even with the sale, Berkshire will retain important financial ties to Lee as its sole lender. As part of the deal, Berkshire is providing Lee with $576 million in long-term financing at an interest rate of 9%. That will allow Lee to refinance its $400 million in existing debt and save about $5 million a year in interest expense.
"This transaction unlocks new opportunities to grow our top line and further accelerate our digital transformation," said Kevin Mowbray, Lee's president and CEO.
The deal is the latest in a wave of consolidation that has swept through the newspaper industry, which has been stung by declining advertising revenue as competition from online providers, such as Facebook and Google, increases. In response, newspaper companies have been merging aggressively, attempting to better compete by getting bigger.
Lee expects to achieve $20 million to $25 million in annual revenue and cost synergies as it consolidates the two companies. Of that, the company expects about $5 million to come from revenue growth from digital advertising and subscriber programs; it expects to generate about $20 million in cost savings, mainly from lower administrative expenses.