Lee Enterprises, Incorporated (NYSE: LEE) rose sharply Tuesday following news that it will manage Berkshire Hathaway’s (NYSE: BRK.A) newspaper and digital operations in 30 markets.
The agreement, which kicks in on Monday, provides Lee with flexibility to implement revenue initiatives and business transformation consistent with how it manages its own newspaper and digital operations in 49 markets, while Berkshire Hathaway continues as owner of BH Media.
Berkshire chair Warren Buffett said: "I love our newspapers and am passionate about the vital role they serve in our communities. Although the challenges in publishing are clear, I believe we can benefit by joining efforts.
"Lee Enterprises’ growth in digital market share and revenue has outpaced the industry. Lee also has led the industry in overall innovation and performance, all while faithfully fulfilling its public trust as an indispensable source for local news, information and advertising. Our missions and goals match exactly, our markets are similar, and we both have excellent managers. Operating together will strengthen both of us, and Lee is logical to lead the process."
Mary Junck, executive chairman of Lee Enterprises, said, “Berkshire Hathaway has been a significant investor across our capital structures for years, most recently in the $94-million refinancing of our Pulitzer Notes, which we redeemed in 2015, two years ahead of schedule. Our relationship has been positive for both and has become a foundation for us to come together in this agreement."
Lee shares galloped 75 cents, or 31.3%, to $3.15 early Tuesday morning, while Berkshire’s shares closed Monday at $284,640.00
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