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Still, Buffett is lending his hand to an American institution, in a move that matches his supportive investments into the U.S. banking system at the height of the financial crisis -- and a recent bet on the recovering auto industry.
While Berkshire's investments in preferred shares of financial heavyweights like
General Electric (GE) and
Goldman Sachs (GS) turned out to be wildly profitable and since have been redeemed by both companies, Buffett will face a challenge in turning Media General around, even after lending his financial support to the company.
Media General's sales have fallen steadily in the past four years and the company hasn't turned a profit since 2007. In that time span, Media General's shares have lost most of their value, falling from over $40 in 2007 to just $3.14 as of Wednesday's close.
"These newspapers are great institutions and powerful brands in their respective markets," said Terry Kroeger, president of BH Media Group, the Berkshire unit that will be responsible for the investment. The Media General newspapers will be added to BH Media Group's portfolio of assets that include the Omaha World-Herald. Kroeger joined Berkshire Hathaway through its acquisition of the
"Selling our newspapers represents a monumental change for us. We're very happy that our newspapers will become part of Berkshire Hathaway's BH Media Group, a company with a strong commitment to local news leadership and community engagement," said Media General chief executive Marshall N. Morton in a statement. The deal accelerates Media General's on its broadcast television business and new opportunities like digital content and Mobile DTV, added Morton.
Buffett's biggest newspaper investment, his stake in The Washington Post Company, has fallen roughly 20% in the last year as its
Kaplan education unit struggles and print sales in its media unit deteriorate. Still, Buffett isn't likely to depart his 27%-plus stake in the company's shares anytime soon.
>>View Warren Buffett's Portfolio
Vanity Fair's April
The Washington Post Buffett was quoted as saying that it's unlikely he'll ever sell his stake. "I can afford to be sentimental," said Buffett.
Thursday's deal to buy the newspapers and provide financial support to Media General, and his previous acquisition of the Omaha World-Herald, may signal that this sentiment will extend to more deals throughout the newspaper industry.
"I'm not comfortable without an honest-to-God newspaper in my hand," Buffett told staff at
The World in an impromptu November address.
For more on Warren Buffett's deal making see why Berkshire's
elephant gun could be targeted at utilities. For more on Buffett's recent investments, see why Warren Buffett's latest
bet on America is GM.
-- Written by Antoine Gara from New York.
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