Times-Dispatch office. Photo credit: William H. Harnett
by James A. Bacon
Richmond-based Media General announced the sale this morning of all of its newspapers, except those in the Tampa Group, to Berkshire Hathaway, Inc. for $142 million in cash and help in refinancing its capital structure. Newspapers affected include the Richmond Times-Dispatch as well as daily newspapers in Charlottesville, Lynchburg, Danville, Bristol and Manassas.
Heavily indebted since the purchase of major broadcast properties years ago, Media General was looking for ways to refinance bank debt that comes due in 2013. Berkshire Hathaway will provide Media General with a $400 million term loan and a $45 million revolving credit. The new loan, which will mature in May 2020, will be used to fully repay the company’s existing bank debt. Stated the press release:
The Media General newspapers will be part of BH Media Group, along with the Omaha World-Herald Company newspapers. A sister company of the Omaha World-Herald Company, World Media Enterprises, Inc., will manage the Media General newspapers.
“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” said Warren Buffett, Chairman of Berkshire Hathaway. “The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”
The sale is deeply symbolic, marking the passing of the old Richmond elite. The Richmond Dispatch was founded in 1850 and the Daily Times in 1886. By 1900 Joseph Bryan had brought the two newspapers into common ownership. Richmond Newspapers Inc. entered an aggressive growth phase under D. Tennant Bryan, who acquired newspapers in Tampa, Fla., Winston-Salem, N.C., and other cities, as well as newsprint, broadcast and cable television properties.
Under the leadership of D. Tennant’s son, J. Stewart Bryan III, the company reached its apogee, shedding its newsprint operations and selling its cable television operations in Fairfax County and Fredericksburg for $1.4 billion, then forged a strategy around the anticipated digital “convergence” of broadcast, print and Internet media. Despite fears that the Internet would erode advertising margins for traditional media, Media General doubled down with major acquisitions during the 2000s as well as some ill-advised acquisitions in the Internet space. However, the increase in Internet revenues didn’t come close to offsetting the loss of traditional advertising revenue. Burdened with massive debt, profitability declined markedly.
The bow-tied Stewart Bryan was a fixture of the old Richmond establishment. He was an old-school gentleman and he knew newspapers and broadcast but I got the sense that neither he nor his successor as CEO, Marshall Morton, ever understood the Internet. The first executive they put in charge of the company’s Interactive Media Division (IMD) was a blowhard who held endless meetings that accomplished nothing, and was single-handedly responsible for my decision to leave the company. As publisher of Virginia Business, I saw no great future for traditional print media, and it was my goal to migrate the Virginia Business brand to the Internet as rapidly as I could. But I could do nothing except through the IMD and found myself thwarted at every turn and unable to deliver on promises made to customers. Media General had treated me well otherwise — overlooking my occasional outbursts of speaking truth to corporate power — but I departed in frustration in 2002.
As symbolized by the sale of the Times-Dispatch, few of Richmond’s “old money” companies survive. The old Virginia dynasties aren’t especially wealthy anymore — the Bryans have seen their ownership stake in Media General evaporate to almost nothing — and they certainly aren’t as visible in positions of civic and business leadership. But it’s not clear at all who will succeed Bryan and his peers. The good news is that the field seems to be wide open. Richmond is reinventing itself and I remain optimistic about the region’s long-term future. What Berkshire Hathaway ownership means for the Times-Dispatch and other newspapers, however, remains to be seen.
