Billionaire steps in to save the Daily Progress
After a rough year, and with its company stock in free fall, Lee Enterprises had to cut a deal.
You won’t be hearing much about it — because local media companies are reluctant to report on each other — but there’s been some pretty big news concerning the Daily Progress.
After reporting a net loss of $36 million this year, including $4 million for restoration services after a cyber attack/ransom in February by Russian hackers, which prevented them from printing newspapers for a time and compromised the personal information of approximately 40,000 people, the parent company of the The Daily Progress, Lee Enterpises, finally gave into Florida billionaire David Hoffmann, who inked a deal on Tuesday that will give him a controlling stake in the newspaper chain. As part of the deal, Lee CEO Kevin Mowbray, who has been at the helm for 39 years, will be retiring and collecting a $1.5 million payout.
Hoffman, who made his desire to take over Lee known in a New York Times profile last year, will also become the company’s board chairman. What’s more, Warren Buffett’s company Berkshire Hathaway Media Group, which sold its portfolio of daily and weekly newspapers to Lee in 2020, has agreed to lower the interest rate on a 25-year loan (currently at $455 million) it provided Lee from 9 percent to 5 percent. That’s a big deal. Given how poorly Lee was doing financially — they were only paying interest on the loan, and Buffett’s company allowed them to make no loan payments for three months this year — the company could have possibly been forced into bankruptcy. While Lee’s stock price jumped 20 percent following Tuesday’s announcement, the company has been in free fall all year.
Hoffman, whose company owns a dizzying array of businesses across the country, and made headlines recently for its plan to buy the NHL’s Pittsburgh Penguins from the Fenway Sports Group for an estimated $1.7 to $1.8 billion, appears to be a champion of journalism and local newspapers.
“These local newspapers are really important to these communities,” Hoffmann told the NYT last year. “With the digital age and technology, it’s changing rapidly. But I think there’s room for both, and we’d like to be a part of that.”
The Hoffmann Media Group, a division of the company that is focusing on acquiring newspapers, and had already bought the Napa Valley Register and some other Lee papers last year, has a mission to “reinvest in journalism.”
“You put journalists back into City Council meetings, you put journalists back out at sports games for the local communities,” J. Pason Gaddis, the media group’s CEO, told the Times. “You have local management again in these newspapers, which has all been stripped out.”
Of course, every company our local newspapers have been handed off to has had high hopes. At one time, Buffett said there was no business he’d rather own “than a newspaper in a single-newspaper town,” but after years of owning them, he conceded that “no one has found the answer yet” to making them profitable again.
Fingers crossed.