On January 29, 2020 Lee Enterprises, Incorporated (NYSE: LEE) and Berkshire Hathaway announced a deal to sell the Berkshire owned BH Media Group’s (BHMG). That same day, Todd Cooper, President of the Berkshire owned Omaha World-Herald Guild ripped the decision and revealed their grievances. While this may seem to have little to do with manufactured housing, a closer look reveals a sobering lesson for employees and others with respect to Clayton Homes, 21st Mortgage Corp, Vanderbilt Mortgage and Finance (VMF) or other Buffett-led Berkshire owned brands. See what Cooper had to say in the featured focus, which includes elements of the formal statement by Lee and Berkshire.
Periodic readers of this business-nightly feature should note there are new tweaks to some of the standard portions of our evening market/investing report. Read carefully as some changes of the ‘standard text’ that follows before our left-right headlines and also in other features near the end of tonight’s reports.
Every evening our headlines that follow provide snapshots from two major media outlets on each side of the left-right news spectrum that reflect topics that influence or move investor sentiment. In moments on this business evening report, you can get ‘insights-at-a-glance.’
This report also sets the broader context for manufactured housing markets, in keeping with our mantra, “News through the lens of manufactured homes and factory-built housing” ©.
We begin with headlines left-of-center CNN followed by right-of-center Fox Business. We share closing tickers and other related data courtesy of Yahoo Finance, and more. 5 to 10 minutes reading this MHProNews market report every business night could save you 30 minutes to an hour of similar reading or fact-gathering elsewhere.
Perhaps more important, you will get insights about the industry from experts that care, but also dare to challenge the routine narrative that arguably keeps manufactured housing underperforming during an affordable housing crisis.
Headlines from left-of-center CNN Business
- Worries about coronavirus and its economic impact weigh on markets
- American, Delta and United airlines suspend most US- China flights amid coronavirus outbreak
- Goldman Sachs warns that the coronavirus could slow the US economy
- Coronavirus could cost China’s economy $62 billion
- CEO of cannabis retailer MedMen steps down
- Lyft had an edge on the hot e-bike market. Then things went wrong
- Amazon blows Wall Street’s expectations out of the water
- Britain seeks closer economic ties with Africa following Brexit
- Britain needs a big trade deal with Europe and wants one with America. It may end 2020 with neither
- Jaguar Land Rover is looking for a new CEO
- Delta will ditch the uniforms many employees call ‘toxic’
- Peter Navarro: Counterfeits harm Americans and threaten national security. Trump has a plan to combat them
- WWE stock gets body slammed by executive shakeup
- Tesla just proved all its haters wrong. Here’s how
- Formula 1 billionaire bails out Aston Martin
- BEVERAGE WARS
- A new kind of Coke quietly hits US store shelves
- New Pepsi has nearly twice as much caffeine
- Coca-Cola doubles down on sparkling water
- Powerade gets a makeover
- Diet soda doesn’t have to lead to weight loss, court rules
- GADGETS AND MORE
- Apple redesigned its Maps app. Here’s what’s new
- iPhone sales make a comeback
- The big differences between 4G and 5G
- Bluetooth gets most important update in 20 years
- iPhones are flying off shelves in China again
Headlines from right-of-center Fox Business
- US sounds alarm over deadly virus outbreak, reveals quarantine plans
- US declares emergency, new entry restrictions due to virus
- Dow TUMBLES over 600 points as outbreak contagion fears rock stocks
- Goldman Sachs’ bleak prediction about outbreak’s hit on US economy
- Coronavirus is ground zero for crude
- These celebs have South Florida homes — here’s how close they are to Super Bowl LIV
- BONK-ERS FOR GRONK: You’ll need to pay up to party up with ex-Patriots star
- Super Bowl commercials, once top secret, now take different tact
- Harvey Weinstein accuser makes shocking claim about his genitalia during trial
- Bloomberg hands Pelosi and company a massive paycheck
- Bloomberg could qualify for debates under new party rules
- Brexit is great, but Britain doesn’t deserve a trade deal with the US
- How to binge-watch Oscar movies in theaters for cheap
- Luxury real estate booms in major US city as residents flee high-tax states
- Lori Loughlin, Mossimo Giannulli put $29M manse on market ahead of trial
- WATCH: Customer slammed by deer in McDonald’s parking lot
- Senator responds after Taylor Swift slams her in new documentary
- New poll shows dramatic shift in Demcoratic party may be the real deal
- Helicopter company in Kobe Bryant crash not certified for critical risk
- CHOPPER BOMBSHELL
- Helicopter company in Kobe Bryant crash not certified for critical risk
- Chevron announces massive losses after huge writedown on shale
- Billionaire newspaper heiress dead at 100
- Attorney General Barr targets encryption at human trafficking summit
- Robert De Niro reportedly not interested in settling discrimination suit
- ‘Wheel of Fortune’ contestant’s NSFW wrong answer draws giggles, support
- How much Bloomberg spent on campaign in less than 2 months
- Varney: Drive to throw Trump out of office is just about finished
- Millennials revive long-dead fashion trend considered taboo by some
- Saying no to the dress: Why young Americans keep putting off marriage
- Amazon’s workforce rockets past 500K mark in another sign of growth
- Streaming giant signs Adam Sandler for 4 more films
- Why your 2020 portfolio needs real estate cash flow
- Google hosts summit with Washington, DC policy experts
- Super Bowl LIV banks on Verizon 5G for security, former New York City police commissioner says
- Netflix hit series ‘The Crown’ taps its new and last queen
- UPS To airlift more than 2M masks and protective gear to China
- Ring announces updates after hacking lawsuit
- How to legally bet on Super Bowl LIV
- Facebook to remove coronavirus misinformation
- Ivanka Trump confirms $42M budget increase to support human trafficking victims
- Caterpillar warns global economic tremors will curb sales
- Gwyneth Paltrow’s lifestyle brand slammed by UK’s health chief
- Harvey Weinstein rape trial faces pivotal moment with latest testimony
- Airbus to pay billions to settle up on bribery scandal
- Nike Vaporfly sneakers cleared for Summer Olympics 2020
- Tom Brady posts cryptic Instagram photo as NFL free agency looms
- Antifa protests New York City police, transportation
- Waymo: Self-driving vehicle in manual mode at time of crash
- Mourning Kobe Bryant, Lakers prep for emotional return to Staples Center
- Trump: Europe trade deal ‘is next’
- Super Bowl glitz heads to Miami’s blue-collar neighborhood
10 Market Indicator Closing Summaries – Yahoo Finance Closing Tickers on MHProNews…
Featured Focus – Where Business, Politics and Investing Meet
In teeing up what follows, ponder carefully what Cooper is claiming. It arguably describes a betrayal. Per the “blindsided” Cooper, one thing was promised by Buffett and Berkshire to the Omaha World-Herald Guild journalists, but an entirely different outcome occurred. More on that following the meat from the various sources.
More on that below but keep the above report in mind. According to Webalizer, that report – which was published on September 4, 2019, is still near the top of all reports being read on MHProNews. That one article would dwarf the purported monthly readership of MHInsider, MHReview and George Allen’s blog.
- “What an unmitigated mess. It just doesn’t have to be this way. And Mr. Buffett knows it.” – Todd Cooper – President of the Omaha World-Herald Guild. More will follow.
The following bullets are from Markets Insider.
- Warren Buffett struck a $140 million deal to sell the Omaha World-Herald and 30 other daily newspapers to publisher Lee Enterprises this week.
- OWH journalists have accused Buffett of backing them to find a local buyer for his hometown paper, then selling it to a national chain himself.
- “We are blindsided, dismayed, and disappointed,” the OWH Guild said.
- The union accused Lee of paying “bloated bonuses to executives,” making “massive cuts to product,” and working with “cutthroat investors.”
The guts of the press release are as follows.
Lee Enterprises to Buy Berkshire Hathaway Newspaper Operations; Berkshire Hathaway to Finance All Debt
Lee to finance acquisition and refinance long-term debt with Berkshire Hathaway at 9% annual rate
Deal adds 31 local daily news publications, nearly doubles Lee audience size
Immediately accretive to earnings before synergies, reduces balance sheet leverage
Annual run-rate revenue and cost synergies estimated at $20-25 million
DAVENPORT, Iowa, Jan. 29, 2020 (GLOBE NEWSWIRE) — Lee Enterprises, Incorporated (NYSE: LEE), a trusted local news provider and leading platform for advertising in 50 markets, has entered into a definitive agreement with Berkshire Hathaway to acquire BH Media Group’s (“BHMG”) publications and The Buffalo News for $140 million in cash. Berkshire Hathaway is providing approximately $576 million in long-term financing to Lee at a 9% annual rate. The proceeds from the Berkshire financing will be used to pay for the acquisition, refinance Lee’s approximately $400 million of existing debt, and provide enough cash on Lee’s balance sheet to allow for the termination of Lee’s revolving credit facility. Subsequent to the deal closing, Berkshire Hathaway will be Lee’s sole lender.
Serving communities in 10 states, BHMG owns the print and digital operations of 30 daily newspapers, as well as more than 49 paid weekly publications with digital sites and 32 other print products. BHMG had 2019 revenues of $373.4 million and adjusted EBITDA1 of $47.4 million. Lee has managed BHMG’s publications since July 2018 under a management agreement. The transaction also includes The Buffalo News, Western New York’s premier news source, which is separately owned by Berkshire Hathaway. BHMG’s real estate (including permanently attached equipment) and cash are excluded from the acquisition.
The addition of Berkshire Hathaway’s robust portfolio of high-quality local publications will add significant size and scale to Lee’s operations, bringing its portfolio of daily newspapers to 81 from 50 and nearly doubling its audience size. The transaction is expected to drive an 87% increase in revenue, a 40% increase in adjusted EBITDA and immediately reduce leverage to 3.4x before synergies. Based on Lee’s work managing BHMG publications over the last 18 months, Lee expects $20-25 million of anticipated annual revenue and cost synergies. As a result, Lee will benefit from a stronger financial profile and be positioned to de-lever more rapidly.
Mary Junck, Lee’s Chairman, said, “This is a compelling and transformative transaction for Lee. It both refinances our long-term debt on attractive terms and provides new revenue opportunities as well as operational synergies across an expanded portfolio. We have enjoyed a strong, long-term relationship with Berkshire Hathaway, which has been a significant investor across our capital structure for years. As manager of BH Media for the past 18 months, we have developed a deep knowledge of these properties and tremendous respect for their operators. We know first-hand the power this acquisition brings for further accelerating our industry-leading digital revenue growth while maintaining our focus on delivering high-quality local news. We look forward to capturing the tremendous value of this transaction for readers, advertisers and shareholders.”
Warren E. Buffett, Berkshire Hathaway’s Chairman and CEO, said, “My partner Charlie Munger and I have known and admired the Lee organization for over 40 years. They have delivered exceptional performance managing BH Media’s newspapers and continue to outpace the industry in digital market share and revenue. We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges. No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee. I am confident that our newspapers will be in the right hands going forward and I also am pleased to be deepening our long-term relationship with Lee through the financing agreement.”
Kevin Mowbray, Lee President and CEO, said, “Over the past 18 months, we have developed a strong bond and shared culture with the outstanding operators at BH Media. This highly collaborative relationship has driven digital and subscription revenue growth, margin expansion and continued innovation. We are confident we can achieve even greater success as one, integrated company. This unique transaction is immediately accretive to earnings, decreases leverage and provides compelling refinancing terms, while avoiding tens of millions in fees associated with traditional refinancing agreements and no intermediaries were involved. Most gratifying, it expands our partnership with a single long-term lender who shares our passion for the indispensable services we provide to our communities.”
The approximately $576 million in long-term financing from Berkshire Hathaway will have an interest rate of 9% annually with a 25-year maturity and no performance covenants. The financing requires no fees, will result in approximately $5 million of interest rate savings on Lee’s refinanced debt annually, and will eliminate Lee’s existing $23 million revolving credit facility. With a stronger growth profile and a more flexible balance sheet, Lee will be able to de-lever more quickly over the long term. Lee will continue to prioritize deleveraging, including strategically monetizing noncore assets.
The acquisition is expected to be immediately accretive to earnings and will reduce Lee’s leverage from 3.5x to 3.4x, before any cost and revenue synergies. Lee has identified approximately $20-25 million of highly achievable annual synergies, including revenue synergies from the management of digital advertising and subscriber programs, and cost synergies, primarily from the reduction of administrative expenses. Lee expects to achieve the full synergy run-rate within 24 months of closing, which is expected in mid-March 2020, subject to customary regulatory approvals.
As part of the agreement, Lee will enter into a 10-year lease for BHMG’s real estate. The initial lease payment is $8 million annually, payable in monthly installments, with Lee assuming responsibility for the maintenance and expense associated with the BHMG property. Lease payments can be reduced to the extent BHMG real estate is monetized.
The acquisition includes the following daily newspapers and their digital operations:
- ALABAMA: Dothan Eagle, Opelika-Auburn News
- IOWA: The Daily Nonpareil in Council Bluffs
- NEBRASKA: Omaha World-Herald, The Grand Island Independent, Scottsbluff Star-Herald, The North Platte Telegraph, Kearney Hub, York News-Times
- NEW JERSEY: The Press of Atlantic City
- NEW YORK: The Buffalo News
- NORTH CAROLINA: Winston-Salem Journal, Greensboro News & Record, The News Herald in Morganton, The McDowell News, Statesville Record and Landmark, Hickory Daily Record
- OKLAHOMA: Tulsa World
- SOUTH CAROLINA: The Florence Morning News
- TEXAS: The Eagle in Bryan-College Station, Waco Tribune-Herald
- VIRGINIA: Richmond Times-Dispatch, The Daily Progress in Charlottesville, The Roanoke Times, Bristol Herald Courier, News & Advance in Lynchburg, Martinsville Bulletin, Danville Register & Bee, The Free Lance-Star in Fredericksburg, Culpeper Star-Exponent, The News Virginian in Waynesboro
Additional details regarding today’s announcements will be filed with the Securities and Exchange Commission…
About Lee Enterprises
Lee Enterprises is a leading provider of local news and information, and a major platform for advertising, with daily newspapers, rapidly growing digital products and more than 200 weekly and specialty publications serving 50 markets in 20 states. Year to date, Lee’s newspapers have average circulation of 0.7 million daily and 1.0 million Sunday, and are estimated to reach almost three million readers in print alone. Lee’s markets include St. Louis, MO; Lincoln, NE; Madison, WI; Davenport, IA; Billings, MT; Bloomington, IL; and Tucson, AZ. Lee Common Stock is traded on the New York Stock Exchange under the symbol LEE…”
Todd Cooper ripped the deal and Buffett via Twitter.
Despite protests to the contrary by management, there have been voices inside Clayton Homes and their associated Berkshire-owned lenders that have for several years reminded people about the original efforts to change retail general managers pay, as well as other steps that are all arguably aimed at marginalizing workers.
But is there any reason to think beyond what Buffett himself has said about deals and money?
In the light of the deep outrage and sense of betrayal expressed by Cooper, is there any reason for industry professionals to pay more heed to promises or assurances from Berkshire or their surrogates?
Time Sensitive Reading = Consumers, Nonprofit Advocacy, Manufactured Home Professional Comments on HUD-White House RFI Reducing Regulatory Barriers, plus Manufactured Housing Headline Reports 1.19 to 1.26.2020
Manufactured Housing Industry Investments Connected Closing Equities Tickers
Some of these firms invest in manufactured housing, or are otherwise connected, but may do other forms of investing or business activities too.
- NOTE: The chart below includes the Canadian stock, ECN, which purchased Triad Financial Services, a manufactured home industry lender
- NOTE: Drew changed its name and trading symbol at the end of 2016 to Lippert (LCII).
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