Media General completes sale of newspapers to Warren Buffett's Berkshire Hathaway
Since I'm working on a few other stories, I'll just post the press release here for you all the see, important sections highlighted:
Media General Completes Sale of Newspapers to Berkshire Hathaway
RICHMOND, Va. - Media General, Inc. (NYSE: MEG) today completed the previously announced sale of 63 daily and weekly newspapers to World Media Enterprises, Inc., a subsidiary of Berkshire Hathaway, Inc. (NYSE: BRK.A and BRK.B), for $142 million in cash, subject to adjustment for working capital and other items.
After transaction fees and the repayment of funds drawn on the revolving credit facility, Media General will use the net proceeds from the newspaper sale to offer to repay on a pro rata basis existing senior secured notes at par and a term loan with no prepayment penalty.
Media General is also in discussions with prospective buyers for its Tampa, Florida, print properties and associated websites.
“Selling our newspapers represents a monumental change for us – we’ve been in the newspaper business for more than 160 years. However, our model has been shifting more toward Broadcast and Digital in recent years,” said Marshall N. Morton, president and chief executive officer of Media General. Broadcast television accounted for 77 percent of total Platform Cash Flow for the full year 2011 and for 87 percent in the first quarter of this Political year.
”We will now focus on our higher margin Broadcast television business. We have an attractive economic model, fueled by revenue growth, including Political, Retransmission and Digital revenues.
For the second quarter of 2012, we expect to report Political revenues of more than $7 million, reflecting spending by both presidential campaigns, Super PACs, and contested races in our markets, including the Massachusetts Senate race and primaries in Virginia and South Carolina. We now expect Political revenues for the full year 2012 to be at the high end of our previously announced range of $40-45 million,” Mr. Morton said.
“Our plans are underway to increase Broadcast cash flow and EBITDA margins. At the market level, we are focused on ratings and share increases as well as expense management. At the corporate level, as previously announced, we are reducing corporate expense from $32 million to $20 million, a run rate we plan to achieve before the end of this year. The increased cash flow will support and accelerate our deleveraging plan and we have good incentive to do so. Our new term loan agreement provides a stepdown in the interest rate from 10.5 percent to 9 percent if leverage were to reach 3.50x,” Mr. Morton said.