On 12 May 2012 announced BH Media Group, buy a subsidiary of Warren Buffett’s Berkshire Hathaway, an offer of Media General (MEG) newspaper division for $ 142 million in cash and provide debt financing of the company to fight. Reactions from investors and analysts vary widely: one called it a “big surprise,” another asked if Buffett with his heart and not with the head (he was a paperboy as a child) was invested, and a third said it was a “Financial engineering feat.” Vi … Read more »

On 12 May 2012 announced BH Media Group, buy a subsidiary of Warren Buffett’s Berkshire Hathaway, an offer of Media General (MEG) newspaper division for $ 142 million in cash and provide debt financing of the company to fight. Reactions from investors and analysts vary widely: one called it a “big surprise,” another asked if Buffett with his heart and not his head (he was a paperboy as a child) was invested, and a third said it was a “Financial engineering feat.” Almost all of them asked what the “Oracle of Omaha” saw in the declining U.S. newspaper industry, which others have not. The question of the media General CEO Marshall Morton was whether to accept the offer or not. As head of a highly leveraged company whose turnover was 31% fallen in the past four years, the share price was more than 90% from its high and its falling profitability, it was dangerously close to violating key credit agreements, he had to move quickly.
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from
Benjamin C. Esty,
Aldo Sesia
Source: Harvard Business School
16 pages.
Release Date: 21 June 2013. Prod #: 213142-PDF-ENG
Buffett’s Bid for Media General newspaper HBR case solution