Weschler's world: Berkshire Hathaway buys 'Daily Progress'
Ted Weschler has just become an even bigger media mogul in Charlottesville. That's because his boss, Warren Buffett, just bought most of debt-laden Media General's newspapers, and Weschler, co-owner of the Hook and C-Ville Weekly, finds himself orchestrating the purchase of the Daily Progress.
Oh, and Weschler is a contributor to Charlottesville Tomorrow, a nonprofit news agency that provides free content to the Progress.
With all those fingers in print media pies, the first thing Weschler tells a reporter in an exclusive interview is, "Berkshire has over 70 individual operating units. Warren takes pride in letting them run autonomously."
That means Weschler is not going to be hands-on at the Progress, or the Richmond Times-Dispatch, or the Madison Eagle or any of the 60 other Media General newspapers now joining the BH Media Group, a subsidiary of Berkshire Hathaway.
"I will have zero to do with the newspapers," says Weschler, who was tapped last September as one of Buffett's two top investment strategists and a potential heir apparent to the 81-year-old Oracle of Omaha.
"I sit at the top of the house at Berkshire Hathaway," says Weschler. "Warren is the chief capital allocator."
As the world's best-known "value investor," the Berkshire CEO has a long history of buying businesses that he thinks can make money, and that's why he chose Weschler, who founded the successful Peninsula Capital hedge fund and who shares a similar style of money-making.
So what about buying the papers of Media General, the venerable-but-debt-saddled Richmond firm best known as the home of the Richmond Times-Dispatch?
"This was surreal," says Weschler, who lives in Charlottesville and commutes to Omaha.
"[Buffett] walked into my office three weeks ago," says Weschler, "and said, 'This could be an interesting opportunity, and it involves your hometown.'"
Buffett is a well-known fan of newspapers. He owns a large chunk of the Washington Post, had an affair with late Post publisher Kay Graham, and proudly owns the Buffalo News as well as his hometown's Omaha World-Herald.
"In towns and cities where there is a strong sense of community, there is no more important institution than the local paper," Buffett says in a release about the deal to buy all of Media General's papers (except for a group in Tampa). Team Omaha will pay $142 million cash and supply a $400 million loan to get creditors off MG's back so it can repay a $362 million loan.
Weschler echoes Buffett: "If a sense of community is important, papers are important. It's unclear how newspapers will evolve over time, but they are of fundamental importance."
Also unclear, says Weschler, is how newspapers will play out economically.
One bit of bright news for newspaper lovers: the relatively recent Berkshire acquisition, the Omaha World-Herald, is profitable, says Weschler.
Berkshire Hathaway paid $200 million for that group of 24 midwest papers last fall, making its $142 million acquisition of 63 Media General papers seem something of a bargain. How prices have fallen. In 1995, then owner Thomas A. Worrell Jr. sold the Progress as the flagship of a mere 29-paper chain to Media General for $230 million.
More problematic for Weschler may be his role as co-owner of two Charlottesville weeklies.
"I've got to wrestle through what me being on the board of the Hook and C-Ville means," he admits. "I briefed Warren. I think he thought it was a curiosity. The Hook and C-Ville are relatively small compared to the broad newspaper operations of Berkshire."
Complicating matters are Weschler's financial contributions to Charlottesville Tomorrow, which– in a much-heralded 2009 deal– began providing free content to the Progress, which competes with the two weeklies for stories and ad dollars.
"My support of Charlottesville Tomorrow predated its deal with the Daily Progress," notes Weschler.
Over at the daily paper, whose employees have recently faced unpaid furloughs as the parent corporation tried to tighten its debt-bloated belt, an ebullient-sounding Lawrence McConnell, publisher of the Progress, leaves a message for the Hook: "We're very excited about all this latest development."
When the Hook finally catches up with McConnell a day later, he says he had no idea about the deal until Thursday, May 17.
"Anytime a business is put up for sale, there's uncertainty," says McConnell. "We now have clarity about the future because the new owner is committed to community journalism for the long term."
In Richmond, BH Media execs met with Times-Dispatch employees Thursday morning, about a month before the planned June 25 close of the deal, and reassured them that Berkshire typically did not cut staff when making an acquisition.
"It sounds like good news," says former Progress reporter Bob Gibson, who now runs UVA's Sorensen Institute. "It sounds like a firm that knows about investing in newspapers is investing in newspapers. They are in the business as serious investors."
Over in the Hook newsroom, employees are scratching their heads about how Weschler's and Buffett's love of newspapers will play out at a small non-Berkshire Hathaway paper.
"Like many higher powers, Ted moves in strange and mysterious ways," says Hook editor Hawes Spencer, who is in the unusual position of working under Weschler and also along with him as a shareholder of the Hook. "I don't know how it's all going to shake out."
Updated May 18 with additional comment from Lawrence McConnell.