If Warren Buffett is the Oracle of Omaha, then Ted Weschler is poised to become the Scion of C’ville. A founding donor of digital news nonprofit Charlottesville Tomorrow and a partner in Charlottesville Publishing Group, which owns C-VILLE Weekly and The Hook, Weschler’s media shadow now falls on The Daily Progress as well.
Last year Weschler, a highly successful hedge fund manager, joined the leadership team at Berkshire Hathaway, Buffett’s multi-billion dollar investment company, after winning Buffett’s trust and friendship over a charity lunch date. BH Media Group, a Berkshire Hathaway subsidiary, announced last week that it would purchase all of the newspapers owned by Media General excluding its Tampa Bay group, for $142 million in cash. If Warren Buffett is the Oracle of Omaha, then Ted Weschler is poised to become the Scion of C’ville. A founding donor of digital news nonprofit Charlottesville Tomorrow and a partner in Charlottesville Publishing Group, which owns C-VILLE Weekly and The Hook, Weschler’s media shadow now falls on The Daily Progress as well.
Ted Weschler, part of Berkshire Hathaway’s management team, is an owner of C-VILLE Weekly and The Hook and a founding donor of Charlottesville Tomorrow. Berkshire Hathaway announced last week that it would purchase Media General’s newspapers, which include The Daily Progress and The Richmond Times-Dispatch. (Courtesy subject)
The transaction, which includes The Daily Progress and the Richmond Times-Dispatch, is only part of a deal designed to solve Media General’s impending debt crisis. Berkshire Hathaway will also enter into a separate credit agreement that will provide Media General with a $400 million term loan and a $45 million revolving credit line that the company can use to fully repay its existing bank debt, which is due in March 2013.
Weschler is keen to separate his role at Berkshire Hathaway from his own investments in local media, stressing that both his official role at the company and his compensation are tied to his management of a $2.75 billion portfolio of capital investments in public securities, not his input in this kind of acquisition.
“On the one hand I understand the perception issue, but if you knew how Berkshire worked, you’d dismiss it so quickly,” Weschler said. “On a transaction like this, I’m not any different than an attorney or an accountant putting the mechanics of the transaction together. But the day-to-day operations of The Daily Progress or the Richmond Times-Dispatch, Warren’s not going to have anything to do with that and I’m not going to have anything to do with that.”
The story of how the deal fell into place bears Weschler out, but it also shines a spotlight on the influence he has with Buffett. Weschler said he’d been following Media General’s business for a decade because of his interest in The Hook and knew of its desire, made public in February, to sell its newspapers. Buffett came into his office just over three weeks ago with a financing proposal from JP Morgan and asked him to evaluate the sale of Media General’s papers in light of the loan proposal.
“He mentioned that it included my hometown and he said, ‘Why don’t you take a look at it. It looks like a good starting point,’” Weschler said. “So I spent a couple of hours on it in the afternoon, because the key thing was to get comfortable that what was left at Media General—which is I think their 18 broadcast TV stations—were good and valuable assets relative to the amount of debt the company would have.”
The math panned out and Berkshire Hathaway began negotiating the terms of the agreement. Earlier this month Buffett told the audience at his annual shareholders meeting that he was interested in buying more newspapers. Buffett currently owns the Buffalo News, the Omaha World-Herald (which he purchased for $200 million last year), and part of the Washington Post. Still, the purchase of Media General can be seen as a stark turnaround from Buffett’s stance at a 2009 shareholders meeting during which he said, “For most newspapers in the United States, we would not buy them at any price. They have the possibility of going to just unending losses.”
In last week’s announcement, Buffett framed the acquisition as an investment in community news.
“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said. “The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”
Daily Progress publisher Lawrence McConnell, who learned about the deal in a conference call Thursday morning, said he was “personally and professionally thrilled.”
“I think it’s very significant that we’ve got an individual and a group of executives who see a long-term future in newspapers,” McConnell said. “One of the reasons I think Berkshire Hathaway has been successful is they invest for the long haul and they invest in businesses that they know and understand.”
Hawes Spencer, founder of The Hook and Weschler’s partner in Charlottesville Publishing Group, voiced a somewhat more conflicted opinion in a conversation with Coy Barefoot on WINA.
“Not only am I an old newspaper guy, I’m an ignoramus who woke up this morning to read the headlines and find out that one of the owners of The Hook is the kingpin of this deal, which I didn’t know was in the works,” said Spencer.
Bill Chapman, founder of C-VILLE Weekly and another of the group’s partners, said he didn’t see any tension in Weschler’s multi-faceted role in the local media landscape.
“Ted is an interested and supportive investor in the weeklies, but doesn’t control them,” Chapman said. “A far as I know he is just a donor to the nonprofit site, and as far as Berkshire goes, the DP will be a tiny speck in their portfolio of companies. So while I think the Buffett glow is great for the industry as a whole, I don’t think Ted’s ties to these various things will be a big factor in the local landscape.”
Weschler said the purchase of Media General had as much to do with the selling price as it did with Berkshire Hathaway’s interest in media businesses.
“[Warren] absolutely believes that in places where community is important, the newspaper plays a critical function and that was what was particulary appealing about this group,” Weschler said. “But in anything that Berkshire does, we invest in things that we think will be good long-term investments for Berkshire. The newspaper industry has been so maligned in the last half dozen years and there’s obviously been a sea change in how it works, but at the price that these newspapers transacted, we’re quite confident that it’s a very attractive money-maker for the shareholder.”
As for his role as a local media mogul, Weschler demurs, contending he’s more interested in watching the workings of Adam Smith’s invisible hand than in wielding his own influence.
“The last thing I want to do is in any way, shape, or form have this investment or my support of Charlottesville Tomorrow or my involvement in The Hook and C-VILLE reduce in any way the vigor in which each of those organizations competes with the others. Because I really believe competition makes everyone better,” Weschler said.