Case Study Analysis and Solutions

Case ID: 213142

Abstract:
Case Solution & Analysis for Buffett's Bid for Media General's Newspapers by Benjamin C. Esty; Aldo Sesia
On May 12, 2012, BH Media Group, a subsidiary of Warren Buffett's Berkshire Hathaway, announced an offer to buy Media General's (MEG) newspaper division for $142 million in cash and provide debt financing to the struggling firm. Reactions from investors and industry analysts varied greatly: one called it a "great surprise", another wondered if Buffett was investing with his heart rather than his head (he was a paperboy as a child), and a third said it was a "feat of financial engineering." Virtually all of them wondered what the "Oracle of Omaha" saw in the declining U.S. newspaper industry that others did not. The question facing Media General's CEO Marshall Morton was whether to accept the offer or not. As the head of a highly leveraged company whose revenues had fallen 31% in the past four years, whose stock price was down more than 90% off its high, and whose falling profitability left it perilously close to violating key debt covenants, he had to move quickly.

Keywords:
Acquisition, Advertising, Bankruptcy, Capital, Capital structure, Cash flow, Costs of bankruptcy, Cross functional management, Execution, Executive compensation, Finance,Financial strategy, Incubators, Insolvency, Management, Mergers & acquisitions, Present value, Restructuring, Risk, Risk management, Shutdowns, Social Security, Strategy, Valuation, Buffett's Bid for Media General's Newspapers Case Solution

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