Interesting take on the Media General-Young merger on Poynter.org. in which the reporter–a former Media General employee–notes that Warren Buffett, true to character, benefited handsomely from the new arrangement. A year ago, writes Rick Edmonds, “Berkshire Hathaway loaned Media General $445 million to refinance a crushing debt load coming due. The initial interest rate was an eye-popping 10.5 percent.
Second, as thanks for saving Media General from that life-threatening financial distress, BH received penny-a-share warrants to acquire 19.9 percent of the company - 4.6 million shares in all.”
Consider the sweet deal a quick demonstration - on a modest scale for giant Berkshire Hathaway - of how Buffett got to be one of the five richest men in the world.
Edmonds also dissects why the newly formed super-group has chosen to retain the name Media General, not to mention the Richmond headquarters, despite Young’s shareholders owning two-thirds of the new company stock.
New Young is a confusing name on its surface. The name has nothing to do with youth - it’s derived from the founder’s name. The “New” part makes a distinction from old Young, whose flagship KRON-TV in San Francisco lost its NBC affiliation a decade ago and whose financial troubles festered for years before the bankruptcy.
Edmonds also breaks down the demise of Media General’s longtime two-class stock structure.
It’s a quick, worthwhile read.
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