The Oracle of Omaha has taken a shine to Local 10.
Warren Buffett’s investment conglomerate, Berkshire Hathaway, has agreed to buy WPLG-Channel 10 from Graham Holdings Co. in exchange for nearly all of Berkshire’s stake in the company that once owned The Washington Post.
The news on Wednesday came as a surprise to many in the industry. Neither Berkshire Hathaway, Graham Holdings Co. nor WPLG would comment. It was unclear Wednesday what impact the sale might have on local viewers of South Florida’s No. 2 broadcast station.
WPLG staffers learned of the sale Wednesday through an email memo from Post-Newsweek Stations, a unit of Graham Holdings that owns the Miami ABC affiliate station.
WPLG staffers contacted for this story declined to comment. Connie Hicks, a reporter for the station for 15 years until 2005 who now teaches broadcast journalism at Barry University recalled her days under Graham ownership with fondness. “We were always proud to say we were a Post-Newsweek station,” she said. “Katharine Graham was very gracious when she visited and she was always interested in women in the news business.’’
In the memo to staffers, Emily Barr, Post-Newsweek Stations’ president and CEO, said: “Please know that the decision to trade WPLG, which has long been an important part of the fabric of Post-Newsweek, was not made lightly or without regard to the implications this has for our remaining five stations. We are a broadcast group that has long been the envy of many in our industry and we remain healthy and influential. Let me assure you we will continue to innovate, lead and evolve far into the future.”
WPLG, which started operating in 1957 and is an affiliate of Walt Disney Co.’s ABC, has been part of Graham Holdings for more than four decades and was named for the iconic Graham family. The Washington Post Company purchased the station in 1969 and changed the call letters to WPLG in memory of publisher Philip L. Graham, the husband of Katharine Graham.
The family is related to the Graham family of Miami Lakes, whose best known member is former Florida governor and U.S. Senator Bob Graham. But the companies Graham Holdings and the local Graham Companies do not share ownership or management.
The purchase marks a growing interest in traditional media by Buffett, the high-profile investor known as “the Oracle of Omaha.” In recent years, Buffett has bought newspapers in small and medium-sized towns because, he has said, he believes the local news and community information they deliver will allow them to compete favorably with national Internet news sources.
He might be making a similar bet on WPLG’s local news coverage, which leads South Florida in digital viewership. Its website, local10.com, attracted more average monthly local unique visitors than any other South Florida media website in 2013, according to Scarborough research. In viewership, WPLG, which moved its studios to Pembroke Park in 2009, typically ranks in the top two for English-language stations in the coveted Miami market. South Florida is the 16th largest TV market in the U.S., with about 1.66 million TV homes that account for 1.4 percent of the country’s viewers, according to data from Nielsen.
“Miami has always been a great news market, and the gateway to Latin America,” said Hicks, the reporter-turned-journalism teacher. “It could be a very shrewd and strategic move by a very shrewd and strategic guy.”
The Channel 10 purchase isn’t Buffett’s first foray into the South Florida market. Late last year, the national real estate franchisor Berkshire Hathaway HomeServices (BHHS) entered into a franchise agreement with the former Prudential Florida Realty, a brokerage serving 17 Florida counties including South Florida, to become a franchisee of BHHS. HomeServices of America, an affiliate of Berkshire Hathaway, has owned the brokerage firm Esslinger Wooten Maxwell (EWM) since 2003.
Buffet’s current media holdings include the Omaha World-Herald Company, owner of seven daily newspapers and several weeklies, a large group of small- and mid-sized newspapers in North Carolina and Virginia, the Buffalo News and Business Wire. Although this is the first station Berkshire Hathaway will own outright, it has held stakes in companies with television stations. Berkshire Hathaway owns roughly 80 subsidiaries, including railroad, clothing, furniture and jewelry firms.
Buffett, who has called Capital Cities/ABC one of his most successful investments of the 1990s, has previously praised the prospects of television stations. In a 2008 letter to shareholders, he lamented his decision not to buy an NBC station in the Dallas area, writing TV stations “required virtually no capital investment. They were simple to run and showered cash on their owners.”
Under the $1.1 billion deal, Berkshire Hathaway will buy WPLG, along with an undisclosed amount of Berkshire shares currently held by Graham and cash. In exchange, Graham gets 1.6 million shares of Graham Holdings Class B common stock currently owned by Berkshire Hathaway. The deal values the station at about $364 million, according to a regulatory filing Wednesday.
Graham Holdings will continue to own the other five stations, including the CBS affiliate in Orlando. Graham Holdings was formerly the Washington Post Co.; the name was changed when Amazon’s Jeff Bezos bought the flagship newspaper last year.
The swap would leave Omaha, Nebraska-based Berkshire with roughly 100,000 of the 1.73 million Graham shares it currently owns. Those shares were worth more than $1.2 billion as of Tuesday. Berkshire paid $11 million for its stake in 1973. “I am sure this is a mutually beneficial transaction for both companies. While this transaction will greatly reduce our position in Graham Holdings, our admiration for the company and its management is undiminished,” Buffett said in a statement.
For Buffet, Graham Holdings has been one of his company’s most successful investments. It’s also a business to which he has had deep personal ties. He has served on the board twice through the years, stepping down in 2011. He also was reportedly a personal friend and adviser of longtime Washington Post publisher and then-CEO Katharine Graham, who died in 2001.
“Warren Buffett’s 40-year association with our company has been extremely good for our shareholders. Naturally, the deal that we have put together is one that will be good for both companies,” said Donald E. Graham, chairman and CEO of Graham Holdings, in a statement. “We thank our longtime colleagues at WPLG for their enormous contributions and congratulate them on the opportunity to join one of the greatest companies in America.”