The newspaper industry has decayed so much in recent years that even Warren Buffett — the world-famous investor whose annual meetings have included a newspaper toss — has declared the business “toast.”
But another billionaire is placing a counterintuitive bet that local newspapers aren’t dead yet. David Hoffmann, a Florida investor worth $1.6 billion, who has purchased more than 5 percent of Lee Enterprises, one of America’s largest newspaper companies, wants to buy up a controlling stake.
Mr. Hoffmann, 72, acknowledged in an interview Friday that investing in local newspapers in 2024 is a somewhat quixotic proposition. But he said that he believes print newspapers are “a key part of the American fabric.” He also thinks Lee Enterprises is undervalued by the stock market and a smart financial bet.
“These local newspapers are really important to these communities,” Mr. Hoffmann said. “With the digital age and technology, it’s changing rapidly. But I think there’s room for both, and we’d like to be a part of that.”
Mr. Hoffmann is a relative newcomer to the struggling newspaper industry. The founder of DHR Global, an executive search firm, Mr. Hoffmann parleyed his early success into a sprawling hodgepodge of companies including Mitch’s Cookies, Oberweis Dairy, the Florida Everblades minor-league hockey team and Linstol, a manufacturer of in-flight airline amenities like blankets and headsets. His family of companies, based in Naples, Fla., also includes a media group that has accumulated a handful of small newspapers, including the Mackinac Island Town Crier on Mackinac Island in Michigan and Northern California’s Napa Valley Register, a former Lee newspaper.
According to a securities filing last week, a trust connected to Mr. Hoffmann’s family paid roughly $4 million for a 5.2 percent stake in Lee Enterprises, the fourth-largest newspaper chain in the country. The company, based in Davenport, Iowa, owns roughly 75 newspapers in 26 states, including The St. Louis Post-Dispatch and The Buffalo News — which it bought from Mr. Buffett’s BH Media Group in 2020.
But Mr. Hoffmann wants to go bigger. He said his motivation was simple: He wants to preserve community news — including more local sports coverage.
A native of Washington, Mo., (population: 14,500), Mr. Hoffmann said he was raised in a home that did not have hot running water until he was a sophomore in high school. The son of a nurse and a milk delivery man, Mr. Hoffmann, who was the quarterback for his high school football team, lamented that coverage of local games was disappearing.
As newspapers die off, he said, “you don’t get to read about kids’ sports.”
Lee Enterprises, which has nearly $500 million in debt, lost roughly $3.7 million last quarter. The company has cut costs in recent years, including furloughing and laying off journalists, to offset declines in advertising and subscription revenue.
Alden Global Capital, a hedge fund that has bought newspapers across the United States, submitted an unsolicited proposal in 2021 to buy the company for roughly $141 million. Lee Enterprises rejected that proposal and put in place a “poison pill” plan that prevented Alden from buying control of the company.
Though Mr. Hoffmann has plans to buy additional shares of Lee Enterprises, he said he was not a hostile activist and planned to talk to the company’s management team this week.
“We want it to be friendly,” Mr. Hoffmann said. “They have called us, as you would expect, and said, ‘What are you guys doing?’ And we’re going to sit down with them and tell them our story.”
A spokeswoman for Lee Enterprises did not respond to an email seeking comment. The company’s stock has risen about 64 percent, to $14.34, since the Hoffmann family trust went on a share-buying spree in late September. It is now valued at nearly $90 million.
Hoffmann Media Group, a subsidiary of the Hoffmann Family of Companies, bought the Napa Valley Register and other papers last month from Lee for an undisclosed sum. It now owns about 12 newspapers, said J. Pason Gaddis, the media group’s chief executive.
Mr. Gaddis said that the Hoffmann Media Group’s plan to transform Lee’s newspapers involves reinvesting in journalism to build a more substantial digital subscription business. The company would do that, in part, by consolidating the company’s printing business to regional hubs and reducing its real estate footprint.
“You put journalists back into City Council meetings, you put journalists back out at sports games for the local communities,” Mr. Gaddis said. “You have local management again in these newspapers, which has all been stripped out.”
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