Lee Enterprises said it has reached a compromise with billionaire investor David Hoffmann to stabilize the newspaper company’s finances with a $50 million investment. The announcement came as Lee, like other newspaper owners, has faced pressure from declining advertising and weaker website traffic, prompting staff cuts and changes to printing schedules.
Under the deal, Hoffmann will move toward taking a controlling role in Lee and is expected to become the company’s chairman. The deal also includes changes to Lee’s top leadership: the company said CEO Kevin Mowbray will retire after 39 years with the Davenport, Iowa-based business when Hoffmann takes over.
Hoffmann’s family investment firm already owns more than 40 publications, and Lee said he will continue pursuing a goal of becoming the country’s largest newspaper publisher. In recent interviews, Hoffmann has said he believes newspapers can continue to play a role in covering local communities and in building a successful digital subscription business.
The company said the investment would help relieve a debt burden it took on when it bought Warren Buffett’s newspapers from Berkshire Hathaway. Lee said it has $455.5 million of debt tied to that transaction and refinancing, and it expects the Hoffmann-led infusion—along with other investors—to reduce the interest rate from 9% to 5%, saving about $18 million a year.
Lee said the agreement also comes with an updated governance framework, and Hoffmann described the focus after the deal as disciplined execution and long-term value creation. Hoffmann declined to comment beyond the statement on the transaction.
Tim Franklin, a professor and chair of local news at Northwestern University’s Medill School of Journalism, said the key test will be whether Hoffmann and Lee reinvest in newsrooms to strengthen coverage, including high school sports and other local institutions. Franklin also said Lee’s “back was up against the wall” and was “looking for a way to stabilize the business.”
The deal also marks a shift from an earlier attempted takeover. Unlike when Lee fought off a takeover bid from the Alden Global Capital investment fund three years ago, the company’s board has embraced Hoffmann’s approach.
Lee said Hoffmann agreed to buy $35 million of new Lee stock at $3.25 per share in addition to the 9.8% of the company’s stock he already controlled, while other investors will put up $15 million. Lee shares rose more than 20% on Tuesday and closed at $4.50 after the news was announced.
Buffett and incoming Berkshire CEO Greg Abel did not respond to questions about the deal. The article described how Buffett had previously characterized the newspaper industry as “toast” destined for an unending decline before Berkshire sold its newspapers.