This Case is aboutÂ BUDGETING, COLLABORATION, CRISIS MANAGEMENT, ENTREPRENEURSHIP, EXECUTIVE COMPENSATION ,FINANCIAL ANALYSIS, MARKETING, MERGERS & ACQUISITIONS, REORGANIZATION, RISK MANAGEMENT, STRATEGY EXECUTION
PUBLICATION DATE: June 21, 2013 PRODUCT #: 213142-PDF-ENG
On the 12th of May 2012, BH Media Group, a subsidiary of the Warren Buffettâ€™s Berkshire Hathaway, affirmed an offer to get hold of Media General’s (MEG) paper office for $142 million in cash and supply debt financing to the fighting business.Reactions from investors and industry analysts altered substantially: one called it a “great surprise”, another implicated if Buffett was investing with his heart rather than his head (he was a paperboy as a kid), and a third said it was an “effort of financial engineering.” Almost all of them speculated what the “Oracle of Omaha” saw in the declining U.S. paper business that others did not. The question confronting the CEO Marshall Morton of Media General was whether to accept the offer or not. As the head of an extremely leveraged firm whose sales had dropped 31% in the previous four years, whose stock price was down more than 90% off its high, and whose dropping profitability left it perilously close to breaking essential debt covenants, he needed to go fast.