Over the Dr. Martin Luther King Jr. Holiday, word surfaced that The E.W. Scripps Co. was enjoying strong after-hours trading for its stock because of a report offered by a Smarter Analyst Wall Street observer that took note of a Securities and Exchange Commission disclosure from noted investor Warren Buffett.
While Smart Analyst’s Ben Mahaney said Buffett’s “Berkshire Hathaway” has snagged “a 24.9% passive stake” in Scripps, that’s not what’s happening.
According to Scripps, Buffett is helping Scripps out with its ION Media purchase.
In the original report, Mahaney took note of Friday’s extended market trading for SSP.
It came after the filing of a “SC 13G” form with the SEC by Buffett.
The form shows that Berkshire Hathaway holds 23,076,923 shares, translating to what Mahaney calls a 24.9% passive stake.
These warrants are indeed exercisable, and Berkshire Hathaway has 60 days to do so.
It’s not being done as of yet, however. Scripps SVP/Corporate Communications and Investor Relations Carolyn Pione Micheli explains to RBR+TVBR that it’s not a stake in Scripps Buffett is snagging.
Rather, the SEC filing is confirmation that he’s making a $600 million pledge to help Scripps complete its purchase of ION Media.
That was reported in September 2021, and he’s now moving forward with a loan — not an equity investment. And, the timing is concurrent with the closing of Scripps’ merger with ION Media.
While Berkshire holds a warrant to exercise the purchase 23.1 million in Class A E.W. Scripps shares at $13 a piece, which would amount to an equity position, this has not transpired as of January 18.
E.W. Scripps shares closed at $14.84 on Friday. In midday trading on Tuesday, SSP was up 6.3% to $15.77.
It seems Scripps’ stock may have benefited from the confusion triggered from the Friday report. However, Pione believes the gains across Tuesday’s trading are being seen from investors “because of the reminder of Berkshire Hathaway’s commitment to us.”
— Additional reporting by Rob Dumke
