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Warren Buffett

Warren Buffett, chairman of Berkshire Hathaway, speaks on the sale of the Omaha World-Herald Co. to Berkshire Hathaway on Wednesday Nov. 30, 2011. (AP Photo, The Omaha World-Herald, Jeff Bundy)

The Wall Street Journal reported Warren Buffett has expanded his stake in U.S. newspapers to Lee Enterprises, which owns the Journal Star and about 50 other dailies.

Last year, anticipating new regulatory restrictions on proprietary trading and seeking to reduce the bank's exposure to risky assets, Goldman Sachs traders unloaded hundreds of millions of dollars of leveraged loans at a loss, including some loans of Lee, according to the Wall Street Journal, citing anonymous sources.

Buffett since has made a tidy paper profit on the deal and established a stake in Lee, according to the Journal.

In November, Goldman sold about $85 million of loans in Lee Enterprises Inc. at about 65 cents on the dollar, bought by Goldman months before at about 80 cents, causing a loss of at least $13 million, the Journal reported.

BH Finance LLC, a unit of Buffett's Berkshire Hathaway Inc., bought the loans, according to the Journal's sources, and now they're worth about 82 cents on the dollar.

The $85 million of loans he bought from Goldman Sachs in November were slated to be exchanged into junior debt and a stake of at least 4.1 percent in the company as part of Lee's emergence from bankruptcy in January, the Journal reported.

A Goldman spokesman declined to comment on the loan sales. Buffett did not return the Journal's requests for comment.

Deal Journal, the Wall Street Journal's online listening post, asked: "Is Warren Buffett Building a Newspaper Empire?" Berkshire Hathaway announced an agreement to buy Buffett's hometown Omaha World-Herald in November, a deal approved by World-Herald shareholders in December. Berkshire also owns a stake in the Washington Post Co. and owns the Buffalo News.

Through BH Finance, Buffett has been buying more Lee loans, $5 million worth last week, according to an anonymous source quoted by the Journal. This time he paid 81.5 cents on the dollar, 25 percent more than he paid Goldman, the Journal reported.

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