For the Buffett's Bid for Media General's Newspapers Case,

1. In order to value the small market newspaper assets of MEG being purchased, you need to establish an appropriate risk adjusted discount rate. Since MEG itself is quite financially distressed, and Warren Buffet is only offering to purchase certain assets of MEG, the company's own stock characteristics may not be a good benchmark.Exhibit 12 presents a set of media firms that may be used as benchmarks.

• Choose which stocks you believe are appropriate benchmarks for the assets that Buffet is trying to buy.
• Explain in detail why you included certain companies but excluded others.

Company Media General A.H. Belo Corp. Beasley Broad ca st Group Courier Corp. {c} Gannett Co., Inc. Journal Comm. Inc. Saga Communications Average As of Dec. 31, 2011 [book values in millions] leverage Equity Revenue Assets Debt Equity DIV [g]: Beta {b} 5616.2 $1,085.13 $558.0 $34.0 84% 2.29 $461.5 $345.1 $0.0 $121.5 0% 1.49 591? 3255.0 5126.? $78.5 50% 1.11 $259.4 $213.0 $21.5 $154.3 11% 1.21 55240.0 $6,515.13 $1,?60.4 $2,327.53 41% 2.11 5356.8 5411? 541.? 5205.0 31% 2.24 $125.3 $190.3 $69.1 $93.0 52% 1.05 Sources: Value Line, Bloomberg, Google finance, and mm estimates. Notes: {a} Twoyear average Debtfv'alue ratio; value equals the book value of debt plus the market value of equity. {b} The equity beta was measured over two years against the S&P 500 Index using daily returns. {c} Financial data for Courier Corp. is from September 2011.I Co mpany A.H. Belo Corp. Beasley Broadcast Group Cou rier Corp. Gannett (30. Journal Com m., Inc. Saga Communications Business Description A newspaper company that owned and operated four daily newspapers and associated web sites. AH Belo was created in February 2008, when Belo Corp. {a media conglomerate) spun off its newspaper division into a separate public company. Belo Corp. retained the television division while A.H. Belo became a newspaper publishing company. A radio broadcasting company that owned 26 FM and 16 AM stations. The stations played a diverse range of formats: Hispanic, oldies, rhythmic, country, news, and sports talk programs. A book manufacturing and publishing company. Target markets included religious, educational textbooks, and specialty trade books. The largest U.S. newspaper company. It published 82 dailies [including USA IQ_a[q;Q and 600 community papers in 35 states. It also had both daily and weekly community newspapers published in the UK. A diversified media company with operations in publishing [48% of revenue] and broadcasting {52% of revenue]. It published an urban newspaper, weekly papers, and shoppers; and owned 33 radio and 13 TV stations. A broadcast company engaged in acquiring and operating radio and trieru'sion stations. It owned 9 TV stations, 61 FM radio stations, and 30 AM radio stations