Case 3. Bu'ett's Bid for Media Eeneral's Newspapers 1. Whyr does Warren Buffett want to buv MEG's newspaper division? 2. Is MEG's newspaper division worth $142 million? a. Start bv valuing the newspaper division, assuming the cash flow forecast in Exhibit 10 is reasonable. For the purposes of this analvsis, assume a market risk premium of 6%, a debt beta of [1.21], a closing date for the transaction of January:r 1, 2012 {you can ignore half-veer discounting), and a reduction of $30 million in vour valuation of the entire newspaper division to reflect the fact that the The Tampa Tribune is excluded from the purchase agreement. b. Are the cash flow forecasts reasonable? What are the critical assumptions you need to make for the newspaper division (again, less The Tampa Tribune] to be worth $142 million? To be worth more than $142 million? 3. How much value, if any, does Buffett derive from the credit agreement? 4. As a current lender to MEG, would you renance the $225 million term loan that is coming due? Would you renance the term loan as a new lender? 5. What should MEE's CED Marshall Morton do? What are his options