but sadly on a global scale there is hardly any independent news sources left currently. [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. Lee, which owns the St. Louis Post Dispatch, the Omaha World-Herald and many other daily newspapers throughout the region, is staving off a takeover attempt by Alden Global Capital, a New-York . He can cite decades-old scoops and tell you whom they pissed off. A Secretive Hedge Fund Is Gutting Newsrooms. "[28], In mid-February 2022, the Delaware court found in favor of Lee Enterprises. The question was how. [7][8] Alden's purchase price was $635 million, or $17.25 per share. Alden currently owns 32%. Freeman was only slightly more accessible. On . Gerry Smith. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. He was fired after criticizing Alden in a Washington Post interview. But there are some clues here and there. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. One tagline he was considering was Marylands Best Newsroom., When I asked, half in jest, if he planned to raid the Sun to staff up, he responded with a muted grin. Like many alumni of the Sun, Simon is steeped in the papers history. This summer, Alden Global Capital acquired Tribune Publishing and its titles, from small community newspapers to major metro titles like its flagship, The Chicago Tribune, and The Baltimore Sun. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. He teaches his 8-year-old son, Caleb, to make trades on a Quotron computer, and imparts the value of delayed gratification by reportedly postponing his familys Christmas so that he can use all their available cash to buy stocks at lower prices in December. [10] With its acquisition of Tribune Publishing in late May 2021, Alden is collectively the second-largest owner of newspapers in the United States, as calculated by average daily print circulation, second only to Gannett. The specific shareholder rights plan adopted by the Lee board forbids Alden from purchasing more than 10% of the company, and will be in force for one year. . Located in the same Manhattan office building as Alden, it funds stem-cell research, health-related charities, arts and culture and Duke University, alma mater of Smiths protg Heath Freeman. It hurts to see the paper like this, he told her. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! As a reporter whos covered Alden Global Capital for more than two years, people often ask me who are the investors behind the hedge fund that owns one of Americas largest newspaper chains? [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. This company that owns us now seems to still be prettyI dont even know how to put it, the editor said, according to a recording of the meeting obtained by The Atlantic. A group of 11 community newspapers owned by Red Wing Publishing Co. have been sold to MediaNews Group, owner of the St. Paul Pioneer Press and more than 100 newspapers across the country. For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. That's because the fund is stepping in to buy and then gut newsrooms across the country. Today, half of all daily newspapers in the U.S. are controlled by financial firms, according to an analysis by the Financial Times, and the number is almost certain to grow. Several years later, when Heath was still in his mid-20s, Smith co-founded Alden Global Capital with him, and eventually put him in charge of the firm. Feb. 16, 2021 8:04 PM PT. In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. . Of course, its easy to romanticize past eras of journalism. [10][19][20], The company has its origins in R.D. 'Sobs, gasps, expletives' over latest Denver Post layoffs", "The Hedge Fund Vampire That Bleeds Newspapers Dry Now Has the Chicago Tribune by the Throat", "How Massive Cuts Have Remade The Denver Post", "Newsonomics: By selling to Americas worst newspaper owners, Michael Ferro ushers the vultures into Tribune", "A Secretive Hedge Fund Is Gutting Newsrooms", "Affiliated Media Files for Bankruptcy to Restructure (Update2)", "The shakeup at MediaNews: Why it could be the leadup to a massive newspaper consolidation", "Alden Global Capital to buy Tribune in deal valued at $630 million", "Lee Enterprises Enacts Poison Pill to Guard Against Alden Takeover", "Lee Enterprises Board Rejects Alden's Acquisition Offer", "Alden Global Capital takes Lee Enterprises to court over failed board nominations", "Alden Global Capital sues Lee Enterprises after rejected takeover bid", "Alden Global Capital loses lawsuit to nominate its slate of candidates for Lee Enterprises' board", "Lee Enterprises shareholders reelect three directors amid hedge fund fight", "Tampa Bay Times sells printing plant to developer for $21 million", "A hedge fund's 'mercenary' strategy: Buy newspapers, slash jobs, sell the buildings", "The hedge fund trying to buy Gannett faces federal probe after investing newspaper workers' pensions in its own funds", https://en.wikipedia.org/w/index.php?title=Alden_Global_Capital&oldid=1130942589, This page was last edited on 1 January 2023, at 19:27. Hellman and BNP together own 46.4 per cent of Allfunds' shares. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. Aldens Distressed Opportunities Fund was launched in 2008 and saw astounding success in its first few months, showing returns of more than 30 percent a big rescue for Alden, whose investments in Russia the year before had lost more than 61 percent of their value. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. With full control of Tribune Publishing, Alden Global Capital is scrambling to squeeze out a return on its $600 million investment in the struggling Chicago-based newspaper company. [6][7][8][9], The company operates its media holdings through Digital First Media (DFM), which it acquired in 2010 after DMG's parent company, MediaNews Group, declared bankruptcy. Who Profits From Alden Global Capital? He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. Now it might be facing extinction. After all, it has a long and venerable history of supporting local news. The consequences can influence national politics as well; an analysis by Politico found that Donald Trump performed best during the 2016 election in places with limited access to local news. Alden completed its takeover of the Tribune papers in May. Prior to the buildings completion, McCormick directed his foreign correspondents to collect fragments of various historical sitesa brick from the Great Wall of China, an emblem from St. Peters Basilicaand send them back to be embedded in the towers facade. Feb 16, 2021 at 8:05 pm. [29] This attempt also failed, as shareholders returned both directors to the Lee board despite Alden's opposition. What threatens local newspapers now is not just digital disruption or abstract market forces. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. For Freeman and his investors to come out ahead, they didnt need to worry about the long-term health of the assetsthey just needed to maximize profits as quickly as possible. In the Hyatt meeting, Ted Venetoulis, a former Baltimore politician, advised the reporters to pick a noisy public fight: Set up a war room, circulate petitions, hold events to rally the city against Alden. [31], In 2019, Twenty Lake Holdings reported that it had acquired about 180 properties with 2.3 million square feet of real estate in 29 states. [13], Newspapers in Alden's portfolio include Chicago Tribune, The Denver Post, the St. Paul Pioneer Press, the Boston Herald, The Mercury News, East Bay Times, The Orange County Register, and Orlando Sentinel. Plus how Facebook is a hostile foreign power, the engineers daughter, the collapse of music genres, Dostoyevsky, W. G. Sebald, nasty return logistics, and more. Connecting this to the current state of American newspaper ownership seems rather tenuous.. Its World War II correspondent brought firsthand news of Nazi concentration camps to American readers; its editorial page had the power to make or break political careers in Maryland. These papers would have been liquidated if not for us stepping up.. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. Scott Olson/Getty Images When a reporter asked if their work was still valued, the editor sounded deflated. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. The shows premise pits two couples against each other for the chance to win a home. It wasn't the first newspaper acquisition for this hedge fund firm, nor is it the only firm of its kind eyeing the nation's newspapers. He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. On the surface, the answer might seem obvious. So who is investing with them? To find the papers current headquarters one afternoon in late June, I took a cab across town to an industrial block west of the river. The new owners had announced a round of buyouts, some beloved staffers were leaving, and those who remained were worried about the future. Freeman, meanwhile, would later gloat to colleagues that Bainum was never serious about buying the newspapers and just wanted to bask in the worshipful media coverage his bid generated. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. Freeman was clearly aware of his reputation for ruthlessness, but he seemed to regard Aldens commitment to cost-cutting as a badge of honorthe thing that distinguished him from the saps and cowards who made up Americas previous generation of newspaper owners. (Freeman denied this characterization through a spokesperson. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. Last week, Alden Global Capital, the hedge fund notorious for slashing costs at its local titles, came down on the No side of the question, with editorial boards at papers that it owns stating that they will no longer endorse candidates for governor, US senator, or president. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. By 2011, when Aldens Distressed Opportunities Fund lost more than 20 percent of its value, Knights holdings in the fund were valued at $10.7 million. Many of the operators were looking at the newspaper business as a local advertising business, he said, and we didnt believe that was the right way to look at it. A former Sun reporter whose work on the police beat famously led to his creation of The Wire on HBO, Simon told me the paper had suffered for years under a series of blundering corporate ownersand it was only a matter of time before an enterprise as cold-blooded as Alden finally put it out of its misery. By Julie Reynolds. But Glidden felt sure he knew the real reason: Alden wanted him gone. A look at Alden Global Capital is the cover story of the latest . Ken Kelleher is an American sculptor. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. | Michael Gray, WIkimedia Commons. . Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. As the months passed, things kept getting worse. But even for a group of journalists, it was tough to keep the publics attention. A native of Vallejo, he was proud to work for his hometown paper. From the March 1914 issue: H. L. Mencken on newspaper morals, A story circulated throughout the companypossibly apocryphal, though no one could say for surethat when Freeman was informed that The Denver Post had won a Pulitzer in 2013, his first response was: Does that come with any money?. Former Knight-Ridder headquarters. At their worst, they used their papers to maintain oppressive social hierarchies. Hedge fund Alden Global Capital is attempting to acquire Davenport-based Lee Enterprises, one of the country's largest newspaper chains, in all the markings of a hostile takeover. Somehow, no one's buying it. . Updated May 21, 2021 at 2:13 PM ET. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. he asks. Alden gradually took control of the papers that would become DFM. So Freeman pivoted. NPR's A Martnez talks to McKay Coppins of The Atlantic about how a hedge fund, Alden Global Capital, is buying and then gutting newspapers and the implications for democracy. At the end of last month, Alden Global Capital, a notorious newspaper-owning hedge fund, sought to stake its claim on one of the last newspaper chains it hasn't yet touched: Lee Enterprises, which owns 90 publications across the country.Alden, which currently owns six percent of Lee's stock, sent an unsolicited offer to purchase the newspaper chain for $24 per share. It . MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. The rationale offered by the board was, Consistent with its fiduciary duties, Lees Board has taken this action to ensure our shareholders receive fair treatment, full transparency and protection in connection with Aldens unsolicited proposal to acquire Lee. All good works, and Knight is to be commended for them. As a young man, hed studied at divinity school before taking over his fathers company, and decades later he still carried a healthy sense of noblesse oblige. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. . Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. My answer is its hard to know. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. Theres no industry that I can think of more integral to a working democracy than the local-news business, he said. . One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. The papers printing was moved to a plant more than 100 miles outside town, Glidden told me, which meant that the news arriving on subscribers doorsteps each morning was often more than 24 hours old. Alden, which owns more than 200 newspapers across the country, has developed a reputation for using extensive layoffs and severe cost cuts at the newspapers it owns. I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. It has figured out how to make a profit by driving newspapers into the ground, he says, since Alden's aim is not to make them into long-term sustainable businesses but rather maximize profits quickly to show it has made a winning investment. It financed the deal with the help of Cerberusa private-equity firm that owned, among other businesses, the security company that trained Saudi operatives who participated in the murder of the journalist Jamal Khashoggi. Otherwise, youre just peeing in the ocean.. Instead, they gutted the place. By the 1980s, this strategy has made Randy luxuriously wealthyvacations in the French Riviera, a family compound outside New York Cityand he has begun to school his children on the wonders of capitalism. These papers were in many cases left for dead by local families not willing to make the tough but appropriate decisions to get these news organizations to sustainability. Alden Global Capital, a New York-based hedge fund that this year became the second largest newspaper publisher in the United States, has made an offer to purchase Lee Enterprises, the media company that owns 75 daily newspapers, including the St. Louis Post-Dispatch. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. But by 2013, despite deep losses to Alden funds overall values in the previous two years, Smith was able to begin buying his now infamous swath of South Florida mansions for $58 million and Freeman was acquiring multi-million-dollar New York condos. But as an organization that believes that quality information is essential for individuals and communities to make their own bestchoices, it was disappointing that the foundation couldnt simply own up to its error in judgment when it came to Alden. Its being snuffed out, quarter after quarter after quarter. We were sitting in a coffee shop in Logan Square, and he was still struggling to make sense of what had happened. Feeling burned by the hedge fund, Bainum decided to make a last-minute bid for all of Tribune Publishings newspapers, pledging to line up responsible buyers in each market. A vulture doesnt hold a wounded animals head underwater. Hedge fund Alden Global Capital, one of the country's largest newspaper owners with a reputation for intense cost cuts and layoffs, has offered to buy the local newspaper chain Lee Enterprises for . Read: What we lost when Gannett came to town. , From the February 1905 issue: The confessions of a newspaper woman, The papers union hired a PR firm to launch a public-awareness campaign under the banner Save Our Sun and published a letter calling on the Tribune board to sell the paper to local owners. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. One acquaintance tells The Village Voice that hes the kind of guy who divests himself every couple of years to avoid ending up on lists of the worlds richest people. He started as a general-assignment reporter, covering local crime and community events. The men killing Americas newspapers, how Slack upended the workplace, and the new meth. But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. Meanwhile, reporters fanned out across their respective cities in search of benevolent rich people to buy their newspapers. In legal filings, Alden has acknowledged diverting hundreds of millions of dollars from its newspapers into risky bets on commercial real estate, a bankrupt pharmacy chain, and Greek debt bonds. Alden is in the business of making money, not journalism. [21], Under the acquisition plan, MediaNews Group debt fell to $165 million from about $930 million. Smith & Company. Baltimore has always had its problems, he told me. But as long as Alden had made back its money, the investment would be a success. The practical effect of the death of local journalism is that you get what weve had, he told me, which is a halcyon time for corruption and mismanagement and basically misrule.. This investment strategy does not come without social consequences. To many, it just didnt seem possible that Alden would instead choose to destroy newspapers by laying off the workforce en masse and stripping papers of all their assets. My request for an interview with Smith was dismissed by his spokesperson before I finished asking. "And what we've seen in a lot of these places where newspapers have been scaled back or even closed is there really is no comparable product in place, whether it's by the government or by another news organization, to do what these local newspapers have done for hundreds of years.". Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. Below are highlights from his conversation with Morning Edition's A Martnez. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. Prior to the acquisition of the Tribune Company, we purchased substantially all of our newspapers out of bankruptcy or close to liquidation, he told me. Those that have survived are smaller, weaker, and more vulnerable to acquisition. After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. Hedge fund Alden Global Capital will acquire the rest of what it does not already own of Tribune Publishing, owner of the Chicago Tribune, the New York Daily News and other local newspapers, in a . But most of them also had a stake in the communities their papers served, which meant that, if nothing else, their egos were wrapped up in putting out a respectable product. At the time, finalternatives.com reported that the Global Distress Opportunities fund would focus on financial firms as well as homebuilding, gaming and auto-related names.. Today, we know that Knight, CalPERS and others no longer invest with Alden. About a month after The Baltimore Sun was acquired by Alden, a senior editor at the paper took questions from anxious reporters on Zoom. If you're a reader of local newspapers particularly the Chicago Tribune, The Baltimore Sun or New York Daily News you're going to want to make sure the answer is yes. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. Alden-owned newspapers have cut their staff at twice the rate of their competitors, for all of Tribune Publishings newspapers, security company that trained Saudi operatives. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. Alden, which has built a reputation as one of the newspaper industry's most aggressive cost-cutters, became Tribune Publishing's largest shareholder in November 2019 and owns a 31.3% stake. While some finance reporters noted that Smiths newspaper investments were all losing value, none seemed to notice that Smith and Aldens president Heath Freeman would soon start strip mining their news companies real estate and other assets. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. Youd be surprised. Alden Global Capital, the hedge fund that owns the Chicago Tribune and New York Daily News, offered to buy Lee Enterprises Inc. for about $142 million, seeking a larger share of the . When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. If accepted, the $24 per share purchase price would . Tribune Publishing last month approved a $630m takeover deal with Alden Global Capital. Some in the city started to wonder if the paper was even worth saving. Or to nearby Monterey, where the former Herald reporter Julie Reynolds says staffers were pushed to stop writing investigative features so they could produce multiple stories a day. By that point, Alden was widely known as the grim reaper of American newspapers, as Vanity Fair had put it, and news of the acquisition plans had unleashed a wave of panic across the industry. According to Aldens scarce SEC filings, it currently has fewer than 10 investors, most of them from overseas. But who most of those few souls are, and how much of the hundreds of millions skimmed from DFM papers theyve received remains a deep, dark mystery. That gave the journalists at the Sun a brief window to stop the sale from going through. Instead, they gutted the place. Next year, Bainum will launch The Baltimore Banner, an all-digital, nonprofit news outlet. Morale tanked; reporters burned out. I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. It felt important. This all seemed especially relevant considering many Alden/DFM papers were previously part of the Knight-Ridder chain, the family news empire from which the foundation sprang. Hedge fund Alden Global Capital will acquire the rest of what it does not already own of Tribune Publishing, owner of the Chicago Tribune, the New York Daily News and other local newspapers . [4] [5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune . For those who cared about the future of local news, it was hard to imagine a better outcomewhich made it all the more devastating when the bid fell through. I asked Knight about those investments and whether the Foundations officers had any regrets, knowing what we now do about Aldens devastating effect on its own newspapers. After Brian took his own life, in 2001, Smith became a mentor and confidant to Heath, who was in college at the time of his fathers death. So what is this Distressed Opportunities fund? The Tribune Company (which owns the newspapers mentioned above) was still turning a profit when Alden bought it, but the hedge fund immediately offered aggressive rounds of buyouts and shrunk its newsrooms in the name of increasing profit margins. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. The pay was terrible and the work was not glamorous, but Glidden loved his job. The one central theme, the Times reports, seems to be that Smith and its web of affiliates are out, first and foremost, for themselves. If this reputation bothers Randy and his colleagues, they dont let on: For a while, according to The Village Voice, his firm proudly hangs a painting of a vulture in its lobby.
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