Hedge fund Alden Global Capital, known for making deep newsroom cuts, won approval to acquire Tribune Publishing, which includes the Chicago Tribune, The Baltimore Sun and New York Daily News. So I was more than a little shocked to learn that, according to its tax filings, Knight had invested $13 million with Aldens Distressed Opportunities Fund by 2010 and kept investing through 2014. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. A native of Vallejo, he was proud to work for his hometown paper. On more than one occasion, according to people I spoke with, he asked aloud, What do all these people do? According to the former executive, Freeman once suggested in a meeting that Aldens newspapers could get rid of all their full-time reporters and rely entirely on freelancers. It felt important. Now it might be facing extinction. Smith & Company, a firm founded by Randall Duncan Smith, initially using the $20,000 cash prize he and his wife won on the 1968-1970 gameshow Dream House. Smith began investing in newspapers and media around the same time. In May, the Tribune was acquired by Alden Global Capital, a secretive hedge fund that has quickly, and with remarkable ease, become one of the largest newspaper operators in the country. The 21st century has seen many of these generational owners flee the industry, to devastating effect. In recent months, hes been meeting with leaders of local-news start-ups across the countryThe Texas Tribune, the Daily Memphian, The City in New Yorkand collecting best practices. Read: Local news is dying, and Americans have no idea, From 2015 to 2017, he presided over staff reductions of 36 percent across Aldens newspapers, according to an analysis by the NewsGuild (a union that also represents employees of The Atlantic). Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. Alden, which took Chicago-based newspaper chain Tribune Publishing private in May, said it made a proposal to buy Lee for $24 a share in cash, a 30% premium to Friday's closing price for . The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . Nov. 22, 2021. It makes me profoundly sad to think about what the Trib was, what it is, and what its likely to become, says David Axelrod, who was a reporter at the paper before becoming an adviser to Barack Obama. 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 . To him, its the same as oil, the publisher said. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. In my many conversations with people who have worked with Freeman, not one could recall seeing him read a newspaper. When the city-hall reporter left a few months later, he picked up that beat too. Researchers at the University of North Carolina found that Alden-owned newspapers have cut their staff at twice the rate of their competitors; not coincidentally, circulation has fallen faster too, according to Ken Doctor, a news-industry analyst who reviewed data from some of the papers. Alden, a New York City-based firm that has become the grim reaper of American newspapers, had recently increased its stake in Tribune Publishing to 32%making it the largest shareholder of the . 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. Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. One early article, in the trade publication Poynter, suggested that Aldens interest in the local-news business could be seen as flattering and quoted the owner of The Denver Post as saying he had enormous respect for the firm. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. Knight spokesman Andrew Sherry declined to answer any of those questions, saying instead, Our endowment investments support our grantmaking., We invested approximately one half of one percent of our endowment in an Alden fund between late 2009 and early 2014, he said via email. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . These papers would have been liquidated if not for us stepping up.. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. But while its true that Alden entered the industry by purchasing floundering newspapers, not all of them were necessarily doomed to liquidation. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. This is predatory.. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. A search through nonprofit groups publicly available financial reports, commonly known as Form 990s, reveals that all kinds of organizations some surprising have invested their monies with Alden over the years. [10][19][20], The company has its origins in R.D. A spokesman took issue with the entirety of the story, and laid out a long list of questions attacking the integrity of the reporter, The Atlantic and some of his sources without addressing some of the more specific claims within the report. [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. Alden currently owns 32%. 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 . In the past 15 years, more than a quarter of American newspapers have gone out of business. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. Much of the Knight family's once-grand newspaper empire was ultimately acquired by Alden Global Capital, while the family foundation invested in Alden funds. Enter the email address you signed up with and we'll email you a reset link. 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. The question was how. Its a game, Randy explains to his son. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. After all, it has a long and venerable history of supporting local news. Alden Global Capital already had a 32% stake in Tribune Publishing, which owns famous names like the Tribune, Daily News, the Hartford Courant and others, and on Tuesday announced it would pay . 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. One, the warning shot was fired in 2011, in a Poynter Institute article titled Who is investor Randall Smith and why is he buying up newspaper companies? Randall Smith is the co-founder of Alden, together with his young protg, Heath Freeman, and has been called the grandfather of vulture investing. Vulture funds by definition dont reinvest in their properties they suck them dry. 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. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. At the same time, he increased subscription prices in many markets; it would take awhile for subscribersmany of them older loyalists who didnt carefully track their billsto notice that they were paying more for a worse product. A century later, the Tribune Tower has retained its grandeur. In Orlando, the Sentinel ran an editorial pleading with the community to deliver us from Alden and comparing the hedge fund to a biblical plague of locusts. In Allentown, Pennsylvania, reporters held reader forums where they tried to instill a sense of urgency about the threat Alden posed to The Morning Call. 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 . The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. 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. When I asked Freeman what he thought was broken about the newspaper industry, he launched into a monologue that was laden with jargon and light on insightsummarizing what has been the conventional wisdom for a decade as though it were Aldens discovery. Have you heard of the hedge fund Alden Global Capital? Senior lenders under the deal were to swap debt for stock. 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. 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. Rapid-fire changes underway at newspapers sold to cost-slashing hedge fund Alden Global Capital have led to a profound case of the jitters at newsrooms like the New York Daily News. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. . Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. This is a subscription-based business.. In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. He declined to meet me in person or to appear on Zoom. Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. But Glidden felt sure he knew the real reason: Alden wanted him gone. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. How do you know who wins? the boy asks. I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. With Alden in control, he believes the Sun is now a prisoner that stands little chance of escape. I asked if anyone there at the time was aware of Aldens vulture business strategy. So Freeman pivoted. Feb. 16, 2021 8:04 PM PT. [2] Its managing director is Heath Freeman. Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. That's because the fund is stepping in to buy and then gut newsrooms across the country. But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. Updated May 21, 2021 at 2:13 PM ET. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. Feb 16, 2021 at 8:05 pm. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. But that's not true for all of them. 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 . The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of . We dont hear from them Theyre, like, nameless, faceless people., In the months that followed, the Sun did not immediately experience the same deep staff cuts that other papers did. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. 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.. The firm oversaw the promotion of John Paton, a charismatic digital-media evangelist, who improved the papers web and mobile offerings and increased online ad revenue. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. 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. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. 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. But for Simon, that paper exists entirely in the past. It has not, however, retained the Chicago Tribune. The Tampa Bay Times has sold its printing plant at 1301 34th St. N to a real estate arm of Alden Global Capital, a New York hedge fund that is the second-largest newspaper owner in the country. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. Its not as if the Tribune is just withering on the vine despite the best efforts of the gardeners, Charlie Johnson, a former Metro reporter, told me after the latest round of buyouts this summer. He writes a weekly column called Mugger that savages the citys journalists by name and frequently runs to 10,000 words. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of journalism. 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. In budget meetings, according to the former executive, Freeman hectored local publishers, demanding that they produce detailed numbers off the top of their head and then humiliating them when they couldnt. But when I emailed his studio looking for information, I was informed curtly that the photo was no longer available. Had Smith bought the rights himself? 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. He can cite decades-old scoops and tell you whom they pissed off. Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. He used his own money to pull court records, and went years without going on a vacation. In the face of that setback, Alden said it would turn to the tactic of filing a proxy statement asking the company's shareholders to vote no on board members Mary Junck and Herbert Moloney during the March 2022 board elections. All good works, and Knight is to be commended for them. Some have even suggested that this represents Americas last chance to save its local-news industry. Meanwhile, in Vallejo, John Glidden went from covering crime and community news to holding the title of the only hard news reporter in town, filling a legal pad with tips he knew he'd never have time to pursue. This investment strategy does not come without social consequences. 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 truth, Freeman didnt seem particularly interested in defending Aldens reputation. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings.