Gerry Smith. 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 . For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. In its bid to acquire Tribune Publishing, the hedge fund Alden Global Capital vowed to provide $375 million in cash to the owner of the Chicago Tribune, the Baltimore Sun and other titles a . In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. ", "The most feared owner in American journalism looks set to take some of its greatest assets", "Minority shareholder sues Denver Post parent and NY hedge fund over 'breaches of fiduciary duty', "What does the Chicago Tribune sale mean for the future of newsrooms? 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. It is the nations second-largest newspaper owner by circulation. 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. 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. Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World. Freeman was only slightly more accessible. 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). 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. But that's not true for all of them. 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 . When the city-hall reporter left a few months later, he picked up that beat too. Convinced that the Sun wont be able to provide the kind of coverage the city needs, he has set out to build a new publication of record from the ground up. Tips that he would never have time to investigate piled up on a legal pad he kept at his desk. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. 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. A vulture doesnt hold a wounded animals head underwater. 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. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. 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. By McKay Coppins. But he has a big idea: He believes theres serious money to be made in buying troubled companies, steering them into bankruptcy, and then selling them off in parts. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. 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. Already the largest shareholder . On the surface, the answer might seem obvious. 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. Inside Alden Global Capital. 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. If accepted, the $24 per share purchase price would . So Freeman pivoted. Am I going to win against capitalism in America? So who is investing with them? But outside the industry, few seemed to notice. If Knights total divestment from Alden in 2014 was because someone made an ethical decision to stop dealing with the vulture fund, good for them. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. For two men who employ thousands of journalists, remarkably little is known about them. "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.". Feb. 16, 2021 8:04 PM PT. 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. 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. The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. Probably not.. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. "Local newspaper brands and operations are the engines that power trusted local news in communities across the United States," Heath Freeman, president of Alden Global Capital, said in a . What threatens local newspapers now is not just digital disruption or abstract market forces. Smith began investing in newspapers and media around the same time. My answer is its hard to know. 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. But a sense of fatalism permeated the work. Some of these papers likely would have been liquidated if the fund had not stepped in to buy them, as Alden's president told Coppins. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. Shares of Lee Enterprises Inc. rose sharply Monday after hedge fund Alden Global Capital LLC offered to buy the newspaper publisher for about $141 million. [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. 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. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. [29] This attempt also failed, as shareholders returned both directors to the Lee board despite Alden's opposition. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. With Alden in control, he believes the Sun is now a prisoner that stands little chance of escape. They want to know who exactly profits when we learn, as Harvard Nieman Lab's Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media . 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. "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. All good works, and Knight is to be commended for them. Theres little evidence that Alden cares about the sustainability of its newspapers. 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. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. Research shows that when local newspapers disappear or are dramatically gutted, communities tend to see lower voter turnout, increased polarization, a general erosion of civic engagement and an environment in which misinformation and conspiracy theories can spread more easily. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. He was fired after criticizing Alden in a Washington Post interview. 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. This was the core of Freemans argument. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. Its hard to imagine theyd show, anyway. Smith. 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. The newsroom was moved to a single room rented from the local chamber of commerce. Connecting this to the current state of American newspaper ownership seems rather tenuous.. [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. Meanwhile, reporters fanned out across their respective cities in search of benevolent rich people to buy their newspapers. On Monday, Dail [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. The 1% own and operate the . We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. . What happens next? Alden currently owns 32%. 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. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. To be sure, the Knight Foundation does much to help promote and sustain local news. But in the case of local news, nothing comparable is ready to replace these papers when they die. But years later, when Randy relocates to Palm Beach and becomes a major donor to Donald Trumps presidential campaign, it will make a certain amount of sense that his earliest known media investment was conceived as a giant middle finger to the journalistic establishment. [3] [4] With its acquisition of Tribune Publishing in late . I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. The 5 global Trends in Journalism: 1 We've moved from a world where media organizations were gatekeepers to a world where media still creates the news agenda, but platform companies control access to audiences 2 this move to digital media generally does not generate filter bubbles Instead automated Serendipity + incidental exposure drive people . Of course, its easy to romanticize past eras of journalism. The firm has a history of purchasing newspapers to cut costs wherever . MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. . Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. 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. But this acquisition was profound, making Alden Global . Alden Global Capital is a hedge fund based in Manhattan, New York City. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. His editor cited a supposed journalistic infraction (Glidden had reported the resignation of a school superintendent before an agreed-upon embargo). He used his own money to pull court records, and went years without going on a vacation. Yes, today, it's a newspaper without a newsroom. Enter the email address you signed up with and we'll email you a reset link. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. 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. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. When the sale failed to attract a sufficiently high offer, Freeman turned his attention to squeezing as much cash out of the newspapers as possible. [8][24] Tribune Publishing publishes nine major metropolitan dailies. 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. By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. Now it might be facing extinction. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. 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.. We must finally require the online tech behemoths, such as Google, Apple, and Facebook, to fairly compensate us for our original news content, he told me. A recent Financial Times analysis found that half of all daily newspapers in the U.S. are controlled by financial firms, and Coppins says that number is all but certain to keep growing. Alden gradually took control of the papers that would become DFM. 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. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. Morale tanked; reporters burned out. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. With aggressive cost-cutting, Alden can operate its newspapers at a profit for years while turning out a steadily worse product, indifferent to the subscribers its alienating. 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. But there was still a sliver of hope: Tribune and Alden agreed that the hedge fund would not increase its stake in the company for at least seven months. 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. We were like, Theyre not going to take our newspaper from us! Those that have survived are smaller, weaker, and more vulnerable to acquisition. ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? These papers would have been liquidated if not for us stepping up.. [11], In November 2021, Alden Global Capital made an offer to purchase Lee Enterprises for $24 a share in cash, or about $141 million. 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. Its a hedge that went and bought up some titles that it milks for cash.. 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. Scott Olson/Getty Images Since they bought their first newspapers a decade ago, no one has been more mercenary or less interested in pretending to care about their publications long-term health. It . Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. That may well be the future of local news, he says. Today, we know that Knight, CalPERS and others no longer invest with Alden. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. When hed agreed to the interview, Id expected him to say the things he was supposed to saythat the layoffs and buyouts were necessary but tragic; that he held local journalism in the highest esteem; that he felt a sacred responsibility to steer these newspapers toward a robust future. Financially, it was a raw deal. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. They were very tight. Freeman has resisted elaborating on his relationship with Smith, saying simply that they were family friends before going into business together. In my many conversations with people who have worked with Freeman, not one could recall seeing him read a newspaper.
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