This investment strategy does not come without social consequences. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. | Michael Gray, WIkimedia Commons. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. The Ubiquity - The student news site of Quartz Hill High School (Freeman has, in the past, disputed Bainums account of the negotiations.) In truth, Freeman didnt seem particularly interested in defending Aldens reputation. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of Gothic spires and flying buttresses that were designed to exude power and prestige. [13], In response, the board of Lee Enterprises enacted a shareholder rights plan, colloquially known as a "poison pill", in order to ward off the purchase attempt. But whats happening in Chicago is different. Alden Global Capital owns 56 dailies under Digital First Media (Alden also owns 32% of Tribune 10 dailies in Column C.) Tribune Media owns 10 dailies. But he couldnt help feeling that the police scandal would have been exposed much sooner if the Sun were operating at full force. "60 Minutes" correspondent Jon Wertheim did a strong piece that aired Sunday night about the grim state of local newspapers, in part because of how hedge funds, such as Alden Global Capital . The men killing Americas newspapers, how Slack upended the workplace, and the new meth. The Alden Global Capital . On . MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. 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. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions. [4] [5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune . Misinformation proliferates. October 14, 2021. During its five-year run with Alden, it seems quite unlikely that no one at Knight knew about the hedge funds slash-and-burn strategy for two reasons. Some people believe that local newspapers will eventually be replaced by new publications, which Coppins describes as "built from the ground-up for the digital era." And everyone knows its going to run dry.. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. 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. 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. Tribune Publishing last month approved a $630m takeover deal with Alden Global Capital. So Freeman pivoted. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. . "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. Now it might be facing extinction. The pay was terrible and the work was not glamorous, but Glidden loved his job. 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 . But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. 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. Alden Global Capital is a hedge fund based in Manhattan, New York City. But I had underestimated how little Aldens founders care about their standing in the journalism world. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . Alden Global Capital, the New York hedge fund that bought Tribune Publishing this year, said on Monday that it was making an offer for another big American newspaper chain, Lee . [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. I put the question to Freeman, but he declined to answer on the record. Tuesday, 23 November 2021 07:46 PM EST. Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. As a privately held hedge fund, Alden doesnt have to reveal much to the public. Alden gradually took control of the papers that would become DFM. Orders for non-defence capital goods excluding aircraft a closely watched proxy for business investment, rose 0.8 per cent in January from a month earlier, comfortably above economists . The new owners had announced a round of buyouts, some beloved staffers were leaving, and those who remained were worried about the future. When lawmakers pressed for details last year on who funds Alden, the company replied that there may be certain legal entities and organizational structures formed outside of the United States.. "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 . It has not, however, retained the Chicago Tribune. 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. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. But that's not true for all of them. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. 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. 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. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. It turned out that those ownersNew York hedge funders whom Glidden took to calling the lizard peoplewere laser-focused on increasing the papers profit margins. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. A young man named Randall Duncan SmithRandy for shortstands next to his wife, Kathryn, answering quick-fire trivia questions in front of a live studio audience. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. The show draws from a book written by a Sun reporter, and Simon was quick to point out that the paper still has good journalists covering important stories. 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. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. Craigslist killed the Classified section, Google and Facebook swallowed up the ad market, and a procession of hapless newspaper owners failed to adapt to the digital-media age, making obsolescence inevitable. 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 . Well, that wasnt the point. When he did, he exhibited a casual contempt for the journalists who worked there. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. For two men who employ thousands of journalists, remarkably little is known about them. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. 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. Senior lenders under the deal were to swap debt for stock. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . 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. That may well be the future of local news, he says. Newspaper publisher Lee Enterprises is asking its shareholders to help it fight off a hostile takeover . Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. In a news release Monday, Alden said it sent Lee's board a letter with the offer. "The question is, will local communities decide that this is an important issue, that it's worth saving these newspapers, protecting them from firms like Alden, or will they decide that they don't really care?" On the surface, the answer might seem obvious. Now he was feeling the effects of their management. Im worried the worst is yet to come. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. In the ensuing exodus, the paper lost the Metro columnist who had championed the occupants of a troubled public-housing complex, and the editor who maintained a homicide database that the police couldnt manipulate, and the photographer who had produced beautiful portraits of the states undocumented immigrants, and the investigative reporter whod helped expose the governors offshore shell companies. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. A native of Vallejo, he was proud to work for his hometown paper. [7][8] Alden's purchase price was $635 million, or $17.25 per share. When Simon called me, he was on the set of his new miniseries, We Own This City, which tells the true story of Baltimore cops who spent years running their own drug ring from inside the police department. . 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. , 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. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. He said that he still appreciated their journalism, but that he couldnt speak for his corporate bosses. Baltimore has always had its problems, he told me. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. 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. 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. Meanwhile, reporters fanned out across their respective cities in search of benevolent rich people to buy their newspapers. ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? Somehow, no one's buying it. The Tribune had been profitable when Alden took over. Lee Enterprises, the owner of daily newspapers in Winston-Salem and Greensboro, this morning rejected a hedge fund's proposal to take over the company. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! 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. It is a subsidiary of Alden Global Capital, the New York City hedge fund that backed the purchase of and dramatic cost-cutting at more than 100 newspapers causing more than 1,000 lost jobs. . Financially, it was a raw deal. 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). 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. The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. He took particular pride in finding novel ways to give away his family fortune, funding child-poverty initiatives in Baltimore and prenatal care for women in Liberia. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. So far, Alden has limited its closures primarily to weekly newspapers, but Doctor argues its only a matter of time before the firm starts shutting down its dailies as well. A century later, the Tribune Tower has retained its grandeur. 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 replace a paper like the Sun would require a large, talented staff that covers not just government, but sports and schools and restaurants and art. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. 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. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. 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. When a reporter asked if their work was still valued, the editor sounded deflated. They are also defined by an obsessive secrecy. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. 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? Theres no industry that I can think of more integral to a working democracy than the local-news business, he said. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. "[21], shareholder rights plan, colloquially known as a "poison pill", "Alden Global Capital LLC NEW YORK , NY", "Company Overview of Alden Global Capital LLC", "Heath Freeman of Alden Global Capital says he wants to save local news. John Temple: My newspaper died 10 years ago. 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. 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. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. In addition to the constant layoffs, our buildings were being sold, basic office supplies became scarce and the hot water stopped working. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. Send any friend a story As a subscriber, you . The Denver Post has become the face of this struggle, due to an editorial published in its own pages lashing out against owners, New York-based hedge fund Alden Global Capital. Before our interview, Id contacted a number of Aldens reporters to find out what they would ask their boss if they ever had the chance. 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. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of . Since Alden's . If you went into a lab to create the perfect bro, Heath would be that creation, says one former executive at an Alden-owned company, who, like others in this story, requested anonymity to speak candidly. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. Aldens calculus was simple. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? Read: What we lost when Gannett came to town. But that would require slow, painstaking workand there are easier ways to make money. But as long as Alden had made back its money, the investment would be a success. 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. I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. Alden Global Capital revealed a proposal Monday to purchase Lee Enterprise Inc. and its newspapers at $24 a share, casting alarm through the many newsrooms owned by Lee. Alden Global Capital has currently bid to buy all of Tribune. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. My answer is its hard to know. Maybe theyd cancel their subscriptions eventually; maybe the papers would fold altogether. 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? Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. 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 . After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. Ken Kelleher is an American sculptor. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. 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 . Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. Here was one of Americas most storied newspapersa publication that had endorsed Abraham Lincoln and scooped the Treaty of Versailles, that had toppled political bosses and tangled with crooked mayors and collected dozens of Pulitzer Prizesreduced to a newsroom the size of a Chipotle. 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. Today, we know that Knight, CalPERS and others no longer invest with Alden. But we dont know, because they arent saying. With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. When it was over, a quarter of the newsroom was gone. By McKay Coppins. They had a father-figure relationship, one told me. One conclusions even these reporters are hesitant to make is that we are all dealing within a capitalist system which has none, or few, principles to guide itself, apart from making a profit, no matter how. Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. Heath hopes the well never runs dry, but hes going to keep pumping until it does. As a reporter who's 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 America's largest newspaper chains?. [29] This attempt also failed, as shareholders returned both directors to the Lee board despite Alden's opposition. 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 about $141 million. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. 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. 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. . . 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. Instead, they gutted the place. At their worst, they used their papers to maintain oppressive social hierarchies. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. 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. Instead, the money was used to finance the hedge funds other ventures. The pitch had a certain romantic appeal to the reporters in the room. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. He wrote, "Alden Global Capital has eliminated the jobs of scores of reporters and editors, and decimated journalism in cities all over the country: Denver, Boston, San Jose, Trenton, etc. He used his own money to pull court records, and went years without going on a vacation. That's because the fund is stepping in to buy and then gut newsrooms across the country. "[34], In October 2021, The Atlantic examined the impact of Alden's acquisition of the Chicago Tribune, noting that, "The new owners did not fly to Chicago to address the staff, nor did they bother with paeans to the vital civic role of journalism. Randy claims no editorial role in the Press, and his investment in the projectwhich has little chance of producing the kind of return hes accustomed tocould be chalked up to brotherly loyalty. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. [21], Under the acquisition plan, MediaNews Group debt fell to $165 million from about $930 million. How exactly Randall Smith chose Heath Freeman as his protg is a matter of speculation among those who have worked for the two of them.
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