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 . I knew they almost never talked to reporters, but Randall Smith and Heath Freeman were now two of the most powerful figures in the news industry, and theyd gotten there by dismantling local journalism. But a sense of fatalism permeated the work. It played with my mind a little bit, Glidden told me. They want to know who exactly profits when we learn, as Harvard Nieman Labs Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media newspapers. Gerry Smith. In the past 15 years, more than a quarter of American newspapers have gone out of business. Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. 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. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. 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. It was all about the next quarters profit margins, says Matt DeRienzo, who worked as a publisher for Aldens Connecticut newspapers before finally resigning. Margaret Sullivan: The Constitution doesnt work without local news. Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. 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. 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. That gave the journalists at the Sun a brief window to stop the sale from going through. About a month after The Baltimore Sun was acquired by Alden, a senior editor at the paper took questions from anxious reporters on Zoom. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. New York hedge fund and U.S. newspaper consolidator Alden Global Capital LLC has made a proposal to take Lee Enterprises Inc. private in a deal that values the company at around $141 million. But Glidden felt sure he knew the real reason: Alden wanted him gone. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. 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. It . 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. [11], In November 2021, Alden Global Capital made an offer to purchase Lee Enterprises for $24 a share in cash, or about $141 million. 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 . This once-proud publication is now owned and run by Alden Global Capital, a multibillion-dollar hedge fund with a long record of buying papers on the cheap, selling off their assets and slashing pay and jobs. Collectively, they control about one-half of daily newspapers in the U.S. Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. (Freeman denied this through a spokesperson.) Nov. 22, 2021. Lee's board of directors . The audio for this interview was produced by Ryan Benk and edited by Scott Saloway. But while its true that Alden entered the industry by purchasing floundering newspapers, not all of them were necessarily doomed to liquidation. Morale tanked; reporters burned out. about two hundred American newspapers. NPR reached out to Alden for a response. But this acquisition was profound, making Alden Global . . But he couldnt help feeling that the police scandal would have been exposed much sooner if the Sun were operating at full force. 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. On . 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. At one point, he told me, the citys entire civil-service commission was abruptly fired without explanation; his sources told him something fishy was going on, but he knew hed never be able to run down the story. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. As a privately held hedge fund, Alden doesnt have to reveal much to the public. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. But for Simon, that paper exists entirely in the past. 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. Those that have survived are smaller, weaker, and more vulnerable to acquisition. If accepted, the $24 per share purchase price would . If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. 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. 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. 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. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. They had a father-figure relationship, one told me. What happens next? Heath Freeman in an undated photo provided by Goldin Solutions . But that's not true for all of them. 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. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. 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 . Alden began its acquisition of Tribune Publishing in 2019, when they paid $117.9 million to Michael Ferro for his 25.2-percent stake. A century later, the Tribune Tower has retained its grandeur. When he did, he exhibited a casual contempt for the journalists who worked there. That's because the fund is stepping in to buy and then gut newsrooms across the country. 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. 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.. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. 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. Instead, they gutted the place. "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?" This is predatory.. This investment strategy does not come without social consequences. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. 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. Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. The pitch had a certain romantic appeal to the reporters in the room. That may well be the future of local news, he says. Connecting this to the current state of American newspaper ownership seems rather tenuous.. He used his own money to pull court records, and went years without going on a vacation. Alden Global Capital has currently bid to buy all of Tribune. 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. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. But outside the industry, few seemed to notice. Instead, they gutted the place. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. Freeman would show up at business meetings straight from the gym, clad in athleisure, the executive recalled, and would find excuses to invoke his college-football heroics, saying things like When I played football at Duke, I learned some lessons about leadership. (Freeman was a walk-on placekicker on a team that won no games the year he played.). He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. 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. The model is simple: Gut the staff, sell the real estate, jack up subscription prices, and wring as much cash as possible out of the enterprise until eventually enough readers cancel their subscriptions that the paper folds, or is reduced to a desiccated husk of its former self. Feb 16, 2021 at 8:05 pm. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. AP. But whats happening in Chicago is different. Alden Global Capital, the hedge fund that owns The Virginian-Pilot and Daily Press in Virginia, has proposed purchasing Lee Enterprises, the Iowa-based owner of the Richmond Times-Dispatch and most other major Virginia newspapers, for approximately $144 million, Alden announced Monday. 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. 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 time the FBI caught them, in 2017, the conspiracy had resulted in one dead civilian and a rash of wrongful arrests and convictions. ), Crucially, the profits generated by Aldens newspapers did not go toward rebuilding newsrooms. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. With its acquisition of Tribune Publishing earlier this year, Alden now controls more than 200 newspapers, including some of the countrys most famous and influential: the Chicago Tribune, The Baltimore Sun, the New York Daily News. 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. 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. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. Many in the journalism industry, watching lawsuits play out in Australia and Europe, have held out hope in recent years that Google and Facebook will be compelled to share their advertising revenue with the local outlets whose content populates their platforms. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. 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. 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. [2] Its managing director is Heath Freeman. 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. Maybe theyd cancel their subscriptions eventually; maybe the papers would fold altogether. On Monday, Dail 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. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. 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. [7][8] Alden's purchase price was $635 million, or $17.25 per share. Year after year, the executives from Alden would order new budget cuts, and Glidden would end up with fewer co-workers and more work. Instead, the money was used to finance the hedge funds other ventures. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. 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 . 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. 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." Coppins notes that there's even some research indicating that city budgets increase as a result, because corruption and dysfunction can take hold without a newspaper to hold powerful people to account. | Michael Gray, WIkimedia Commons. 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 . This is the story weve been telling for decades about the dying local-news industry, and its not without truth. 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. In addition to the constant layoffs, our buildings were being sold, basic office supplies became scarce and the hot water stopped working. 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. 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. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. 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. 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. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. 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. It was founded in 2007 by Randall D. But even for a group of journalists, it was tough to keep the publics attention. 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. Theres little evidence that Alden cares about the sustainability of its newspapers. 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. Now he was feeling the effects of their management. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. But that would require slow, painstaking workand there are easier ways to make money. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. When The New York Times profiles him in 1991, it notes that he excels at profiting from other peoples misery and quotes a parade of disgruntled clients and partners. The California Public Employees Retirement System, a few European banks, and Citigroup and Coca Cola Companys pension funds have all invested in Alden, along with charities such as the Circle of Service Foundation and the Alfred University Endowment. 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. The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. Spend some time around the shell-shocked journalists at the Tribune these days, and youll hear the same question over and over: How did it come to this? 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. Hellman and BNP together own 46.4 per cent of Allfunds' shares. I felt like a terrible reporter because I couldnt get to everything.. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. A quarter of the newsroom (including many big-name reporters, columnists and photographers) took the buyouts Alden offered, and while some great reporters remain on staff, it's nearly impossible for them to fill those gaps, Coppins says. 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. It was founded in 2007 by Randall D. Smith. 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. City budgets balloon, along with corruption and dysfunction. Financially, it was a raw deal. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. 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. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. My question was did Knight know what Alden was doing to newspapers when it invested with the hedge fund, and does it regret that investment now? The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. 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. You need real capital to move the needle, he told me. 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. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. 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. [4][5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune Publishing and became the second-largest newspaper publisher in the United States. 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. At the time, the Sun had a bustling bureau in Annapolis, and he marveled at the reporters ability to sort the honest politicians from the political whores by exposing abuses of power. 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. Below are highlights from his conversation with Morning Edition's A Martnez. 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. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. 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 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.
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