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. It played with my mind a little bit, Glidden told me. Hedge fund Alden Global Capital in hunt for big newspaper chain Lee It emphasizes supporting the emergence of new, sustainable models for local news, through both grantmaking and research, Sherry told me, including grant programs for nonprofit news organizations. Well, that wasnt the point. But we dont know, because they arent saying. The endorsement debate swings around again - Columbia Journalism Review 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. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. Controversial hedge fund Alden Global wins bidding for Chicago Tribune City budgets balloon, along with corruption and dysfunction. About a month after The Baltimore Sun was acquired by Alden, a senior editor at the paper took questions from anxious reporters on Zoom. 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. Alden Global Capital aims to buy Lee Enterprises | The Gazette I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. 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. Smith began investing in newspapers and media around the same time. All good works, and Knight is to be commended for 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. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. By Julie Reynolds. On Monday, Dail Even as Aldens portfolio grew, Freeman rarely visited his newspapers. Freeman never responded. 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. 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. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. By McKay Coppins. He started as a general-assignment reporter, covering local crime and community events. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. Aldens calculus was simple. 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 . [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. The shows premise pits two couples against each other for the chance to win a home. When the Smiths win, they pass on the house and take the cash prize insteada $20,000 haul that Randy will eventually use to seed a small trading firm he calls R.D. Why Chicago Tribune Staffers Are Terrified Of Their Hedge Fund - Forbes 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. One researcher tells me that if that money were invested in the S&P 500 Index Fund, it would have earned roughly $11 million over the same period. 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. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. Well, he told me, they have some very good reporters., This article appears in the November 2021 print edition with the headline The Men Who Are Killing Americas Newspapers., A Secretive Hedge Fund Is Gutting Newsrooms, I Dont Know That I Would Even Call It Meth Anymore, W. G. Sebald Ransacked Jewish Lives for His Fictions. 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. 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 . According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. Hedge fund Alden in hunt for another big newspaper chain ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune [11], In November 2021, Alden Global Capital made an offer to purchase Lee Enterprises for $24 a share in cash, or about $141 million. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. 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.). Im repulsed by the incestuous world of New York journalism, he tells New York magazine. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. Youd be surprised. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. Lee's board of directors . In May, The Alden Global Capital a hedge fund, acquired Tribune Publishing TPCO for $633 million. What threatens local newspapers now is not just digital disruption or abstract market forces. Lee Enterprises holds off an Alden takeoverfor now The men killing Americas newspapers, how Slack upended the workplace, and the new meth. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. What's in the fine print in Alden's offer to takeover Tribune? - The If you want to know what its like when Alden Capital buys your local newspaper, you could look to Montgomery County, Pennsylvania, where coverage of local elections in more than a dozen communities falls to a single reporter working out of his attic and emailing questionnaires to candidates. 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. 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. On the surface, the answer might seem obvious. 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. , 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. At the Pioneer Press , where its staff is down to 60, the paper produced a . (Freeman has, in the past, disputed Bainums account of the negotiations.) 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. No response came back. Its a game, Randy explains to his son. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. Opinions - Help yourself. Is it ever okay to nick an idea? Alden Global Capital has currently bid to buy all of Tribune. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. 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. Hedge fund Alden Global is buying newspaper chain Tribune Publishing - CNN Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. For two men who employ thousands of journalists, remarkably little is known about them. I asked. 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. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. 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. 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 . A Cornell grad with an M.B.A., Randy is on a partner track at Bear Stearns, where hes poised to make a comfortable fortune simply by climbing the ladder. A month after he started, one of his fellow reporters left and Glidden was asked to start covering schools in addition to his other responsibilities. 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. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. (Freeman denied this through a spokesperson.) Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. Im worried the worst is yet to come. My request for an interview with Smith was dismissed by his spokesperson before I finished asking. Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. Alden is in the business of making money, not journalism. Who Profits From Alden Global Capital? Media . After weeks of back-and-forth, he agreed to a phone call, but only if parts of the conversation could be on background (which is to say, I could use the information generally but not attribute it to him). For a fleeting moment, Aldens newspapers became unexpected darlings of the journalism industrywritten about by Poynter and Nieman Lab, endorsed by academics like Jay Rosen and Jeff Jarvis. Alden Global Capital moves to buy Lee Enterprises, owner of the St This Is How a Newspaper Dies - POLITICO Magazine This story originally appeared on the Morning Edition live blog. Maybe this obscure hedge fund had a plan. 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. Layout design was outsourced to freelancers in the Philippines. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. Read: What we lost when Gannett came to town. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. 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? At their worst, they used their papers to maintain oppressive social hierarchies. 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. To be sure, the Knight Foundation does much to help promote and sustain local news. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. . "A lot of cities almost operate with the assumption that there will be at least one local newspaper, in some cases several local newspapers, acting as a check on the authorities," he says. Tips that he would never have time to investigate piled up on a legal pad he kept at his desk. In a news release Monday, Alden said it sent Lee's board a letter with the offer. 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. 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. 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 21st century has seen many of these generational owners flee the industry, to devastating effect. Alden gradually took control of the papers that would become DFM. He gained 100 pounds and started grinding his teeth at night. 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.. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. . The audio for this interview was produced by Ryan Benk and edited by Scott Saloway. 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. 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 . [3] [4] With its acquisition of Tribune Publishing in late . 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. Vallejo deserves better. A few weeks after the story came out, he was fired. Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. Enter the email address you signed up with and we'll email you a reset link. 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. The Alden Global Capital . 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. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. Heath hopes the well never runs dry, but hes going to keep pumping until it does. A look at Alden Global Capital is the cover story of the latest . These papers would have been liquidated if not for us stepping up.. 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. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. But he says the worst culprit is the hedge fund Alden Global Capital, which bought the Mercury in 2011 and has since sold the paper's building and slashed newsroom staff by about 70%. Freeman was only slightly more accessible. Its not the name or the flag., He may get his wish. After a contentious presidential race and amid a still-raging pandemic, there was a limited supply of outrage and sympathy to spare for local reporters. It seemed reasonable to ask that they answer a few questions. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . Meet the Hedge Fund Boss Who Just Bought Tribune's Newspapers 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. As the months passed, things kept getting worse. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. 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. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. Alden Global Looks to Buy Newspaper Publisher Lee Enterprises 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 . 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. The $633 million sale made Alden the nation's second largest newspaper owner in terms of circulation, with more than 200 newspapers. Instead, they gutted the place. He can cite decades-old scoops and tell you whom they pissed off. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. Is this company saving newspapers or profiting from their demise? - The The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. Lee Enterprises rejects Alden Global Capital's unsolicited proposal He declined to meet me in person or to appear on Zoom. 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. In truth, Freeman didnt seem particularly interested in defending Aldens reputation. As a privately held hedge fund, Alden doesnt have to reveal much to the public. Who is investor Randall Smith and why is he buying up newspaper companies, deep losses to Alden funds overall values, Denver Post newsroom workers invoke Thirst Amendment to raise awareness about conditions under Alden, Pittsburgh newspaper workers are making history, The NewsGuild urges public pension funds to divest from Cerberus, NewsGuild to Lee Shareholders: Reject Aldens Vote No Campaign. Next up: Chicago, Baltimore, and the New York Daily News. 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. | Michael Gray, WIkimedia Commons. His editor cited a supposed journalistic infraction (Glidden had reported the resignation of a school superintendent before an agreed-upon embargo). The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. Theres little evidence that Alden cares about the sustainability of its newspapers. Already the largest shareholder . Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. And everyone knows its going to run dry.. 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. 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. It is the nations second-largest newspaper owner by circulation. 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. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. For Baltimore to avoid a similar fate, Simon told me, something new would have to come alonga spiritual heir to the Sun: A newspaper is its contents and the people who make it. . With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. Year after year, the executives from Alden would order new budget cuts, and Glidden would end up with fewer co-workers and more work. 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. Alden, which already owned one-third of . It was founded in 2007 by Randall D. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. Somehow, no one's buying it. You need real capital to move the needle, he told me. But he couldnt help feeling that the police scandal would have been exposed much sooner if the Sun were operating at full force. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. Former Knight-Ridder headquarters. Gerry Smith. When it was over, a quarter of the newsroom was gone. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. The scene was somehow even grimmer than Id imagined. On . 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. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. This is a subscription-based business.. 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. If accepted, the $24 per share purchase price would . Digital First Media - Wikipedia 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. ", "Denver Post Rebels Against Its Hedge-Fund Ownership", "Tribune Says Sale to Alden Wins Approval Amid Confusion Over Key Shareholder's Vote", "Lee Enterprises Shares Jump on Takeover Offer From Alden", "The vulture is hungry again: Alden Global Capital wants to buy a few hundred more newspapers", "Colorado Group Pushes to Buy Embattled Denver Post From New York Hedge Fund", "The battle for Tribune: Inside the campaign to find new owners for a legendary group of newspapers", "Is this strip-mining or journalism? But it turned out that Smith had so many doorsteps16 mansions in Palm Beach alone, as of a few years ago, some of them behind gatesthat the plan proved impractical. "[28], In mid-February 2022, the Delaware court found in favor of Lee Enterprises. It was clear that they didnt care about this being a business in the future. The 1% own and operate the . 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. AP. . 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 . 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 . "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. But beneath all the recriminations and infighting was a cruel reality: When faced with the likely decimation of the countrys largest local newspapers, most Americans didnt seem to care very much. [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.