Nov. 22, 2021. You need real capital to move the needle, he told me. 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. Am I going to win against capitalism in America? The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. I felt like a terrible reporter because I couldnt get to everything.. But for all the theatrics, his marching orders were always the same: Cut more. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. By Julie Reynolds. 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. 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. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. He used his own money to pull court records, and went years without going on a vacation. 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 . "[28], In mid-February 2022, the Delaware court found in favor of Lee Enterprises. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. . We dont hear from them Theyre, like, nameless, faceless people., In the months that followed, the Sun did not immediately experience the same deep staff cuts that other papers did. It played with my mind a little bit, Glidden told me. 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?. 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. A native of Vallejo, he was proud to work for his hometown paper. The final product, completed in 1925, was an architectural spectacle unlike anything the city had seen beforeromance in stone and steel, as one writer described it. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." When plans for the building were announced in 1922, Colonel Robert R. McCormick, the longtime owner of the Chicago Tribune, said he wanted to erect the worlds most beautiful office building for his beloved newspaper. 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. 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. When he did, he exhibited a casual contempt for the journalists who worked there. Im worried the worst is yet to come. 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. 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. And everyone knows its going to run dry.. It was clear that they didnt care about this being a business in the future. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. 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. 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. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. 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. Its a game, Randy explains to his son. The Alden Global Capital . "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. about two hundred American newspapers. 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. Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. 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. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. Send any friend a story As a subscriber, you . 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 . Alden currently owns 32%. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. I asked. One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. Next year, Bainum will launch The Baltimore Banner, an all-digital, nonprofit news outlet. (Freeman denied this through a spokesperson.) In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. He said that he still appreciated their journalism, but that he couldnt speak for his corporate bosses. AP. Baltimore has always had its problems, he told me. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. Smith & Company. Alden completed its takeover of the Tribune papers in May. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. NPR reached out to Alden for a response. 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. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? After all, it has a long and venerable history of supporting local news. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. Or to Denver, where the Posts staff was cut by two-thirds, evicted from its newsroom, and relocated to a plant in an area with poor air quality, where some employees developed breathing problems. Alden Global Capital, a hedge fund known for gutting local newsrooms, is seeking to buy Lee Enterprises (LEE), a publicly traded company with a chain of daily newspapers and other publications . Media . A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. The pay was terrible and the work was not glamorous, but Glidden loved his job. 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. So who is investing with them? 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. When the city-hall reporter left a few months later, he picked up that beat too. Now it might be facing extinction. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. 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 . No response came back. Alden's holdings already spanned the country, including the . Feb. 16, 2021 8:04 PM PT. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. But if you really started fucking up in grandiose and belligerent ways, if you started stealing and grifting and lying, eventually somebody would come up behind you and say, Youre grifting and youre lying and theyd put it in the paper., The bad stuff runs for so long now, he went on, that by the time you get to it, institutions are irreparable, or damn near close., Take away the newsroom packed with meddling reporters, and a city loses a crucial layer of accountability. At their worst, they used their papers to maintain oppressive social hierarchies. Meanwhile, in Vallejo, John Glidden went from covering crime and community news to holding the title of the only hard news reporter in town, filling a legal pad with tips he knew he'd never have time to pursue. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. 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. In May, the Tribune was acquired by Alden Global Capital, a secretive hedge fund that has quickly, and with remarkable ease, become one of the largest newspaper operators in the country. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. 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. Its being snuffed out, quarter after quarter after quarter. We were sitting in a coffee shop in Logan Square, and he was still struggling to make sense of what had happened. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. The new owners had announced a round of buyouts, some beloved staffers were leaving, and those who remained were worried about the future. 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? Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. They had a father-figure relationship, one told me. [10][19][20], The company has its origins in R.D. Scott Olson/Getty Images 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. 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. By that point, Alden was widely known as the grim reaper of American newspapers, as Vanity Fair had put it, and news of the acquisition plans had unleashed a wave of panic across the industry. Enter the email address you signed up with and we'll email you a reset link. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. The New York-based hedge fund Alden Global Capital - known for slashing its newspapers' budgets to extract escalated profits - won shareholder approval Friday for its $633 million bid to acquire the Tribune Publishing newspaper chain.. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. The $633 million sale made Alden the nation's second largest newspaper owner in terms of circulation, with more than 200 newspapers. 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. 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. Theres little evidence that Alden cares about the sustainability of its newspapers. [7][8] Alden's purchase price was $635 million, or $17.25 per share. "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?" Some have even suggested that this represents Americas last chance to save its local-news industry. 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. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. On . 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 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." Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. 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.). This is the story weve been telling for decades about the dying local-news industry, and its not without truth. It was founded in 2007 by Randall D. Smith. In my many conversations with people who have worked with Freeman, not one could recall seeing him read a newspaper. California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, [4], In 2019, Alden attempted, but failed at, a hostile takeover of Gannett. 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. 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 . Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. 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. Feb 16, 2021 at 8:05 pm. Somehow, no one's buying it. Alden began its acquisition of Tribune Publishing in 2019, when they paid $117.9 million to Michael Ferro for his 25.2-percent stake. 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. Interestingly, Smiths foundation didnt do well with its Alden investments in 2016. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. 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. But that would require slow, painstaking workand there are easier ways to make money. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. This investment strategy does not come without social consequences. Of course, its easy to romanticize past eras of journalism. 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. 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. Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. Alden is in the business of making money, not journalism. How do you know who wins? the boy asks. 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. Since Alden's . A look at Alden Global Capital is the cover story of the latest . The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. 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. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. 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. But whats happening in Chicago is different. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. | Michael Gray, WIkimedia Commons. All good works, and Knight is to be commended for them. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. hide caption. 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.. Like many alumni of the Sun, Simon is steeped in the papers history. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. 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. 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.