"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?" Theres little evidence that Alden cares about the sustainability of its newspapers. The practical effect of the death of local journalism is that you get what weve had, he told me, which is a halcyon time for corruption and mismanagement and basically misrule.. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. Updated May 21, 2021 at 2:13 PM ET. 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. Alden is in the business of making money, not journalism. 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. 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. Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. It seemed reasonable to ask that they answer a few questions. 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.. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. 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. 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 Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. 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. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. . The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. 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. 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. So Freeman pivoted. Feb. 16, 2021 8:04 PM PT. 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. 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 . but sadly on a global scale there is hardly any independent news sources left currently. He started as a general-assignment reporter, covering local crime and community events. It played with my mind a little bit, Glidden told me. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. From the March 1914 issue: H. L. Mencken on newspaper morals, A story circulated throughout the companypossibly apocryphal, though no one could say for surethat when Freeman was informed that The Denver Post had won a Pulitzer in 2013, his first response was: Does that come with any money?. [4] [5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune . I felt like a terrible reporter because I couldnt get to everything.. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. 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. But by 2014, it was becoming clear to Aldens executives that Patons approach would be difficult to monetize in the short term, according to people familiar with the firms thinking. 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.. 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. Theres no industry that I can think of more integral to a working democracy than the local-news business, he said. Some in the city started to wonder if the paper was even worth saving. 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 . Heath hopes the well never runs dry, but hes going to keep pumping until it does. Misinformation proliferates. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. But outside the industry, few seemed to notice. [10][19][20], The company has its origins in R.D. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. And everyone knows its going to run dry.. What happens next? Newspaper publisher Lee Enterprises is asking its shareholders to help it fight off a hostile takeover . At the time, even savvy media insiders like Martin Langeveld wistfully predicted Alden would keep newspapers future in mind: Smith knows that the only way to win his big bet on the future of newspapers is to turn them into nimble, modern digital news enterprises.. 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. 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 Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . Maybe this obscure hedge fund had a plan. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. 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. A vulture doesnt hold a wounded animals head underwater. But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. 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. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. 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. Tips that he would never have time to investigate piled up on a legal pad he kept at his desk. He was fired after criticizing Alden in a Washington Post interview. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. 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? (Freeman denied this characterization through a spokesperson. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. Yes, today, it's a newspaper without a newsroom. 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. When it was over, a quarter of the newsroom was gone. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. Its a game, Randy explains to his son. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. In the face of that setback, Alden said it would turn to the tactic of filing a proxy statement asking the company's shareholders to vote no on board members Mary Junck and Herbert Moloney during the March 2022 board elections. 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. 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. 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. 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? They could be vain, bumbling, even corrupt. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. 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. 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. After all, it has a long and venerable history of supporting local news. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. Already the largest shareholder . The Alden Global Capital . 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. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. 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. On the appointed afternoon, I dialed the number provided by his spokesperson and found myself talking to the most feared man in American newspapers. On . [33], Alden Global Capital's management of American newspapers has been criticized. This story originally appeared on the Morning Edition live blog. A search through nonprofit groups publicly available financial reports, commonly known as Form 990s, reveals that all kinds of organizations some surprising have invested their monies with Alden over the years. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. He teaches his 8-year-old son, Caleb, to make trades on a Quotron computer, and imparts the value of delayed gratification by reportedly postponing his familys Christmas so that he can use all their available cash to buy stocks at lower prices in December. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. Now it might be facing extinction. 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. The audio for this interview was produced by Ryan Benk and edited by Scott Saloway. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. 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 . 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 . I asked. To many, it just didnt seem possible that Alden would instead choose to destroy newspapers by laying off the workforce en masse and stripping papers of all their assets. he asks. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? 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 . Hedge fund Alden Global Capital is attempting to acquire Davenport-based Lee Enterprises, one of the country's largest newspaper chains, in all the markings of a hostile takeover. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. That's because the fund is stepping in to buy and then gut newsrooms across the country. In May, The Alden Global Capital a hedge fund, acquired Tribune Publishing TPCO for $633 million. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. This all seemed especially relevant considering many Alden/DFM papers were previously part of the Knight-Ridder chain, the family news empire from which the foundation sprang. As a young man, hed studied at divinity school before taking over his fathers company, and decades later he still carried a healthy sense of noblesse oblige. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! 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." 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. But in the case of local news, nothing comparable is ready to replace these papers when they die. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. You have no way of knowing that if you dont have some nosy son of a bitch asking a lot of questions down there, he told me. This is a subscription-based business.. hide caption. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. John Temple: My newspaper died 10 years ago. 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. Its a hedge that went and bought up some titles that it milks for cash.. 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.. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. Collectively, they control about one-half of daily newspapers in the U.S. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . 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). Freeman never responded. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. 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. 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. A century later, the Tribune Tower has retained its grandeur. As the months passed, things kept getting worse. Probably not.. "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. Other records turned up from public pension funds and filings of publicly traded companies. Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. He writes a weekly column called Mugger that savages the citys journalists by name and frequently runs to 10,000 words. Its hard to imagine theyd show, anyway. Gerry Smith. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, Vallejo deserves better. A few weeks after the story came out, he was fired. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. Former Knight-Ridder headquarters. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. 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. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. But Glidden felt sure he knew the real reason: Alden wanted him gone. They are also defined by an obsessive secrecy. 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. The Ubiquity - The student news site of Quartz Hill High School Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. 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. Hedge fund Alden Global Capital, known for making deep newsroom cuts, won approval to acquire Tribune Publishing, which includes the Chicago Tribune, The Baltimore Sun and New York Daily News. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. 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 . 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. Im worried the worst is yet to come. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. Aldens calculus was simple. Lee, which owns the St. Louis Post Dispatch, the Omaha World-Herald and many other daily newspapers throughout the region, is staving off a takeover attempt by Alden Global Capital, a New-York . "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 . 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. Coordinated by . A look at Alden Global Capital is the cover story of the latest . Of course, its easy to romanticize past eras of journalism. But that's not true for all of them. Hedge fund Alden Global Capital will acquire the rest of what it does not already own of Tribune Publishing, owner of the Chicago Tribune, the New York Daily News and other local newspapers, in a . About a month after The Baltimore Sun was acquired by Alden, a senior editor at the paper took questions from anxious reporters on Zoom. It has not, however, retained the Chicago Tribune. Instead, the money was used to finance the hedge funds other ventures. But a sense of fatalism permeated the work. The newsroom was moved to a single room rented from the local chamber of commerce. He gained 100 pounds and started grinding his teeth at night. 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. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. [3] [4] With its acquisition of Tribune Publishing in late . At the Pioneer Press , where its staff is down to 60, the paper produced a . It was founded in 2007 by Randall D. Smith. The pitch had a certain romantic appeal to the reporters in the room. Alden currently owns 32%. Youd be surprised. ", "The most feared owner in American journalism looks set to take some of its greatest assets", "Minority shareholder sues Denver Post parent and NY hedge fund over 'breaches of fiduciary duty', "What does the Chicago Tribune sale mean for the future of newsrooms? In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. . It felt important. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. It was all about the next quarters profit margins, says Matt DeRienzo, who worked as a publisher for Aldens Connecticut newspapers before finally resigning. Senior lenders under the deal were to swap debt for stock. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. But as long as Alden had made back its money, the investment would be a success. Alden completed its takeover of the Tribune papers in May. All good works, and Knight is to be commended for them. But there are some clues here and there. Rapid-fire changes underway at newspapers sold to cost-slashing hedge fund Alden Global Capital have led to a profound case of the jitters at newsrooms like the New York Daily News. But this acquisition was profound, making Alden Global . Otherwise, youre just peeing in the ocean.. It . Tribune Publishing, publisher of the Chicago Tribune and other major newspapers, has agreed to be acquired by Alden Global Capital in a deal valued at $630 million . Media . 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. It hurts to see the paper like this, he told her. On the surface, the answer might seem obvious. According to Aldens scarce SEC filings, it currently has fewer than 10 investors, most of them from overseas. But who most of those few souls are, and how much of the hundreds of millions skimmed from DFM papers theyve received remains a deep, dark mystery.