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Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. After Brian took his own life, in 2001, Smith became a mentor and confidant to Heath, who was in college at the time of his fathers death. My answer is its hard to know. 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. Heath Freeman in an undated photo provided by Goldin Solutions . 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. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. AP. Its hard to imagine theyd show, anyway. 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. 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. 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. Since Alden's . When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. Read: What we lost when Gannett came to town. 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. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. Convinced that the Sun wont be able to provide the kind of coverage the city needs, he has set out to build a new publication of record from the ground up. Already the largest shareholder . In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. Dec 9, 2021. Youd be surprised. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. And everyone knows its going to run dry.. 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. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. 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 . 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. 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. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. 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. 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? He stops talking to the press, refuses to be photographed, and rarely appears in public. . The question was how. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. Feb 16, 2021 at 8:05 pm. 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. He took particular pride in finding novel ways to give away his family fortune, funding child-poverty initiatives in Baltimore and prenatal care for women in Liberia. It . When he did, he exhibited a casual contempt for the journalists who worked there. They could be vain, bumbling, even corrupt. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. Collectively, they control about one-half of daily newspapers in the U.S. The Tribune had been profitable when Alden took over. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. Aldens Distressed Opportunities Fund was launched in 2008 and saw astounding success in its first few months, showing returns of more than 30 percent a big rescue for Alden, whose investments in Russia the year before had lost more than 61 percent of their value. 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. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. "[25], In early December, the board of Lee unanimously rejected the Alden bid, saying that the Alden proposal "grossly undervalues Lee and fails to recognize the strength of our business today. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." So Freeman pivoted. But there are some clues here and there. Somehow, no one's buying it. Scott Olson/Getty Images Maybe theyd cancel their subscriptions eventually; maybe the papers would fold altogether. These papers would have been liquidated if not for us stepping up.. "60 Minutes" correspondent Jon Wertheim did a strong piece that aired Sunday night about the grim state of local newspapers, in part because of how hedge funds, such as Alden Global Capital . [13], Newspapers in Alden's portfolio include Chicago Tribune, The Denver Post, the St. Paul Pioneer Press, the Boston Herald, The Mercury News, East Bay Times, The Orange County Register, and Orlando Sentinel. 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 . Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. 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. 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. [31], In 2019, Twenty Lake Holdings reported that it had acquired about 180 properties with 2.3 million square feet of real estate in 29 states. He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. 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. The firm oversaw the promotion of John Paton, a charismatic digital-media evangelist, who improved the papers web and mobile offerings and increased online ad revenue. But for all the theatrics, his marching orders were always the same: Cut more. Ken Kelleher is an American sculptor. 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. 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. [13], In response, the board of Lee Enterprises enacted a shareholder rights plan, colloquially known as a "poison pill", in order to ward off the purchase attempt. 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. But even for a group of journalists, it was tough to keep the publics attention. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. 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. When it was over, a quarter of the newsroom was gone. No response came back. Enter the email address you signed up with and we'll email you a reset link. hide caption. 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. 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. He gained 100 pounds and started grinding his teeth at night. "[34], In October 2021, The Atlantic examined the impact of Alden's acquisition of the Chicago Tribune, noting that, "The new owners did not fly to Chicago to address the staff, nor did they bother with paeans to the vital civic role of journalism. Alden Global Capital has currently bid to buy all of Tribune. It hurts to see the paper like this, he told her. 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.. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. 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 . Eventually he was the only news reporter left on staff, charged with covering the citys police, schools, government, courts, hospitals, and businesses. The scene was somehow even grimmer than Id imagined. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. 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. Alden gradually took control of the papers that would become DFM. [4] [5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune . Other records turned up from public pension funds and filings of publicly traded companies. 'Sobs, gasps, expletives' over latest Denver Post layoffs", "The Hedge Fund Vampire That Bleeds Newspapers Dry Now Has the Chicago Tribune by the Throat", "How Massive Cuts Have Remade The Denver Post", "Newsonomics: By selling to Americas worst newspaper owners, Michael Ferro ushers the vultures into Tribune", "A Secretive Hedge Fund Is Gutting Newsrooms", "Affiliated Media Files for Bankruptcy to Restructure (Update2)", "The shakeup at MediaNews: Why it could be the leadup to a massive newspaper consolidation", "Alden Global Capital to buy Tribune in deal valued at $630 million", "Lee Enterprises Enacts Poison Pill to Guard Against Alden Takeover", "Lee Enterprises Board Rejects Alden's Acquisition Offer", "Alden Global Capital takes Lee Enterprises to court over failed board nominations", "Alden Global Capital sues Lee Enterprises after rejected takeover bid", "Alden Global Capital loses lawsuit to nominate its slate of candidates for Lee Enterprises' board", "Lee Enterprises shareholders reelect three directors amid hedge fund fight", "Tampa Bay Times sells printing plant to developer for $21 million", "A hedge fund's 'mercenary' strategy: Buy newspapers, slash jobs, sell the buildings", "The hedge fund trying to buy Gannett faces federal probe after investing newspaper workers' pensions in its own funds", https://en.wikipedia.org/w/index.php?title=Alden_Global_Capital&oldid=1130942589, This page was last edited on 1 January 2023, at 19:27. 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%. Smith. but sadly on a global scale there is hardly any independent news sources left currently. He used his own money to pull court records, and went years without going on a vacation. [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. Im worried the worst is yet to come. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. Nov. 22, 2021. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. 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. But I had underestimated how little Aldens founders care about their standing in the journalism world. [10] With its acquisition of Tribune Publishing in late May 2021, Alden is collectively the second-largest owner of newspapers in the United States, as calculated by average daily print circulation, second only to Gannett. With Alden in control, he believes the Sun is now a prisoner that stands little chance of escape. All good works, and Knight is to be commended for them. Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. 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. But as long as Alden had made back its money, the investment would be a success. 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. 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. [6][7][8][9], The company operates its media holdings through Digital First Media (DFM), which it acquired in 2010 after DMG's parent company, MediaNews Group, declared bankruptcy. [33], Alden Global Capital's management of American newspapers has been criticized. 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. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. By McKay Coppins. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. It has figured out how to make a profit by driving newspapers into the ground, he says, since Alden's aim is not to make them into long-term sustainable businesses but rather maximize profits quickly to show it has made a winning investment. But Glidden felt sure he knew the real reason: Alden wanted him gone. It was founded in 2007 by Randall D. Smith. In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. Now it might be facing extinction. So what is this Distressed Opportunities fund? I put the question to Freeman, but he declined to answer on the record. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. But as an organization that believes that quality information is essential for individuals and communities to make their own bestchoices, it was disappointing that the foundation couldnt simply own up to its error in judgment when it came to Alden. In recent months, hes been meeting with leaders of local-news start-ups across the countryThe Texas Tribune, the Daily Memphian, The City in New Yorkand collecting best practices. 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 we dont know, because they arent saying. Alden is known for . 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. 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. City budgets balloon, along with corruption and dysfunction. In 2011, Paton launched an ambitious initiative he called Project Thunderdome, hiring more than 50 journalists in New York and strategically deploying them to supplement short-staffed local newsrooms. It was all about the next quarters profit margins, says Matt DeRienzo, who worked as a publisher for Aldens Connecticut newspapers before finally resigning. Maybe this obscure hedge fund had a plan. 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 . It seemed reasonable to ask that they answer a few questions. 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. . Orders for non-defence capital goods excluding aircraft a closely watched proxy for business investment, rose 0.8 per cent in January from a month earlier, comfortably above economists . For two men who employ thousands of journalists, remarkably little is known about them. 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. ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? A young man named Randall Duncan SmithRandy for shortstands next to his wife, Kathryn, answering quick-fire trivia questions in front of a live studio audience. 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. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. They are also defined by an obsessive secrecy. "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?" After a long walk down a windowless hallway lined with cinder-block walls, I got in an elevator, which deposited me near a modest bank of desks near the printing press. That may well be the future of local news, he says. To him, its the same as oil, the publisher said. I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. 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 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. It felt important. Prior to the buildings completion, McCormick directed his foreign correspondents to collect fragments of various historical sitesa brick from the Great Wall of China, an emblem from St. Peters Basilicaand send them back to be embedded in the towers facade.