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 . 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. 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. 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. But there are some clues here and there. 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. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. 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. 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? At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. One early article, in the trade publication Poynter, suggested that Aldens interest in the local-news business could be seen as flattering and quoted the owner of The Denver Post as saying he had enormous respect for the firm. Margaret Sullivan: The Constitution doesnt work without local news. Vallejo deserves better. A few weeks after the story came out, he was fired. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. NPR's A Martnez talks to McKay Coppins of The Atlantic about how a hedge fund, Alden Global Capital, is buying and then gutting newspapers and the implications for democracy. AP. He was fired after criticizing Alden in a Washington Post interview. 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. 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. ", "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? With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. He can cite decades-old scoops and tell you whom they pissed off. You need real capital to move the needle, he told me. But for all the theatrics, his marching orders were always the same: Cut more. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. 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. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. During its five-year run with Alden, it seems quite unlikely that no one at Knight knew about the hedge funds slash-and-burn strategy for two reasons. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. 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. 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. 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 had spoken on this issue before, and it was easy to see why. 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. Other records turned up from public pension funds and filings of publicly traded companies. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. But outside the industry, few seemed to notice. 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. [4] [5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune . Alden completed its takeover of the Tribune papers in May. Ken Kelleher is an American sculptor. 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. 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. Hellman and BNP together own 46.4 per cent of Allfunds' shares. 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. 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. Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. but sadly on a global scale there is hardly any independent news sources left currently. 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. Read: What we lost when Gannett came to town. 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?. For Freeman and his investors to come out ahead, they didnt need to worry about the long-term health of the assetsthey just needed to maximize profits as quickly as possible. 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. It . In the past 15 years, more than a quarter of American newspapers have gone out of business. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. 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.. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. Morale tanked; reporters burned out. On the surface, the answer might seem obvious. [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. But whats happening in Chicago is different. It has not, however, retained the Chicago Tribune. 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 . We were like, Theyre not going to take our newspaper from us! But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. 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. [7][8] Alden's purchase price was $635 million, or $17.25 per share. ", "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? At their worst, they used their papers to maintain oppressive social hierarchies. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. Alden, which already owned one-third of . 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 . Yes, today, it's a newspaper without a newsroom. 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. Im worried the worst is yet to come. Nov. 22, 2021. 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. 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 was founded in 2007 by Randall D. [29] This attempt also failed, as shareholders returned both directors to the Lee board despite Alden's opposition. After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. "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?" The 1% own and operate the . The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. Its a game, Randy explains to his son. When the city-hall reporter left a few months later, he picked up that beat too. "[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. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. 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 maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. Gerry Smith. Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. Like many alumni of the Sun, Simon is steeped in the papers history. When it was over, a quarter of the newsroom was gone. Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.[23]. Send any friend a story As a subscriber, you . In legal filings, Alden has acknowledged diverting hundreds of millions of dollars from its newspapers into risky bets on commercial real estate, a bankrupt pharmacy chain, and Greek debt bonds. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. He declined to meet me in person or to appear on Zoom. 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. He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. 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. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. Now it might be facing extinction. 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. 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 . So who is investing with them? [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. Or to nearby Monterey, where the former Herald reporter Julie Reynolds says staffers were pushed to stop writing investigative features so they could produce multiple stories a day. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. Connecting this to the current state of American newspaper ownership seems rather tenuous.. Smith began investing in newspapers and media around the same time. How do you know who wins? the boy asks. [22] The appointees to the MediaNews board were replaced by new directors representing the stockholders group led by Alden Global Capital. John Temple: My newspaper died 10 years ago. The shows premise pits two couples against each other for the chance to win a home. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. Smith. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. 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. This was the core of Freemans argument. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. 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.. 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. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. It hurts to see the paper like this, he told her. Below are highlights from his conversation with Morning Edition's A Martnez. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. 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. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. . He says he visited the Tribune's office and was "really shocked by how grim the scene was." 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. Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. Alden Global Capital had recently purchased a nearly one-third stake in the Suns parent company, Tribune Publishing, and the firm was signaling that it would soon come for the rest. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. 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. 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?. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. 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 . 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). The Tribune Company (which owns the newspapers mentioned above) was still turning a profit when Alden bought it, but the hedge fund immediately offered aggressive rounds of buyouts and shrunk its newsrooms in the name of increasing profit margins. 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. 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. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. 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 . The 21st century has seen many of these generational owners flee the industry, to devastating effect. 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. Heath Freeman in an undated photo provided by Goldin Solutions . 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. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. 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. Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions. My answer is its hard to know. 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. They want to know who exactly profits when we learn, as Harvard Nieman Lab's Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media . Former Knight-Ridder headquarters. 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 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. In the Hyatt meeting, Ted Venetoulis, a former Baltimore politician, advised the reporters to pick a noisy public fight: Set up a war room, circulate petitions, hold events to rally the city against Alden. "And what we've seen in a lot of these places where newspapers have been scaled back or even closed is there really is no comparable product in place, whether it's by the government or by another news organization, to do what these local newspapers have done for hundreds of years.". Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. The newsroom was moved to a single room rented from the local chamber of commerce. This investment strategy does not come without social consequences. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of . Its a hedge that went and bought up some titles that it milks for cash.. In my many conversations with people who have worked with Freeman, not one could recall seeing him read a newspaper. I asked if anyone there at the time was aware of Aldens vulture business strategy. And everyone knows its going to run dry.. 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. Misinformation proliferates. | Michael Gray, WIkimedia Commons. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. 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. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. '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. 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. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. Media . Two veteran journalists from the Chicago Tribune published an op-ed on Sunday challenging one of the paper's principal owners, the New York hedge fund Alden Global Capital. 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. Today, we know that Knight, CalPERS and others no longer invest with Alden. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. At the Pioneer Press , where its staff is down to 60, the paper produced a . Alden-owned newspapers have cut their staff at twice the rate of their competitors, for all of Tribune Publishings newspapers, security company that trained Saudi operatives. 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. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. Much of the Knight family's once-grand newspaper empire was ultimately acquired by Alden Global Capital, while the family foundation invested in Alden funds. A look at Alden Global Capital is the cover story of the latest . * Edited from 'independent . Heath hopes the well never runs dry, but hes going to keep pumping until it does. "[21], shareholder rights plan, colloquially known as a "poison pill", "Alden Global Capital LLC NEW YORK , NY", "Company Overview of Alden Global Capital LLC", "Heath Freeman of Alden Global Capital says he wants to save local news. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. In May, The Alden Global Capital a hedge fund, acquired Tribune Publishing TPCO for $633 million. 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. 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. Freeman was more animated when he turned to the prospect of extracting money from Big Tech.

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