Its a game, Randy explains to his son. 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. But there are some clues here and there. A more honest argument might have claimed, as some economists have, that vulture funds like Alden play a useful role in creative destruction, dismantling outmoded businesses to make room for more innovative insurgents. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. 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. It has not, however, retained the Chicago Tribune. But while its true that Alden entered the industry by purchasing floundering newspapers, not all of them were necessarily doomed to liquidation. Alden Global Capital, the hedge fund that owns the Chicago Tribune and New York Daily News, offered to buy Lee Enterprises Inc. for about $142 million, seeking a larger share of the . The shows premise pits two couples against each other for the chance to win a home. Baltimore has always had its problems, he told me. [7][8] Alden's purchase price was $635 million, or $17.25 per share. By McKay Coppins. Researchers at the University of North Carolina found that Alden-owned newspapers have cut their staff at twice the rate of their competitors; not coincidentally, circulation has fallen faster too, according to Ken Doctor, a news-industry analyst who reviewed data from some of the papers. 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. This is a subscription-based business.. The Ubiquity - The student news site of Quartz Hill High School In the past 15 years, more than a quarter of American newspapers have gone out of business. '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. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. The consequences can influence national politics as well; an analysis by Politico found that Donald Trump performed best during the 2016 election in places with limited access to local news. Instead, they gutted the place. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. Gerry Smith. 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 . 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.. It turned out that those ownersNew York hedge funders whom Glidden took to calling the lizard peoplewere laser-focused on increasing the papers profit margins. Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. [2] Its managing director is Heath Freeman. [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. On more than one occasion, according to people I spoke with, he asked aloud, What do all these people do? According to the former executive, Freeman once suggested in a meeting that Aldens newspapers could get rid of all their full-time reporters and rely entirely on freelancers. 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. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. 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. . Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. Alden completed its takeover of the Tribune papers in May. Yes, today, it's a newspaper without a newsroom. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. hide caption. By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. 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. 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. [2] Its managing director is Heath Freeman. The men killing Americas newspapers, how Slack upended the workplace, and the new meth. Dec 9, 2021. By Julie Reynolds. Collectively, they control about one-half of daily newspapers in the U.S. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. Its a hedge that went and bought up some titles that it milks for cash.. 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. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. Im worried the worst is yet to come. Instead, they gutted the place. ", "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? 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. Its not the name or the flag., He may get his wish. But he couldnt help feeling that the police scandal would have been exposed much sooner if the Sun were operating at full force. 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. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. Alden Global Capital is a hedge fund based in Manhattan, New York City. 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." and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . So what is this Distressed Opportunities fund? A Secretive Hedge Fund Is Gutting Newsrooms. Alden's holdings already spanned the country, including the . "[28], In mid-February 2022, the Delaware court found in favor of Lee Enterprises. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. This is predatory.. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. Freeman was only slightly more accessible. A recent Financial Times analysis found that half of all daily newspapers in the U.S. are controlled by financial firms, and Coppins says that number is all but certain to keep growing. ", "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? Well, that wasnt the point. 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. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. He writes a weekly column called Mugger that savages the citys journalists by name and frequently runs to 10,000 words. On Monday, Dail Morale tanked; reporters burned out. Alden is in the business of making money, not journalism. [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. . Alden currently owns 32%. Smith began investing in newspapers and media around the same time. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. (Freeman denied this characterization through a spokesperson. 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. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. 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 . Heath hopes the well never runs dry, but hes going to keep pumping until it does. "[18], Alden received critical coverage from the editorial staff at the Denver Post, who described Alden Global Capital as "vulture capitalists" after multiple staff layoffs. When Simon called me, he was on the set of his new miniseries, We Own This City, which tells the true story of Baltimore cops who spent years running their own drug ring from inside the police department. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. Some have even suggested that this represents Americas last chance to save its local-news industry. Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. But it turned out that Smith had so many doorsteps16 mansions in Palm Beach alone, as of a few years ago, some of them behind gatesthat the plan proved impractical. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of Gothic spires and flying buttresses that were designed to exude power and prestige. Have you heard of the hedge fund Alden Global Capital? Below are highlights from his conversation with Morning Edition's A Martnez. Today, we know that Knight, CalPERS and others no longer invest with Alden. [3] [4] With its acquisition of Tribune Publishing in late . But as long as Alden had made back its money, the investment would be a success. Connecting this to the current state of American newspaper ownership seems rather tenuous.. 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. The 1% own and operate the . And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. [15][16] In March 2018, Margaret Sullivan, the media columnist for The Washington Post, called Alden "one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism. [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. | Michael Gray, WIkimedia Commons. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. 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. 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.. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. When it was over, a quarter of the newsroom was gone. In Orlando, the Sentinel ran an editorial pleading with the community to deliver us from Alden and comparing the hedge fund to a biblical plague of locusts. In Allentown, Pennsylvania, reporters held reader forums where they tried to instill a sense of urgency about the threat Alden posed to The Morning Call. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. 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. 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. When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. "[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. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. He can cite decades-old scoops and tell you whom they pissed off. It played with my mind a little bit, Glidden told me. It felt important. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. Otherwise, youre just peeing in the ocean.. Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. , From the February 1905 issue: The confessions of a newspaper woman, The papers union hired a PR firm to launch a public-awareness campaign under the banner Save Our Sun and published a letter calling on the Tribune board to sell the paper to local owners. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. But that's not true for all of them. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. "A lot of cities almost operate with the assumption that there will be at least one local newspaper, in some cases several local newspapers, acting as a check on the authorities," he says. 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. 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. The question was how. [27] The Alden lawsuit asserts that the members of the Lee board "have every reason to maintain the status quo and their lucrative corporate positions" and that they are "focused more on [their] own power than what's best for the company. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. At the same time, he increased subscription prices in many markets; it would take awhile for subscribersmany of them older loyalists who didnt carefully track their billsto notice that they were paying more for a worse product. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. Tuesday, 23 November 2021 07:46 PM EST. Prior to the acquisition of the Tribune Company, we purchased substantially all of our newspapers out of bankruptcy or close to liquidation, he told me. 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 . After weeks of back-and-forth, he agreed to a phone call, but only if parts of the conversation could be on background (which is to say, I could use the information generally but not attribute it to him). After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. Instead, the money was used to finance the hedge funds other ventures. [11], In November 2021, Alden Global Capital made an offer to purchase Lee Enterprises for $24 a share in cash, or about $141 million. Alden began its acquisition of Tribune Publishing in 2019, when they paid $117.9 million to Michael Ferro for his 25.2-percent stake. To be sure, the Knight Foundation does much to help promote and sustain local news. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. 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. 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. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. In its bid to acquire Tribune Publishing, the hedge fund Alden Global Capital vowed to provide $375 million in cash to the owner of the Chicago Tribune, the Baltimore Sun and other titles a . 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. 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 . The pitch had a certain romantic appeal to the reporters in the room. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. NPR reached out to Alden for a response. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. 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. Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. We were like, Theyre not going to take our newspaper from us! Aldens calculus was simple. 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 . 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. 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?. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. To him, its the same as oil, the publisher said. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. Of course, its easy to romanticize past eras of journalism. [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.