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. Meanwhile, in Vallejo, John Glidden went from covering crime and community news to holding the title of the only hard news reporter in town, filling a legal pad with tips he knew he'd never have time to pursue. Of course, its easy to romanticize past eras of journalism. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. 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. He started as a general-assignment reporter, covering local crime and community events. [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. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. The 1% own and operate the . Financially, it was a raw deal. 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. Or to Denver, where the Posts staff was cut by two-thirds, evicted from its newsroom, and relocated to a plant in an area with poor air quality, where some employees developed breathing problems. Alden, which already owned one-third of . When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. Year after year, the executives from Alden would order new budget cuts, and Glidden would end up with fewer co-workers and more work. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. 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 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. 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. So who is investing with them? 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. 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. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. I asked. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. It emphasizes supporting the emergence of new, sustainable models for local news, through both grantmaking and research, Sherry told me, including grant programs for nonprofit news organizations. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. Alden completed its takeover of the Tribune papers in May. By the 1980s, this strategy has made Randy luxuriously wealthyvacations in the French Riviera, a family compound outside New York Cityand he has begun to school his children on the wonders of capitalism. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. Alden is known for . [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. Heath hopes the well never runs dry, but hes going to keep pumping until it does. The Alden Global Capital . In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. 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. Smith began investing in newspapers and media around the same time. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. "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 . 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. It hurts to see the paper like this, he told her. When a reporter asked if their work was still valued, the editor sounded deflated. A former Sun reporter whose work on the police beat famously led to his creation of The Wire on HBO, Simon told me the paper had suffered for years under a series of blundering corporate ownersand it was only a matter of time before an enterprise as cold-blooded as Alden finally put it out of its misery. But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. 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. To him, its the same as oil, the publisher said. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. 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. On Monday, Dail 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. [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. 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. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. Its a game, Randy explains to his son. Media . [10][19][20], The company has its origins in R.D. Layout design was outsourced to freelancers in the Philippines. The firm has a history of purchasing newspapers to cut costs wherever . The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. A look at Alden Global Capital is the cover story of the latest . Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. 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). [11], In November 2021, Alden Global Capital made an offer to purchase Lee Enterprises for $24 a share in cash, or about $141 million. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. They were very tight. Freeman has resisted elaborating on his relationship with Smith, saying simply that they were family friends before going into business together. 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.. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. 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. 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. When it was over, a quarter of the newsroom was gone. My answer is its hard to know. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. Alden's holdings already spanned the country, including the . [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. They could be vain, bumbling, even corrupt. But there was still a sliver of hope: Tribune and Alden agreed that the hedge fund would not increase its stake in the company for at least seven months. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. 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. Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. This is predatory.. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. Alden Global Capital already had a 32% stake in Tribune Publishing, which owns famous names like the Tribune, Daily News, the Hartford Courant and others, and on Tuesday announced it would pay . He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. Send any friend a story As a subscriber, you . They are also defined by an obsessive secrecy. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. Last week, Alden Global Capital, the hedge fund notorious for slashing costs at its local titles, came down on the No side of the question, with editorial boards at papers that it owns stating that they will no longer endorse candidates for governor, US senator, or president. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. I put the question to Freeman, but he declined to answer on the record. "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?" Eventually he was the only news reporter left on staff, charged with covering the citys police, schools, government, courts, hospitals, and businesses. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." 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. Freeman was only slightly more accessible. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. 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. Today, we know that Knight, CalPERS and others no longer invest with Alden. 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. . Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. But a sense of fatalism permeated the work. "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. 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. Today, half of all daily newspapers in the U.S. are controlled by financial firms, according to an analysis by the Financial Times, and the number is almost certain to grow. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. 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. He used his own money to pull court records, and went years without going on a vacation. Lee Enterprises, the owner of daily newspapers in Winston-Salem and Greensboro, this morning rejected a hedge fund's proposal to take over the company. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. 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. 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. [22] The appointees to the MediaNews board were replaced by new directors representing the stockholders group led by Alden Global Capital. Most of his investments are defined by a cold pragmatism, but he takes a more personal interest in the media sector. Ken Kelleher is an American sculptor. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. When hed agreed to the interview, Id expected him to say the things he was supposed to saythat the layoffs and buyouts were necessary but tragic; that he held local journalism in the highest esteem; that he felt a sacred responsibility to steer these newspapers toward a robust future. The Tribune had been profitable when Alden took over. Hes acutely aware of the risksI may end up with egg on my face, he saidbut he believes its worth trying to develop a successful model that could be replicated in other markets. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. But when I emailed his studio looking for information, I was informed curtly that the photo was no longer available. Had Smith bought the rights himself? Aldens calculus was simple. Alden is in the business of making money, not journalism. At one point, he told me, the citys entire civil-service commission was abruptly fired without explanation; his sources told him something fishy was going on, but he knew hed never be able to run down the story. He said that he still appreciated their journalism, but that he couldnt speak for his corporate bosses. Alden began its acquisition of Tribune Publishing in 2019, when they paid $117.9 million to Michael Ferro for his 25.2-percent stake. Updated May 21, 2021 at 2:13 PM ET. But whats happening in Chicago is different. When John Glidden first joined the Vallejo Times-Herald, in 2014, it had a staff of about a dozen reporters, editors, and photographers. Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. Now he was feeling the effects of their management. But that's not true for all of them. About a month after The Baltimore Sun was acquired by Alden, a senior editor at the paper took questions from anxious reporters on Zoom. . 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. Alden Global Capital swallowed all of the Tribune's newspapers, including the New York Daily News, earlier in 2021. The bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. And everyone knows its going to run dry.. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. Hellman and BNP together own 46.4 per cent of Allfunds' shares. We were like, Theyre not going to take our newspaper from us! After college he worked at Hudson Studio, Art Foundry in Niverville, NY . But for all the theatrics, his marching orders were always the same: Cut more. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. That gave the journalists at the Sun a brief window to stop the sale from going through. "[28], In mid-February 2022, the Delaware court found in favor of Lee Enterprises. 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 . Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. . [7][8] Alden's purchase price was $635 million, or $17.25 per share. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. 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. Youd be surprised. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. 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 . By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. 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. To be sure, the Knight Foundation does much to help promote and sustain local news. "[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. Some have even suggested that this represents Americas last chance to save its local-news industry. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. G ARY MARX and David Jackson, two veteran investigative reporters at the Chicago Tribune, spent most of last year seeking potential buyers who might save their newspaper from Alden Global Capital . 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. 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 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. By Julie Reynolds. Alden gradually took control of the papers that would become DFM. Now it might be facing extinction. 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. Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. 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. It felt important. 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.