So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? 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 . Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. 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. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! The Ubiquity - The student news site of Quartz Hill High School Otherwise, youre just peeing in the ocean.. Collectively, they control about one-half of daily newspapers in the U.S. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. Have you heard of the hedge fund Alden Global Capital? Now it might be facing extinction. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. Alden completed its takeover of the Tribune papers in May. hide caption. What happens next? You need real capital to move the needle, he told me. But even for a group of journalists, it was tough to keep the publics attention. This summer, Alden Global Capital acquired Tribune Publishing and its titles, from small community newspapers to major metro titles like its flagship, The Chicago Tribune, and The Baltimore Sun. 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. In addition to the constant layoffs, our buildings were being sold, basic office supplies became scarce and the hot water stopped working. Clearly, for Smith and Freeman, chop-shopping their newspapers paid off. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. 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. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. 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. 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. 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. 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. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. Inside Alden Global Capital. When lawmakers pressed for details last year on who funds Alden, the company replied that there may be certain legal entities and organizational structures formed outside of the United States.. [4], In 2019, Alden attempted, but failed at, a hostile takeover of Gannett. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. 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. The Tribune had been profitable when Alden took over. Senior lenders under the deal were to swap debt for stock. 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. 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. [22] The appointees to the MediaNews board were replaced by new directors representing the stockholders group led by Alden Global Capital. 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. But there are some clues here and there. He started as a general-assignment reporter, covering local crime and community events. Aldens calculus was simple. [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. A native of Vallejo, he was proud to work for his hometown paper. Its a hedge that went and bought up some titles that it milks for cash.. She was writing about Aldens growing newspaper empire, and wanted to know what it was like to be the last news reporter in town. But that's not true for all of them. It . At the Pioneer Press , where its staff is down to 60, the paper produced a . But I had underestimated how little Aldens founders care about their standing in the journalism world. The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. . "Local newspaper brands and operations are the engines that power trusted local news in communities across the United States," Heath Freeman, president of Alden Global Capital, said in a . In a news release Monday, Alden said it sent Lee's board a letter with the offer. The scene was somehow even grimmer than Id imagined. He teaches his 8-year-old son, Caleb, to make trades on a Quotron computer, and imparts the value of delayed gratification by reportedly postponing his familys Christmas so that he can use all their available cash to buy stocks at lower prices in December. Connecting this to the current state of American newspaper ownership seems rather tenuous.. He wrote, "Alden Global Capital has eliminated the jobs of scores of reporters and editors, and decimated journalism in cities all over the country: Denver, Boston, San Jose, Trenton, etc. He gained 100 pounds and started grinding his teeth at night. he asks. With Alden in control, he believes the Sun is now a prisoner that stands little chance of escape. I put the question to Freeman, but he declined to answer on the record. 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. 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. 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. It was clear that they didnt care about this being a business in the future. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. 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.. It hurts to see the paper like this, he told her. These papers would have been liquidated if not for us stepping up.. Next up: Chicago, Baltimore, and the New York Daily News. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. City budgets balloon, along with corruption and dysfunction. [2] Its managing director is Heath Freeman. 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. Alden currently owns 32%. In the past 15 years, more than a quarter of American newspapers have gone out of business. Instead, the money was used to finance the hedge funds other ventures. As the months passed, things kept getting worse. All good works, and Knight is to be commended for them. 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. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. 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. Nov. 22, 2021. 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. I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. Some have even suggested that this represents Americas last chance to save its local-news industry. As a privately held hedge fund, Alden doesnt have to reveal much to the public. 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. 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). The hollowing-out of the Chicago Tribune was noted in the national press, of course. [3] [4] With its acquisition of Tribune Publishing in late . On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. 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.