According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. 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 . by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. 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. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. 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 . He declined to meet me in person or to appear on Zoom. 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. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. In my many conversations with people who have worked with Freeman, not one could recall seeing him read a newspaper. I asked. The hollowing-out of the Chicago Tribune was noted in the national press, of course. Newspaper publisher Lee Enterprises is asking its shareholders to help it fight off a hostile takeover . It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. 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. By McKay Coppins. Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. Coppins notes that there's even some research indicating that city budgets increase as a result, because corruption and dysfunction can take hold without a newspaper to hold powerful people to account. When John Glidden first joined the Vallejo Times-Herald, in 2014, it had a staff of about a dozen reporters, editors, and photographers. The rationale offered by the board was, Consistent with its fiduciary duties, Lees Board has taken this action to ensure our shareholders receive fair treatment, full transparency and protection in connection with Aldens unsolicited proposal to acquire Lee. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. 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. But by 2013, despite deep losses to Alden funds overall values in the previous two years, Smith was able to begin buying his now infamous swath of South Florida mansions for $58 million and Freeman was acquiring multi-million-dollar New York condos. [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. Alden's holdings already spanned the country, including the . Well, that wasnt the point. 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. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. That may well be the future of local news, he says. Otherwise, youre just peeing in the ocean.. After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. What happens next? But that would require slow, painstaking workand there are easier ways to make money. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. 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. 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. But this acquisition was profound, making Alden Global . On the appointed afternoon, I dialed the number provided by his spokesperson and found myself talking to the most feared man in American newspapers. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. John Temple: My newspaper died 10 years ago. 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. "[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. After a contentious presidential race and amid a still-raging pandemic, there was a limited supply of outrage and sympathy to spare for local reporters. Inside Alden Global Capital. The bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. Financially, it was a raw deal. Misinformation proliferates. 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. Around this time, Randy becomes preoccupied with privacy. A month after he started, one of his fellow reporters left and Glidden was asked to start covering schools in addition to his other responsibilities. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. 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. Tuesday, 23 November 2021 07:46 PM EST. One acquaintance tells The Village Voice that hes the kind of guy who divests himself every couple of years to avoid ending up on lists of the worlds richest people. The firm has a history of purchasing newspapers to cut costs wherever . 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. [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. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. On . Clearly, for Smith and Freeman, chop-shopping their newspapers paid off. 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. We were like, Theyre not going to take our newspaper from us! Other records turned up from public pension funds and filings of publicly traded companies. [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. 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. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. In the past 15 years, more than a quarter of American newspapers have gone out of business. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! Instead, they gutted the place. 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. Year after year, the executives from Alden would order new budget cuts, and Glidden would end up with fewer co-workers and more work. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. The new owners had announced a round of buyouts, some beloved staffers were leaving, and those who remained were worried about the future. [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. 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. Former Knight-Ridder headquarters. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. 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 . Freeman was clearly aware of his reputation for ruthlessness, but he seemed to regard Aldens commitment to cost-cutting as a badge of honorthe thing that distinguished him from the saps and cowards who made up Americas previous generation of newspaper owners. "[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. While some finance reporters noted that Smiths newspaper investments were all losing value, none seemed to notice that Smith and Aldens president Heath Freeman would soon start strip mining their news companies real estate and other assets. Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of . 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. At their worst, they used their papers to maintain oppressive social hierarchies. You have no way of knowing that if you dont have some nosy son of a bitch asking a lot of questions down there, he told me. Maybe this obscure hedge fund had a plan. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. 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. A quarter of the newsroom (including many big-name reporters, columnists and photographers) took the buyouts Alden offered, and while some great reporters remain on staff, it's nearly impossible for them to fill those gaps, Coppins says. How exactly Randall Smith chose Heath Freeman as his protg is a matter of speculation among those who have worked for the two of them. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. Randy claims no editorial role in the Press, and his investment in the projectwhich has little chance of producing the kind of return hes accustomed tocould be chalked up to brotherly loyalty. "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?" In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. But most of them also had a stake in the communities their papers served, which meant that, if nothing else, their egos were wrapped up in putting out a respectable product. 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. 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. 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. 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. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. It seemed reasonable to ask that they answer a few questions. Connecting this to the current state of American newspaper ownership seems rather tenuous.. Alden currently owns 32%. Its not as if the Tribune is just withering on the vine despite the best efforts of the gardeners, Charlie Johnson, a former Metro reporter, told me after the latest round of buyouts this summer. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. In the ensuing exodus, the paper lost the Metro columnist who had championed the occupants of a troubled public-housing complex, and the editor who maintained a homicide database that the police couldnt manipulate, and the photographer who had produced beautiful portraits of the states undocumented immigrants, and the investigative reporter whod helped expose the governors offshore shell companies. [4], In 2019, Alden attempted, but failed at, a hostile takeover of Gannett. In a news release Monday, Alden said it sent Lee's board a letter with the offer. "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. Have you heard of the hedge fund Alden Global Capital? But as long as Alden had made back its money, the investment would be a success. A search through nonprofit groups publicly available financial reports, commonly known as Form 990s, reveals that all kinds of organizations some surprising have invested their monies with Alden over the years. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. 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. 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. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? I put the question to Freeman, but he declined to answer on the record. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. 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. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . Since they bought their first newspapers a decade ago, no one has been more mercenary or less interested in pretending to care about their publications long-term health. So Freeman pivoted. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. 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. Margaret Sullivan: The Constitution doesnt work without local news. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. Alden Global Capital has currently bid to buy all of Tribune. 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. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. . You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. , 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. One researcher tells me that if that money were invested in the S&P 500 Index Fund, it would have earned roughly $11 million over the same period. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. 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. Updated May 21, 2021 at 2:13 PM ET. 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.
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