In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . Alden Global Capital swallowed all of the Tribune's newspapers, including the New York Daily News, earlier in 2021. | Michael Gray, WIkimedia Commons. With Alden in control, he believes the Sun is now a prisoner that stands little chance of escape. 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. hide caption. This was the core of Freemans argument. But I had underestimated how little Aldens founders care about their standing in the journalism world. 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. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. When the city-hall reporter left a few months later, he picked up that beat too. But he says the worst culprit is the hedge fund Alden Global Capital, which bought the Mercury in 2011 and has since sold the paper's building and slashed newsroom staff by about 70%. He said that he still appreciated their journalism, but that he couldnt speak for his corporate bosses. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. For two men who employ thousands of journalists, remarkably little is known about them. A Secretive Hedge Fund Is Gutting Newsrooms. 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. The firm has a history of purchasing newspapers to cut costs wherever . When a reporter asked if their work was still valued, the editor sounded deflated. Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions. In addition to the constant layoffs, our buildings were being sold, basic office supplies became scarce and the hot water stopped working. 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 . 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. In the past 15 years, more than a quarter of American newspapers have gone out of business. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. A vulture doesnt hold a wounded animals head underwater. 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 . Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. At the Pioneer Press , where its staff is down to 60, the paper produced a . Im repulsed by the incestuous world of New York journalism, he tells New York magazine. 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. Alden, a New York City-based firm that has become the grim reaper of American newspapers, had recently increased its stake in Tribune Publishing to 32%making it the largest shareholder of the . But outside the industry, few seemed to notice. 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. Coordinated by . [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. 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. 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. 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. 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. That gave the journalists at the Sun a brief window to stop the sale from going through. Plus how Facebook is a hostile foreign power, the engineers daughter, the collapse of music genres, Dostoyevsky, W. G. Sebald, nasty return logistics, and more. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. 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. 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. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. She was writing about Aldens growing newspaper empire, and wanted to know what it was like to be the last news reporter in town. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. (Freeman denied this characterization through a spokesperson. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of journalism. 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. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. Since Alden's . 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. Like many alumni of the Sun, Simon is steeped in the papers history. 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. 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 pay was terrible and the work was not glamorous, but Glidden loved his job. 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). Already the largest shareholder . Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. Maybe this obscure hedge fund had a plan. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. 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. Maybe theyd cancel their subscriptions eventually; maybe the papers would fold altogether. They could be vain, bumbling, even corrupt. But Glidden felt sure he knew the real reason: Alden wanted him gone. Ken Kelleher is an American sculptor. His editor cited a supposed journalistic infraction (Glidden had reported the resignation of a school superintendent before an agreed-upon embargo). Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. Otherwise, youre just peeing in the ocean.. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. I felt like a terrible reporter because I couldnt get to everything.. 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. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. This all seemed especially relevant considering many Alden/DFM papers were previously part of the Knight-Ridder chain, the family news empire from which the foundation sprang. 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. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. My question was did Knight know what Alden was doing to newspapers when it invested with the hedge fund, and does it regret that investment now? 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. 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. 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. 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? It is a subsidiary of Alden Global Capital, the New York City hedge fund that backed the purchase of and dramatic cost-cutting at more than 100 newspapers causing more than 1,000 lost jobs. One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. 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." So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. [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. 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. All good works, and Knight is to be commended for them. 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. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. This story originally appeared on the Morning Edition live blog. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. In May, The Alden Global Capital a hedge fund, acquired Tribune Publishing TPCO for $633 million. It hurts to see the paper like this, he told her. It played with my mind a little bit, Glidden told me. 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. By Julie Reynolds. Dec 9, 2021. 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 . What happens next? Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. 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. To be sure, the Knight Foundation does much to help promote and sustain local news. This is predatory.. 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. 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). Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. One tagline he was considering was Marylands Best Newsroom., When I asked, half in jest, if he planned to raid the Sun to staff up, he responded with a muted grin. Senior lenders under the deal were to swap debt for stock. Alden's holdings already spanned the country, including the . Here was one of Americas most storied newspapersa publication that had endorsed Abraham Lincoln and scooped the Treaty of Versailles, that had toppled political bosses and tangled with crooked mayors and collected dozens of Pulitzer Prizesreduced to a newsroom the size of a Chipotle. 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. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. Misinformation proliferates. The 1% own and operate the . 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. But a sense of fatalism permeated the work. 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. 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. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. Margaret Sullivan: The Constitution doesnt work without local news. 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 . (Freeman denied this through a spokesperson.) 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. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. 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. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. In truth, Freeman didnt seem particularly interested in defending Aldens reputation. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. 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. Alden Global Capital revealed a proposal Monday to purchase Lee Enterprise Inc. and its newspapers at $24 a share, casting alarm through the many newsrooms owned by Lee. 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. he asks. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. It has not, however, retained the Chicago Tribune. 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. 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 . [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. 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 . Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. Enter the email address you signed up with and we'll email you a reset link. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. 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. 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. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. 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. Around this time, Randy becomes preoccupied with privacy. But we dont know, because they arent saying. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. "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.". Feb. 16, 2021 8:04 PM PT. 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. Freeman never responded. But this acquisition was profound, making Alden Global . But as long as Alden had made back its money, the investment would be a success. 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. With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. But while its true that Alden entered the industry by purchasing floundering newspapers, not all of them were necessarily doomed to liquidation. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. about two hundred American newspapers.