In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. To be sure, the Knight Foundation does much to help promote and sustain local news. 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.. Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. On . 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. Instead, they gutted the place. 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. You need real capital to move the needle, he told me. After all, it has a long and venerable history of supporting local news. Its not the name or the flag., He may get his wish. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. I knew they almost never talked to reporters, but Randall Smith and Heath Freeman were now two of the most powerful figures in the news industry, and theyd gotten there by dismantling local journalism. 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 . 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. These papers were in many cases left for dead by local families not willing to make the tough but appropriate decisions to get these news organizations to sustainability. (Freeman denied this characterization through a spokesperson. Smith & Company. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. 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. 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. 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. 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. 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. 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. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. NPR reached out to Alden for a response. For two men who employ thousands of journalists, remarkably little is known about them. It has not, however, retained the Chicago Tribune. (Freeman has, in the past, disputed Bainums account of the negotiations.) 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. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. Coordinated by . [22] The appointees to the MediaNews board were replaced by new directors representing the stockholders group led by Alden Global Capital. Alden, which already owned one-third of . Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. 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 . [33], Alden Global Capital's management of American newspapers has been criticized. 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 . * Edited from 'independent . It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. 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. But there are some clues here and there. Below are highlights from his conversation with Morning Edition's A Martnez. 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. 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. 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. Since Alden's . They had a father-figure relationship, one told me. In budget meetings, according to the former executive, Freeman hectored local publishers, demanding that they produce detailed numbers off the top of their head and then humiliating them when they couldnt. 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? [3] [4] With its acquisition of Tribune Publishing in late . For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. On the appointed afternoon, I dialed the number provided by his spokesperson and found myself talking to the most feared man in American newspapers. 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. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. Probably not.. 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. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. 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. He took particular pride in finding novel ways to give away his family fortune, funding child-poverty initiatives in Baltimore and prenatal care for women in Liberia. In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. 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. Its a game, Randy explains to his son. . "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 . By Julie Reynolds. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. By the time the FBI caught them, in 2017, the conspiracy had resulted in one dead civilian and a rash of wrongful arrests and convictions. 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. For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. 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. Enter the email address you signed up with and we'll email you a reset link. Misinformation proliferates. But a sense of fatalism permeated the work. But that's not true for all of them. Already the largest shareholder . Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. | Michael Gray, WIkimedia Commons. 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. The Alden Global Capital . Otherwise, youre just peeing in the ocean.. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. My request for an interview with Smith was dismissed by his spokesperson before I finished asking. Yes, today, it's a newspaper without a newsroom. 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. [10] With its acquisition of Tribune Publishing in late May 2021, Alden is collectively the second-largest owner of newspapers in the United States, as calculated by average daily print circulation, second only to Gannett. 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. but sadly on a global scale there is hardly any independent news sources left currently. What threatens local newspapers now is not just digital disruption or abstract market forces. The Tribune had been profitable when Alden took over. 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's because the fund is stepping in to buy and then gut newsrooms across the country. The Ubiquity - The student news site of Quartz Hill High School 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 . Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. Freeman would show up at business meetings straight from the gym, clad in athleisure, the executive recalled, and would find excuses to invoke his college-football heroics, saying things like When I played football at Duke, I learned some lessons about leadership. (Freeman was a walk-on placekicker on a team that won no games the year he played.). 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 one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. Newspaper publisher Lee Enterprises is asking its shareholders to help it fight off a hostile takeover . It hurts to see the paper like this, he told her. Updated May 21, 2021 at 2:13 PM ET. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. Of course, its easy to romanticize past eras of journalism. Freeman was only slightly more accessible. "[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. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. "[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 Alden first got into the news business, Freeman seemed willing to indulge some innovation. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. Who is investor Randall Smith and why is he buying up newspaper companies, deep losses to Alden funds overall values, Denver Post newsroom workers invoke Thirst Amendment to raise awareness about conditions under Alden, Pittsburgh newspaper workers are making history, The NewsGuild urges public pension funds to divest from Cerberus, NewsGuild to Lee Shareholders: Reject Aldens Vote No Campaign. Tuesday, 23 November 2021 07:46 PM EST. Hellman and BNP together own 46.4 per cent of Allfunds' shares. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. 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. Its being snuffed out, quarter after quarter after quarter. We were sitting in a coffee shop in Logan Square, and he was still struggling to make sense of what had happened. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. In truth, Freeman didnt seem particularly interested in defending Aldens reputation. 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 California Public Employees Retirement System, a few European banks, and Citigroup and Coca Cola Companys pension funds have all invested in Alden, along with charities such as the Circle of Service Foundation and the Alfred University Endowment. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. But years later, when Randy relocates to Palm Beach and becomes a major donor to Donald Trumps presidential campaign, it will make a certain amount of sense that his earliest known media investment was conceived as a giant middle finger to the journalistic establishment. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. hide caption. Smith. The New York-based hedge fund Alden Global Capital - known for slashing its newspapers' budgets to extract escalated profits - won shareholder approval Friday for its $633 million bid to acquire the Tribune Publishing newspaper chain.. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. 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. On Monday, Dail So far, Alden has limited its closures primarily to weekly newspapers, but Doctor argues its only a matter of time before the firm starts shutting down its dailies as well. [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 of these papers likely would have been liquidated if the fund had not stepped in to buy them, as Alden's president told Coppins. Alden completed its takeover of the Tribune papers in May. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. 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. "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?" These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. 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). 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). Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. But for all the theatrics, his marching orders were always the same: Cut more. 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. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. 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. 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. [2] Its managing director is Heath Freeman. 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 . After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. These papers would have been liquidated if not for us stepping up.. In addition to the constant layoffs, our buildings were being sold, basic office supplies became scarce and the hot water stopped working. October 14, 2021. 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 . I asked. Maybe this obscure hedge fund had a plan. 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. So what is this Distressed Opportunities fund? 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%. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. As a reporter who's 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 America's largest newspaper chains?. "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. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. This company that owns us now seems to still be prettyI dont even know how to put it, the editor said, according to a recording of the meeting obtained by The Atlantic. Alden is known for . Freeman, meanwhile, would later gloat to colleagues that Bainum was never serious about buying the newspapers and just wanted to bask in the worshipful media coverage his bid generated. [4] [5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune .