Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. Its a game, Randy explains to his son. No response came back. . Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. If accepted, the $24 per share purchase price would . So what is this Distressed Opportunities fund? 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. According to Aldens scarce SEC filings, it currently has fewer than 10 investors, most of them from overseas. But who most of those few souls are, and how much of the hundreds of millions skimmed from DFM papers theyve received remains a deep, dark mystery. He writes a weekly column called Mugger that savages the citys journalists by name and frequently runs to 10,000 words. 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. 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. 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. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. 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. Year after year, the executives from Alden would order new budget cuts, and Glidden would end up with fewer co-workers and more work. 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 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. I put the question to Freeman, but he declined to answer on the record. 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. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. Youd be surprised. We were like, Theyre not going to take our newspaper from us! Next up: Chicago, Baltimore, and the New York Daily News. 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. But if you really started fucking up in grandiose and belligerent ways, if you started stealing and grifting and lying, eventually somebody would come up behind you and say, Youre grifting and youre lying and theyd put it in the paper., The bad stuff runs for so long now, he went on, that by the time you get to it, institutions are irreparable, or damn near close., Take away the newsroom packed with meddling reporters, and a city loses a crucial layer of accountability. 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. October 14, 2021. [13], In response, the board of Lee Enterprises enacted a shareholder rights plan, colloquially known as a "poison pill", in order to ward off the purchase attempt. 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. 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 . You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. Theres no industry that I can think of more integral to a working democracy than the local-news business, he said. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! 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. Morale tanked; reporters burned out. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. Im worried the worst is yet to come. But that would require slow, painstaking workand there are easier ways to make money. I asked if anyone there at the time was aware of Aldens vulture business strategy. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. Alden currently owns 32%. Clearly, for Smith and Freeman, chop-shopping their newspapers paid off. 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. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. 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. Since Alden's . Alden Global Capital owns 56 dailies under Digital First Media (Alden also owns 32% of Tribune 10 dailies in Column C.) Tribune Media owns 10 dailies. I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. 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). California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. When it was over, a quarter of the newsroom was gone. At their worst, they used their papers to maintain oppressive social hierarchies. Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. So Freeman pivoted. 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. 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. Maybe this obscure hedge fund had a plan. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. Margaret Sullivan: The Constitution doesnt work without local news. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. He says he visited the Tribune's office and was "really shocked by how grim the scene was." Now it might be facing extinction. 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. 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 . Gerry Smith. 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. Interestingly, Smiths foundation didnt do well with its Alden investments in 2016. . The audio for this interview was produced by Ryan Benk and edited by Scott Saloway. 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? Yes, today, it's a newspaper without a newsroom. His editor cited a supposed journalistic infraction (Glidden had reported the resignation of a school superintendent before an agreed-upon embargo). 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. 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). In Orlando, the Sentinel ran an editorial pleading with the community to deliver us from Alden and comparing the hedge fund to a biblical plague of locusts. In Allentown, Pennsylvania, reporters held reader forums where they tried to instill a sense of urgency about the threat Alden posed to The Morning Call. . "[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. Its a hedge that went and bought up some titles that it milks for cash.. All good works, and Knight is to be commended for them. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. The $633 million sale made Alden the nation's second largest newspaper owner in terms of circulation, with more than 200 newspapers. The shows premise pits two couples against each other for the chance to win a home. Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. [15][16] In March 2018, Margaret Sullivan, the media columnist for The Washington Post, called Alden "one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism. Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? 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 . 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. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. 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. Layout design was outsourced to freelancers in the Philippines. He had spoken on this issue before, and it was easy to see why. 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 . 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. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. [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. Senior lenders under the deal were to swap debt for stock. ", "Denver Post Rebels Against Its Hedge-Fund Ownership", "Tribune Says Sale to Alden Wins Approval Amid Confusion Over Key Shareholder's Vote", "Lee Enterprises Shares Jump on Takeover Offer From Alden", "The vulture is hungry again: Alden Global Capital wants to buy a few hundred more newspapers", "Colorado Group Pushes to Buy Embattled Denver Post From New York Hedge Fund", "The battle for Tribune: Inside the campaign to find new owners for a legendary group of newspapers", "Is this strip-mining or journalism? 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? But outside the industry, few seemed to notice. But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. 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 . [4], In 2019, Alden attempted, but failed at, a hostile takeover of Gannett. When a reporter asked if their work was still valued, the editor sounded deflated. 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 . 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. about two hundred American newspapers. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper.