Its a hedge that went and bought up some titles that it milks for cash.. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. Its hard to imagine theyd show, anyway. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. [31], In 2019, Twenty Lake Holdings reported that it had acquired about 180 properties with 2.3 million square feet of real estate in 29 states. Feeling burned by the hedge fund, Bainum decided to make a last-minute bid for all of Tribune Publishings newspapers, pledging to line up responsible buyers in each market. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? Alden gradually took control of the papers that would become DFM. Other records turned up from public pension funds and filings of publicly traded companies. (Freeman denied this characterization through a spokesperson. One, the warning shot was fired in 2011, in a Poynter Institute article titled Who is investor Randall Smith and why is he buying up newspaper companies? Randall Smith is the co-founder of Alden, together with his young protg, Heath Freeman, and has been called the grandfather of vulture investing. Vulture funds by definition dont reinvest in their properties they suck them dry. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. 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 . He started as a general-assignment reporter, covering local crime and community events. If Knights total divestment from Alden in 2014 was because someone made an ethical decision to stop dealing with the vulture fund, good for them. Much of the Knight family's once-grand newspaper empire was ultimately acquired by Alden Global Capital, while the family foundation invested in Alden funds. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. 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. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. hide caption. The bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. In a news release Monday, Alden said it sent Lee's board a letter with the offer. Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. 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. When Simon called me, he was on the set of his new miniseries, We Own This City, which tells the true story of Baltimore cops who spent years running their own drug ring from inside the police department. [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. 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 . 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. Who Profits From Alden Global Capital? It . I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. 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. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. But for all the theatrics, his marching orders were always the same: Cut more. If you want to know what its like when Alden Capital buys your local newspaper, you could look to Montgomery County, Pennsylvania, where coverage of local elections in more than a dozen communities falls to a single reporter working out of his attic and emailing questionnaires to candidates. G ARY MARX and David Jackson, two veteran investigative reporters at the Chicago Tribune, spent most of last year seeking potential buyers who might save their newspaper from Alden Global Capital . 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. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. Smith & Company. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. Today, we know that Knight, CalPERS and others no longer invest with Alden. But while its true that Alden entered the industry by purchasing floundering newspapers, not all of them were necessarily doomed to liquidation. Year after year, the executives from Alden would order new budget cuts, and Glidden would end up with fewer co-workers and more work. Alden's holdings already spanned the country, including the . 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. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. This was the core of Freemans argument. Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. Instead, they gutted the place. Next year, Bainum will launch The Baltimore Banner, an all-digital, nonprofit news outlet. Alden is in the business of making money, not journalism. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? Next up: Chicago, Baltimore, and the New York Daily News. They are also defined by an obsessive secrecy. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. 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. [7][8] Alden's purchase price was $635 million, or $17.25 per share. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! 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. Those that have survived are smaller, weaker, and more vulnerable to acquisition. Vallejo deserves better. A few weeks after the story came out, he was fired. As the months passed, things kept getting worse. Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World. I asked. "[25], In early December, the board of Lee unanimously rejected the Alden bid, saying that the Alden proposal "grossly undervalues Lee and fails to recognize the strength of our business today. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. 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. 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. 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. 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. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. But I had underestimated how little Aldens founders care about their standing in the journalism world. Alden Global Capital had recently purchased a nearly one-third stake in the Suns parent company, Tribune Publishing, and the firm was signaling that it would soon come for the rest. To be sure, the Knight Foundation does much to help promote and sustain local news. Alden currently owns 32%. After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. Margaret Sullivan: The Constitution doesnt work without local news. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. And everyone knows its going to run dry.. 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. Interestingly, Smiths foundation didnt do well with its Alden investments in 2016. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. 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. 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. 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). 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. The question was how. The new owners had announced a round of buyouts, some beloved staffers were leaving, and those who remained were worried about the future. The pay was terrible and the work was not glamorous, but Glidden loved his job. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. Some have even suggested that this represents Americas last chance to save its local-news industry. 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.. No response came back. Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. 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. The men killing Americas newspapers, how Slack upended the workplace, and the new meth. [10][19][20], The company has its origins in R.D. 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. Aldens calculus was simple. Collectively, they control about one-half of daily newspapers in the U.S. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. Theres little evidence that Alden cares about the sustainability of its newspapers. 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. 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. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. 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. Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. 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. "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?" Ken Kelleher is an American sculptor. For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. They could be vain, bumbling, even corrupt. Freeman was only slightly more accessible. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. In May, The Alden Global Capital a hedge fund, acquired Tribune Publishing TPCO for $633 million. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . It wasn't the first newspaper acquisition for this hedge fund firm, nor is it the only firm of its kind eyeing the nation's newspapers. It played with my mind a little bit, Glidden told me. Scott Olson/Getty Images Gerry Smith. 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. 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. On . But there are some clues here and there. 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. Lee's board of directors . Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. October 14, 2021. Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. 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. The 1% own and operate the . He declined to meet me in person or to appear on Zoom. Already the largest shareholder . "[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. 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. 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. A Secretive Hedge Fund Is Gutting Newsrooms. Alden Global Capital, a New York-based hedge fund that this year became the second largest newspaper publisher in the United States, has made an offer to purchase Lee Enterprises, the media company that owns 75 daily newspapers, including the St. Louis Post-Dispatch. 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. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. In the past 15 years, more than a quarter of American newspapers have gone out of business. Layout design was outsourced to freelancers in the Philippines. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. 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. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough.
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