'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! Alden completed its takeover of the Tribune papers in May. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. Ken Kelleher is an American sculptor. 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. 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. 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. [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. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. Other records turned up from public pension funds and filings of publicly traded companies. [29] This attempt also failed, as shareholders returned both directors to the Lee board despite Alden's opposition. Tuesday, 23 November 2021 07:46 PM EST. Alden Global Capital is a hedge fund based in Manhattan, New York City. 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. Some have even suggested that this represents Americas last chance to save its local-news industry. Youd be surprised. But a sense of fatalism permeated the work. Financially, it was a raw deal. Alden is in the business of making money, not journalism. It was all about the next quarters profit margins, says Matt DeRienzo, who worked as a publisher for Aldens Connecticut newspapers before finally resigning. Freeman was only slightly more accessible. 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. Now it might be facing extinction. So Freeman pivoted. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. 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? John Temple: My newspaper died 10 years ago. 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. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. He said that he still appreciated their journalism, but that he couldnt speak for his corporate bosses. 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. City budgets balloon, along with corruption and dysfunction. At their worst, they used their papers to maintain oppressive social hierarchies. When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. 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. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. The Tribune had been profitable when Alden took over. 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. Alden's holdings already spanned the country, including the . | Michael Gray, WIkimedia Commons. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. How do you know who wins? the boy asks. Alden gradually took control of the papers that would become DFM. Former Knight-Ridder headquarters. 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 . . Inside Alden Global Capital. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. * Edited from 'independent . Alden Global Capital, a hedge fund known for gutting local newsrooms, is seeking to buy Lee Enterprises (LEE), a publicly traded company with a chain of daily newspapers and other publications . Next year, Bainum will launch The Baltimore Banner, an all-digital, nonprofit news outlet. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . My answer is its hard to know. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. All good works, and Knight is to be commended for them. 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. 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. Read: What we lost when Gannett came to town. Knight spokesman Andrew Sherry declined to answer any of those questions, saying instead, Our endowment investments support our grantmaking., We invested approximately one half of one percent of our endowment in an Alden fund between late 2009 and early 2014, he said via email. The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. 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. 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. 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 . At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. By Julie Reynolds. Misinformation proliferates. but sadly on a global scale there is hardly any independent news sources left currently. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. 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. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. 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. Tips that he would never have time to investigate piled up on a legal pad he kept at his desk. Otherwise, youre just peeing in the ocean.. 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. Some in the city started to wonder if the paper was even worth saving. 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. 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. 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 . 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. [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 firm oversaw the promotion of John Paton, a charismatic digital-media evangelist, who improved the papers web and mobile offerings and increased online ad revenue. Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. 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. 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. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. 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?" "[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. 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%. 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. 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.. 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. 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. [33], Alden Global Capital's management of American newspapers has been criticized. 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. 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. 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. To be sure, the Knight Foundation does much to help promote and sustain local news. Have you heard of the hedge fund Alden Global Capital? Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.[23]. This story originally appeared on the Morning Edition live blog. 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. "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. Heath hopes the well never runs dry, but hes going to keep pumping until it does. Alden Global Capital has currently bid to buy all of Tribune. Alden Global Capital swallowed all of the Tribune's newspapers, including the New York Daily News, earlier in 2021. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. he asks. 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. Its a game, Randy explains to his son. Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. From the March 1914 issue: H. L. Mencken on newspaper morals, A story circulated throughout the companypossibly apocryphal, though no one could say for surethat when Freeman was informed that The Denver Post had won a Pulitzer in 2013, his first response was: Does that come with any money?. "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 . Already the largest shareholder . Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. 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. In the past 15 years, more than a quarter of American newspapers have gone out of business. For two men who employ thousands of journalists, remarkably little is known about them. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. Craigslist killed the Classified section, Google and Facebook swallowed up the ad market, and a procession of hapless newspaper owners failed to adapt to the digital-media age, making obsolescence inevitable. When John Glidden first joined the Vallejo Times-Herald, in 2014, it had a staff of about a dozen reporters, editors, and photographers. By that point, Alden was widely known as the grim reaper of American newspapers, as Vanity Fair had put it, and news of the acquisition plans had unleashed a wave of panic across the industry. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity.