Former Knight-Ridder headquarters. Smith began investing in newspapers and media around the same time. 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%. It seemed reasonable to ask that they answer a few questions. The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. Today, we know that Knight, CalPERS and others no longer invest with Alden. The papers printing was moved to a plant more than 100 miles outside town, Glidden told me, which meant that the news arriving on subscribers doorsteps each morning was often more than 24 hours old. Orders for non-defence capital goods excluding aircraft a closely watched proxy for business investment, rose 0.8 per cent in January from a month earlier, comfortably above economists . 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. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. 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. By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. Inside Alden Global Capital. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. 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. Tips that he would never have time to investigate piled up on a legal pad he kept at his desk. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. Margaret Sullivan: The Constitution doesnt work without local news. [22] The appointees to the MediaNews board were replaced by new directors representing the stockholders group led by Alden Global Capital. It was clear that they didnt care about this being a business in the future. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. Well, he told me, they have some very good reporters., This article appears in the November 2021 print edition with the headline The Men Who Are Killing Americas Newspapers., A Secretive Hedge Fund Is Gutting Newsrooms, I Dont Know That I Would Even Call It Meth Anymore, W. G. Sebald Ransacked Jewish Lives for His Fictions. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. A Secretive Hedge Fund Is Gutting Newsrooms. | Michael Gray, WIkimedia Commons. When John Glidden first joined the Vallejo Times-Herald, in 2014, it had a staff of about a dozen reporters, editors, and photographers. It played with my mind a little bit, Glidden told me. 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. Of course, its easy to romanticize past eras of journalism. 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. 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. On the surface, the answer might seem obvious. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. 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 . We were like, Theyre not going to take our newspaper from us! Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. (Freeman has, in the past, disputed Bainums account of the negotiations.) They had a father-figure relationship, one told me. The rationale offered by the board was, Consistent with its fiduciary duties, Lees Board has taken this action to ensure our shareholders receive fair treatment, full transparency and protection in connection with Aldens unsolicited proposal to acquire Lee. [6][7][8][9], The company operates its media holdings through Digital First Media (DFM), which it acquired in 2010 after DMG's parent company, MediaNews Group, declared bankruptcy. 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. Am I going to win against capitalism in America? 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. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. How do you know who wins? the boy asks. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! 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. The pitch had a certain romantic appeal to the reporters in the room. . He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. 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 . After Brian took his own life, in 2001, Smith became a mentor and confidant to Heath, who was in college at the time of his fathers death. 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 shows premise pits two couples against each other for the chance to win a home. You need real capital to move the needle, he told me. 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. 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. He gained 100 pounds and started grinding his teeth at night. I asked if anyone there at the time was aware of Aldens vulture business strategy. By McKay Coppins. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. Next up: Chicago, Baltimore, and the New York Daily News. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. At the end of last month, Alden Global Capital, a notorious newspaper-owning hedge fund, sought to stake its claim on one of the last newspaper chains it hasn't yet touched: Lee Enterprises, which owns 90 publications across the country.Alden, which currently owns six percent of Lee's stock, sent an unsolicited offer to purchase the newspaper chain for $24 per share. 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. Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. In legal filings, Alden has acknowledged diverting hundreds of millions of dollars from its newspapers into risky bets on commercial real estate, a bankrupt pharmacy chain, and Greek debt bonds. This is a subscription-based business.. So who is investing with them? [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. Freeman was clearly aware of his reputation for ruthlessness, but he seemed to regard Aldens commitment to cost-cutting as a badge of honorthe thing that distinguished him from the saps and cowards who made up Americas previous generation of newspaper owners. Now it might be facing extinction. 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. 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. . 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. 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. In addition to the constant layoffs, our buildings were being sold, basic office supplies became scarce and the hot water stopped working. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. (Freeman denied this characterization through a spokesperson. 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. But he has a big idea: He believes theres serious money to be made in buying troubled companies, steering them into bankruptcy, and then selling them off in parts. Clearly, for Smith and Freeman, chop-shopping their newspapers paid off. Tuesday, 23 November 2021 07:46 PM EST. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. 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. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. New York hedge fund and U.S. newspaper consolidator Alden Global Capital LLC has made a proposal to take Lee Enterprises Inc. private in a deal that values the company at around $141 million. [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. Some have even suggested that this represents Americas last chance to save its local-news industry. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. 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. [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. But there are some clues here and there. I asked. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. The bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. Freeman never responded. Misinformation proliferates. 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. 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's holdings already spanned the country, including the . A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. 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). 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. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. 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. [2] Its managing director is Heath Freeman. Alden currently owns 32%. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. Most of his investments are defined by a cold pragmatism, but he takes a more personal interest in the media sector. Media . But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. 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. In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. 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 completed its takeover of the Tribune papers in May. After a long walk down a windowless hallway lined with cinder-block walls, I got in an elevator, which deposited me near a modest bank of desks near the printing press. 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. Alden gradually took control of the papers that would become DFM. 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. He declined to meet me in person or to appear on Zoom. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. 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 . Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. Financially, it was a raw deal. Aldens calculus was simple. Nov. 22, 2021. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. Smith & Company, a firm founded by Randall Duncan Smith, initially using the $20,000 cash prize he and his wife won on the 1968-1970 gameshow Dream House. AP. 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. Alden, which already owned one-third of . 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. [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. He started as a general-assignment reporter, covering local crime and community events. Layout design was outsourced to freelancers in the Philippines. 'Sobs, gasps, expletives' over latest Denver Post layoffs", "The Hedge Fund Vampire That Bleeds Newspapers Dry Now Has the Chicago Tribune by the Throat", "How Massive Cuts Have Remade The Denver Post", "Newsonomics: By selling to Americas worst newspaper owners, Michael Ferro ushers the vultures into Tribune", "A Secretive Hedge Fund Is Gutting Newsrooms", "Affiliated Media Files for Bankruptcy to Restructure (Update2)", "The shakeup at MediaNews: Why it could be the leadup to a massive newspaper consolidation", "Alden Global Capital to buy Tribune in deal valued at $630 million", "Lee Enterprises Enacts Poison Pill to Guard Against Alden Takeover", "Lee Enterprises Board Rejects Alden's Acquisition Offer", "Alden Global Capital takes Lee Enterprises to court over failed board nominations", "Alden Global Capital sues Lee Enterprises after rejected takeover bid", "Alden Global Capital loses lawsuit to nominate its slate of candidates for Lee Enterprises' board", "Lee Enterprises shareholders reelect three directors amid hedge fund fight", "Tampa Bay Times sells printing plant to developer for $21 million", "A hedge fund's 'mercenary' strategy: Buy newspapers, slash jobs, sell the buildings", "The hedge fund trying to buy Gannett faces federal probe after investing newspaper workers' pensions in its own funds", https://en.wikipedia.org/w/index.php?title=Alden_Global_Capital&oldid=1130942589, This page was last edited on 1 January 2023, at 19:27. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions.
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