The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. Have you heard of the hedge fund Alden Global Capital? Freeman never responded. The shows premise pits two couples against each other for the chance to win a home. What exactly went wrong would become a point of bitter debate among the journalists involved in the campaigns. 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. A group of 11 community newspapers owned by Red Wing Publishing Co. have been sold to MediaNews Group, owner of the St. Paul Pioneer Press and more than 100 newspapers across the country. As a privately held hedge fund, Alden doesnt have to reveal much to the public. He was fired after criticizing Alden in a Washington Post interview. I asked. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. It has not, however, retained the Chicago Tribune. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. Layout design was outsourced to freelancers in the Philippines. The 21st century has seen many of these generational owners flee the industry, to devastating effect. Instead, the money was used to finance the hedge funds other ventures. But that's not true for all of them. Misinformation proliferates. '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. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. . Next up: Chicago, Baltimore, and the New York Daily News. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. Dec 9, 2021. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. To him, its the same as oil, the publisher said. 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. 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? 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. And everyone knows its going to run dry.. But in the case of local news, nothing comparable is ready to replace these papers when they die. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. . 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. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. Its not the name or the flag., He may get his wish. I put the question to Freeman, but he declined to answer on the record. The pay was terrible and the work was not glamorous, but Glidden loved his job. 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. 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. Its a game, Randy explains to his son. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. He said that he still appreciated their journalism, but that he couldnt speak for his corporate bosses. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. As a young man, hed studied at divinity school before taking over his fathers company, and decades later he still carried a healthy sense of noblesse oblige. "[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. Alden is in the business of making money, not journalism. Financially, it was a raw deal. Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. 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. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World. A vulture doesnt hold a wounded animals head underwater. It felt important. 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. Alden Global Capital, the hedge fund that owns the Chicago Tribune and New York Daily News, offered to buy Lee Enterprises Inc. for about $142 million, seeking a larger share of the . After all, it has a long and venerable history of supporting local 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. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. But as long as Alden had made back its money, the investment would be a success. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. Probably not.. ", "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? 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. The men killing Americas newspapers, how Slack upended the workplace, and the new meth. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. "Local newspaper brands and operations are the engines that power trusted local news in communities across the United States," Heath Freeman, president of Alden Global Capital, said in a . It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. 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 most of them also had a stake in the communities their papers served, which meant that, if nothing else, their egos were wrapped up in putting out a respectable product. 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. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. 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. This story originally appeared on the Morning Edition live blog. 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. Its hard to imagine theyd show, anyway. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. Aldens calculus was simple. 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 . When Alden first got into the news business, Freeman seemed willing to indulge some innovation. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. On . Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. 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. If you went into a lab to create the perfect bro, Heath would be that creation, says one former executive at an Alden-owned company, who, like others in this story, requested anonymity to speak candidly. [2] Its managing director is Heath Freeman. The Tribune had been profitable when Alden took over. 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. 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 college he worked at Hudson Studio, Art Foundry in Niverville, NY . 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. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. Baltimore has always had its problems, he told me. Alden Global Capital already had a 32% stake in Tribune Publishing, which owns famous names like the Tribune, Daily News, the Hartford Courant and others, and on Tuesday announced it would pay . 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. 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. That's because the fund is stepping in to buy and then gut newsrooms across the country. But it turned out that Smith had so many doorsteps16 mansions in Palm Beach alone, as of a few years ago, some of them behind gatesthat the plan proved impractical. 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. 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 . When plans for the building were announced in 1922, Colonel Robert R. McCormick, the longtime owner of the Chicago Tribune, said he wanted to erect the worlds most beautiful office building for his beloved newspaper. Collectively, they control about one-half of daily newspapers in the U.S. Am I going to win against capitalism in America? Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . Of course, its easy to romanticize past eras of journalism. 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. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. One conclusions even these reporters are hesitant to make is that we are all dealing within a capitalist system which has none, or few, principles to guide itself, apart from making a profit, no matter how. The consequences can influence national politics as well; an analysis by Politico found that Donald Trump performed best during the 2016 election in places with limited access to local news. Alden Global Capital swallowed all of the Tribune's newspapers, including the New York Daily News, earlier in 2021. Inside Alden Global Capital. Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. [2] Its managing director is Heath Freeman. The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. Those that have survived are smaller, weaker, and more vulnerable to acquisition. Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. 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. 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. 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. You need real capital to move the needle, he told me. So who is investing with them? Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, That may well be the future of local news, he says. Gerry Smith. 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. All good works, and Knight is to be commended for them. "[28], In mid-February 2022, the Delaware court found in favor of Lee Enterprises. This was the core of Freemans argument. [10][19][20], The company has its origins in R.D. Freeman was only slightly more accessible. 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. 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. When the sale failed to attract a sufficiently high offer, Freeman turned his attention to squeezing as much cash out of the newspapers as possible. Iowa-based Lee Enterprises asks investors to help fight off hedge fund Alden Global Capital. . 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. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. It turned out that those ownersNew York hedge funders whom Glidden took to calling the lizard peoplewere laser-focused on increasing the papers profit margins. 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. 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. 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. I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. But there are some clues here and there. 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. But while its true that Alden entered the industry by purchasing floundering newspapers, not all of them were necessarily doomed to liquidation. The Denver Post has become the face of this struggle, due to an editorial published in its own pages lashing out against owners, New York-based hedge fund Alden Global Capital. 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. (Freeman has, in the past, disputed Bainums account of the negotiations.) 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. 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. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. he asks. 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. 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. Instead, they gutted the place. It was founded in 2007 by Randall D. Margaret Sullivan: The Constitution doesnt work without local news. Heath Freeman in an undated photo provided by Goldin Solutions . The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. 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. But even for a group of journalists, it was tough to keep the publics attention. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. Enter the email address you signed up with and we'll email you a reset link. The Ubiquity - The student news site of Quartz Hill High School To be sure, the Knight Foundation does much to help promote and sustain local news. It hurts to see the paper like this, he told her. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. On the surface, the answer might seem obvious. 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. How do you know who wins? the boy asks. 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. A more honest argument might have claimed, as some economists have, that vulture funds like Alden play a useful role in creative destruction, dismantling outmoded businesses to make room for more innovative insurgents. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. Heath hopes the well never runs dry, but hes going to keep pumping until it does. For Freeman and his investors to come out ahead, they didnt need to worry about the long-term health of the assetsthey just needed to maximize profits as quickly as possible. When The New York Times profiles him in 1991, it notes that he excels at profiting from other peoples misery and quotes a parade of disgruntled clients and partners. 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. Well, that wasnt the point. AP. October 14, 2021. At one point, he told me, the citys entire civil-service commission was abruptly fired without explanation; his sources told him something fishy was going on, but he knew hed never be able to run down the story. This investment strategy does not come without social consequences. But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. 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. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. Morale tanked; reporters burned out. When it was over, a quarter of the newsroom was gone. 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. 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). We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. 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. [21], Under the acquisition plan, MediaNews Group debt fell to $165 million from about $930 million. City budgets balloon, along with corruption and dysfunction. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. Theres no industry that I can think of more integral to a working democracy than the local-news business, he said. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of 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 . Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. 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. Feb 16, 2021 at 8:05 pm. | Michael Gray, WIkimedia Commons. Somehow, no one's buying it. 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 . In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. 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. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. 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. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May.