When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of journalism. That may well be the future of local news, he says. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. 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. Am I going to win against capitalism in America? "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 . Feb 16, 2021 at 8:05 pm. he asks. Instead, the money was used to finance the hedge funds other ventures. Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. 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. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? Some in the city started to wonder if the paper was even worth saving. 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. Media . On more than one occasion, according to people I spoke with, he asked aloud, What do all these people do? According to the former executive, Freeman once suggested in a meeting that Aldens newspapers could get rid of all their full-time reporters and rely entirely on freelancers. 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. It played with my mind a little bit, Glidden told me. 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 . 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. According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. He stops talking to the press, refuses to be photographed, and rarely appears in public. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. "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 . 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. (Freeman denied this characterization through a spokesperson. * Edited from 'independent . On . 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. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. 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. ), Crucially, the profits generated by Aldens newspapers did not go toward rebuilding newsrooms. Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. Connecting this to the current state of American newspaper ownership seems rather tenuous.. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. One acquaintance tells The Village Voice that hes the kind of guy who divests himself every couple of years to avoid ending up on lists of the worlds richest people. 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. [11], In November 2021, Alden Global Capital made an offer to purchase Lee Enterprises for $24 a share in cash, or about $141 million. 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. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! During its five-year run with Alden, it seems quite unlikely that no one at Knight knew about the hedge funds slash-and-burn strategy for two reasons. Those that have survived are smaller, weaker, and more vulnerable to acquisition. Meanwhile, reporters fanned out across their respective cities in search of benevolent rich people to buy their newspapers. 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. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. I put the question to Freeman, but he declined to answer on the record. 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. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. 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. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. 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 . 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. The newsroom was moved to a single room rented from the local chamber of commerce. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. They could be vain, bumbling, even corrupt. Freeman never responded. 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. 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. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. 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. 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. Freeman would show up at business meetings straight from the gym, clad in athleisure, the executive recalled, and would find excuses to invoke his college-football heroics, saying things like When I played football at Duke, I learned some lessons about leadership. (Freeman was a walk-on placekicker on a team that won no games the year he played.). Year after year, the executives from Alden would order new budget cuts, and Glidden would end up with fewer co-workers and more work. So who is investing with them? by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. 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. Next up: Chicago, Baltimore, and the New York Daily News. And everyone knows its going to run dry.. We must finally require the online tech behemoths, such as Google, Apple, and Facebook, to fairly compensate us for our original news content, he told me. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. 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. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. Inside Alden Global Capital. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. In the past 15 years, more than a quarter of American newspapers have gone out of business. Alden is in the business of making money, not journalism. 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. But outside the industry, few seemed to notice. 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. This was the core of Freemans argument. So Freeman pivoted. Theres little evidence that Alden cares about the sustainability of its newspapers. 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). 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. Its not the name or the flag., He may get his wish. Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. One early article, in the trade publication Poynter, suggested that Aldens interest in the local-news business could be seen as flattering and quoted the owner of The Denver Post as saying he had enormous respect for the firm. 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. This is a subscription-based business.. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. City budgets balloon, along with corruption and dysfunction. 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 . Like many alumni of the Sun, Simon is steeped in the papers history. '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. The scene was somehow even grimmer than Id imagined. Ken Kelleher is an American sculptor. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. 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. Alden, which already owned one-third of . Updated May 21, 2021 at 2:13 PM ET. 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. Alden gradually took control of the papers that would become DFM. The hollowing-out of the Chicago Tribune was noted in the national press, of course. But in the case of local news, nothing comparable is ready to replace these papers when they die. 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. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." 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. about two hundred American newspapers. 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. Two veteran journalists from the Chicago Tribune published an op-ed on Sunday challenging one of the paper's principal owners, the New York hedge fund Alden Global Capital. Lee, which owns the St. Louis Post Dispatch, the Omaha World-Herald and many other daily newspapers throughout the region, is staving off a takeover attempt by Alden Global Capital, a New-York . He used his own money to pull court records, and went years without going on a vacation. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. But I had underestimated how little Aldens founders care about their standing in the journalism world. Some have even suggested that this represents Americas last chance to save its local-news industry. 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. 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. I felt like a terrible reporter because I couldnt get to everything.. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? 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. Tribune Publishing last month approved a $630m takeover deal with Alden Global Capital. "[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. 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. But this acquisition was profound, making Alden Global . Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. October 14, 2021. Heath hopes the well never runs dry, but hes going to keep pumping until it does. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. Alden is known for . The question was how. ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? 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. Smith & Company. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. Layout design was outsourced to freelancers in the Philippines. Shares of Lee Enterprises Inc. rose sharply Monday after hedge fund Alden Global Capital LLC offered to buy the newspaper publisher for about $141 million. 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. A spokesman took issue with the entirety of the story, and laid out a long list of questions attacking the integrity of the reporter, The Atlantic and some of his sources without addressing some of the more specific claims within the report. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. Of course, its easy to romanticize past eras of 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? 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. [2] Its managing director is Heath Freeman. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . At the time, even savvy media insiders like Martin Langeveld wistfully predicted Alden would keep newspapers future in mind: Smith knows that the only way to win his big bet on the future of newspapers is to turn them into nimble, modern digital news enterprises.. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. For two men who employ thousands of journalists, remarkably little is known about them. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. Read: What we lost when Gannett came to town. To replace a paper like the Sun would require a large, talented staff that covers not just government, but sports and schools and restaurants and art. It has not, however, retained the Chicago Tribune. 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. Have you heard of the hedge fund Alden Global Capital? Baltimore has always had its problems, he told me. How exactly Randall Smith chose Heath Freeman as his protg is a matter of speculation among those who have worked for the two of them. Now he was feeling the effects of their management. John Temple: My newspaper died 10 years ago. 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. Somehow, no one's buying it. It hurts to see the paper like this, he told her. 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. 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 . At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. Morale tanked; reporters burned out. It was founded in 2007 by Randall D. ", "The most feared owner in American journalism looks set to take some of its greatest assets", "Minority shareholder sues Denver Post parent and NY hedge fund over 'breaches of fiduciary duty', "What does the Chicago Tribune sale mean for the future of newsrooms? Now it might be facing extinction. All good works, and Knight is to be commended for them. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability.
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