But in the case of local news, nothing comparable is ready to replace these papers when they die. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. 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. I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. Im worried the worst is yet to come. 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. In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. 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. 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. Smith began investing in newspapers and media around the same time. Hedge fund Alden Global Capital is attempting to acquire Davenport-based Lee Enterprises, one of the country's largest newspaper chains, in all the markings of a hostile takeover. Other records turned up from public pension funds and filings of publicly traded companies. But there are some clues here and there.  Its managing director is Heath Freeman. 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. 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. At their worst, they used their papers to maintain oppressive social hierarchies. Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. When the city-hall reporter left a few months later, he picked up that beat too. ", In mid-February 2022, the Delaware court found in favor of Lee Enterprises. 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. Misinformation proliferates. In budget meetings, according to the former executive, Freeman hectored local publishers, demanding that they produce detailed numbers off the top of their head and then humiliating them when they couldnt. Aldens calculus was simple. So far, Alden has limited its closures primarily to weekly newspapers, but Doctor argues its only a matter of time before the firm starts shutting down its dailies as well. , In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. The 5 global Trends in Journalism: 1 We've moved from a world where media organizations were gatekeepers to a world where media still creates the news agenda, but platform companies control access to audiences 2 this move to digital media generally does not generate filter bubbles Instead automated Serendipity + incidental exposure drive people . Freeman, meanwhile, would later gloat to colleagues that Bainum was never serious about buying the newspapers and just wanted to bask in the worshipful media coverage his bid generated. It was founded in 2007 by Randall D. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. That gave the journalists at the Sun a brief window to stop the sale from going through. 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. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. 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 . Otherwise, youre just peeing in the ocean.. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. 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. 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. In the for-profit news arena, Knight is spurring the digital transformation of local newsrooms through the Knight-Lenfest Newsroom Initiative, Sherry said. That's because the fund is stepping in to buy and then gut newsrooms across the country. 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.  By mid-2020, Alden had stakes in roughly two hundred American newspapers. 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. Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.. Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. 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. 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. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. As a privately held hedge fund, Alden doesnt have to reveal much to the public. Margaret Sullivan: The Constitution doesnt work without local news. On . .  Alden's purchase price was $635 million, or $17.25 per share. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. . Like many alumni of the Sun, Simon is steeped in the papers history. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. Interestingly, Smiths foundation didnt do well with its Alden investments in 2016. 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. 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. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. The shows premise pits two couples against each other for the chance to win a home. In 2011, Paton launched an ambitious initiative he called Project Thunderdome, hiring more than 50 journalists in New York and strategically deploying them to supplement short-staffed local newsrooms. Prior to the acquisition of the Tribune Company, we purchased substantially all of our newspapers out of bankruptcy or close to liquidation, he told me. Feb. 16, 2021 8:04 PM PT. It was founded in 2007 by Randall D. Smith. But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. Its a game, Randy explains to his son. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. ", "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? People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. 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%. Today, we know that Knight, CalPERS and others no longer invest with Alden. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . The firm has a history of purchasing newspapers to cut costs wherever . As the months passed, things kept getting worse. Coordinated by . 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. At the time, the Sun had a bustling bureau in Annapolis, and he marveled at the reporters ability to sort the honest politicians from the political whores by exposing abuses of power. Of course, its easy to romanticize past eras of journalism. Prior to the buildings completion, McCormick directed his foreign correspondents to collect fragments of various historical sitesa brick from the Great Wall of China, an emblem from St. Peters Basilicaand send them back to be embedded in the towers facade. But he couldnt help feeling that the police scandal would have been exposed much sooner if the Sun were operating at full force.  Its managing director is Heath Freeman. Some have even suggested that this represents Americas last chance to save its local-news industry. Alden, a New York City-based firm that has become the grim reaper of American newspapers, had recently increased its stake in Tribune Publishing to 32%making it the largest shareholder of the . So who is investing with them? 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 gained 100 pounds and started grinding his teeth at night. Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. "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 . Tuesday, 23 November 2021 07:46 PM EST. The pitch had a certain romantic appeal to the reporters in the room. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. He teaches his 8-year-old son, Caleb, to make trades on a Quotron computer, and imparts the value of delayed gratification by reportedly postponing his familys Christmas so that he can use all their available cash to buy stocks at lower prices in December. On Monday, Dail 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. Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. Its being snuffed out, quarter after quarter after quarter. We were sitting in a coffee shop in Logan Square, and he was still struggling to make sense of what had happened. He was fired after criticizing Alden in a Washington Post interview. 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. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. Alden, which already owned one-third of . Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. It hurts to see the paper like this, he told her. "And what we've seen in a lot of these places where newspapers have been scaled back or even closed is there really is no comparable product in place, whether it's by the government or by another news organization, to do what these local newspapers have done for hundreds of years.". 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 . 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. 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. 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. So what is this Distressed Opportunities fund? The one central theme, the Times reports, seems to be that Smith and its web of affiliates are out, first and foremost, for themselves. If this reputation bothers Randy and his colleagues, they dont let on: For a while, according to The Village Voice, his firm proudly hangs a painting of a vulture in its lobby. 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. Many of the operators were looking at the newspaper business as a local advertising business, he said, and we didnt believe that was the right way to look at it. A vulture doesnt hold a wounded animals head underwater. ", 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. Morale tanked; reporters burned out. 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. Alden Global Capital is a hedge fund based in Manhattan, New York City. Freeman never responded. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing.  The Alden lawsuit asserts that the members of the Lee board "have every reason to maintain the status quo and their lucrative corporate positions" and that they are "focused more on [their] own power than what's best for the company. 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. 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. 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. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. She was writing about Aldens growing newspaper empire, and wanted to know what it was like to be the last news reporter in town. But this acquisition was profound, making Alden Global . Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. For Baltimore to avoid a similar fate, Simon told me, something new would have to come alonga spiritual heir to the Sun: A newspaper is its contents and the people who make it. He stops talking to the press, refuses to be photographed, and rarely appears in public. 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. 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. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. 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. Alden completed its takeover of the Tribune papers in May. Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions. And everyone knows its going to run dry.. The final product, completed in 1925, was an architectural spectacle unlike anything the city had seen beforeromance in stone and steel, as one writer described it. 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 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. But for all the theatrics, his marching orders were always the same: Cut more. '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. Scott Olson/Getty Images According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. I felt like a terrible reporter because I couldnt get to everything.. but sadly on a global scale there is hardly any independent news sources left currently. 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. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. Heath hopes the well never runs dry, but hes going to keep pumping until it does. 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. The Tribune had been profitable when Alden took over. A century later, the Tribune Tower has retained its grandeur. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. . A Secretive Hedge Fund Is Gutting Newsrooms. He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden.  The appointees to the MediaNews board were replaced by new directors representing the stockholders group led by Alden Global Capital. 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. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. Clearly, for Smith and Freeman, chop-shopping their newspapers paid off. 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. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. 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 . The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. This is predatory.. 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. In the past 15 years, more than a quarter of American newspapers have gone out of business. 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?. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. . But outside the industry, few seemed to notice. One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. . he asks. 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. "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 . 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. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. 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. "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?" It is the nations second-largest newspaper owner by circulation. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. It seemed reasonable to ask that they answer a few questions. Those that have survived are smaller, weaker, and more vulnerable to acquisition. To him, its the same as oil, the publisher said. After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. Newspaper publisher Lee Enterprises is asking its shareholders to help it fight off a hostile takeover . To be sure, the Knight Foundation does much to help promote and sustain local news. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. The scene was somehow even grimmer than Id imagined.  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 can cite decades-old scoops and tell you whom they pissed off. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. 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. 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.. Alden is known for . Probably not.. He told me it will begin with an annual operating budget of $15 million, unprecedented for an outfit of this kind. , 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. Read: What we lost when Gannett came to town. This once-proud publication is now owned and run by Alden Global Capital, a multibillion-dollar hedge fund with a long record of buying papers on the cheap, selling off their assets and slashing pay and jobs. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. All good works, and Knight is to be commended for them. Some in the city started to wonder if the paper was even worth saving. 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. (Freeman has, in the past, disputed Bainums account of the negotiations.) 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.