The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. In a news release Monday, Alden said it sent Lee's board a letter with the offer. Have you heard of the hedge fund Alden Global Capital? He says he visited the Tribune's office and was "really shocked by how grim the scene was." It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. 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. Of course, its easy to romanticize past eras of journalism. A look at Alden Global Capital is the cover story of the latest . (Freeman denied this through a spokesperson.) That may well be the future of local news, he says. It was founded in 2007 by Randall D. If accepted, the $24 per share purchase price would . As the months passed, things kept getting worse. 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. On . [13], In response, the board of Lee Enterprises enacted a shareholder rights plan, colloquially known as a "poison pill", in order to ward off the purchase attempt. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. 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. 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. [8][24] Tribune Publishing publishes nine major metropolitan dailies. And everyone knows its going to run dry.. 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 . 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. After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. He had spoken on this issue before, and it was easy to see why. 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. The question was how. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. The scene was somehow even grimmer than Id imagined. Hedge fund Alden Global Capital, known for making deep newsroom cuts, won approval to acquire Tribune Publishing, which includes the Chicago Tribune, The Baltimore Sun and New York Daily News. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. Meanwhile, reporters fanned out across their respective cities in search of benevolent rich people to buy their newspapers. 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. Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. Layout design was outsourced to freelancers in the Philippines. 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. 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 . 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. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. Alden Global Capital, a hedge fund known for gutting local newsrooms, is seeking to buy Lee Enterprises (LEE), a publicly traded company with a chain of daily newspapers and other publications . Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. Alden Global Capital is a hedge fund based in Manhattan, New York City. Feb. 16, 2021 8:04 PM PT. Some have even suggested that this represents Americas last chance to save its local-news industry. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. Smith & Company. Media . 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. Former Knight-Ridder headquarters. "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of . He writes a weekly column called Mugger that savages the citys journalists by name and frequently runs to 10,000 words. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. 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. She was writing about Aldens growing newspaper empire, and wanted to know what it was like to be the last news reporter in town. 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. But Glidden felt sure he knew the real reason: Alden wanted him gone. I felt like a terrible reporter because I couldnt get to everything.. 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. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. "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 . He started as a general-assignment reporter, covering local crime and community events. 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. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. "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 . And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. Its a hedge that went and bought up some titles that it milks for cash.. 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. 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. But that would require slow, painstaking workand there are easier ways to make money. Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. He declined to meet me in person or to appear on Zoom. Its a game, Randy explains to his son. 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). When he did, he exhibited a casual contempt for the journalists who worked there. 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. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . 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 . So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? 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. 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. Located in the same Manhattan office building as Alden, it funds stem-cell research, health-related charities, arts and culture and Duke University, alma mater of Smiths protg Heath Freeman. [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. 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?. So what is this Distressed Opportunities fund? 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. 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. Ken Kelleher is an American sculptor. But outside the industry, few seemed to notice. They had a father-figure relationship, one told me. This investment strategy does not come without social consequences. 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 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. Alden is in the business of making money, not journalism. 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. [2] Its managing director is Heath Freeman. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. 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. Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. 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 Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. 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. 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. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. He was fired after criticizing Alden in a Washington Post interview. 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. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . 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. 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. My request for an interview with Smith was dismissed by his spokesperson before I finished asking. Today, half of all daily newspapers in the U.S. are controlled by financial firms, according to an analysis by the Financial Times, and the number is almost certain to grow. Tuesday, 23 November 2021 07:46 PM EST. But this acquisition was profound, making Alden Global . Already the largest shareholder . 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. The firm oversaw the promotion of John Paton, a charismatic digital-media evangelist, who improved the papers web and mobile offerings and increased online ad revenue. 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. 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. Inside Alden Global Capital. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. It . But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. But there are some clues here and there. 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. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of journalism. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path.