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. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. 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. Its a game, Randy explains to his son. Most of his investments are defined by a cold pragmatism, but he takes a more personal interest in the media sector. "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. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. * Edited from 'independent . In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. Hes acutely aware of the risksI may end up with egg on my face, he saidbut he believes its worth trying to develop a successful model that could be replicated in other markets. Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. . John Temple: My newspaper died 10 years ago. But years later, when Randy relocates to Palm Beach and becomes a major donor to Donald Trumps presidential campaign, it will make a certain amount of sense that his earliest known media investment was conceived as a giant middle finger to the journalistic establishment. Send any friend a story As a subscriber, you . Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. 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. This story originally appeared on the Morning Edition live blog. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. 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. The newsroom was moved to a single room rented from the local chamber of commerce. On Monday, Dail Research shows that when local newspapers disappear or are dramatically gutted, communities tend to see lower voter turnout, increased polarization, a general erosion of civic engagement and an environment in which misinformation and conspiracy theories can spread more easily. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. Layout design was outsourced to freelancers in the Philippines. 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. By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. ), Crucially, the profits generated by Aldens newspapers did not go toward rebuilding newsrooms. . Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.[23]. I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. [10][19][20], The company has its origins in R.D. 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. ", "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? But there are some clues here and there. Rapid-fire changes underway at newspapers sold to cost-slashing hedge fund Alden Global Capital have led to a profound case of the jitters at newsrooms like the New York Daily News. 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. This is predatory.. 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. Meanwhile, reporters fanned out across their respective cities in search of benevolent rich people to buy their newspapers. 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. It makes me profoundly sad to think about what the Trib was, what it is, and what its likely to become, says David Axelrod, who was a reporter at the paper before becoming an adviser to Barack Obama. Margaret Sullivan: The Constitution doesnt work without local news. Inside Alden Global Capital. The Tribune had been profitable when Alden took over. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. 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. 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. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. Dec 9, 2021. 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. Eventually he was the only news reporter left on staff, charged with covering the citys police, schools, government, courts, hospitals, and businesses. It . 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. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. [7][8] Alden's purchase price was $635 million, or $17.25 per share. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. On the surface, the answer might seem obvious. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. 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. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. 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. 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 . People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. Vallejo deserves better. A few weeks after the story came out, he was fired. Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. They want to know who exactly profits when we learn, as Harvard Nieman Labs Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media newspapers. AP. 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%. Some in the city started to wonder if the paper was even worth saving. This was the core of Freemans argument. . Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. [22] The appointees to the MediaNews board were replaced by new directors representing the stockholders group led by Alden Global Capital. In addition to the constant layoffs, our buildings were being sold, basic office supplies became scarce and the hot water stopped working. 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 . [3] [4] With its acquisition of Tribune Publishing in late . Alden, which already owned one-third of . You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. This summer, Alden Global Capital acquired Tribune Publishing and its titles, from small community newspapers to major metro titles like its flagship, The Chicago Tribune, and The Baltimore Sun. With full control of Tribune Publishing, Alden Global Capital is scrambling to squeeze out a return on its $600 million investment in the struggling Chicago-based newspaper company. After all, it has a long and venerable history of supporting local news. 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. My question was did Knight know what Alden was doing to newspapers when it invested with the hedge fund, and does it regret that investment now? Yes, today, it's a newspaper without a newsroom. Its World War II correspondent brought firsthand news of Nazi concentration camps to American readers; its editorial page had the power to make or break political careers in Maryland. That gave the journalists at the Sun a brief window to stop the sale from going through. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . 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? I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. 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. Traditional newspaper business model says you make 95% of your money off ad sales and the rest off subscriptions. The $633 million sale made Alden the nation's second largest newspaper owner in terms of circulation, with more than 200 newspapers. Media . 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. It was clear that they didnt care about this being a business in the future. 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. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. 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. Baltimore has always had its problems, he told me. Alden currently owns 32%. 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. 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. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. 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. The papers printing was moved to a plant more than 100 miles outside town, Glidden told me, which meant that the news arriving on subscribers doorsteps each morning was often more than 24 hours old. Alden, which owns more than 200 newspapers across the country, has developed a reputation for using extensive layoffs and severe cost cuts at the newspapers it owns. When Alden first got into the news business, Freeman seemed willing to indulge some innovation. Meanwhile, in Vallejo, John Glidden went from covering crime and community news to holding the title of the only hard news reporter in town, filling a legal pad with tips he knew he'd never have time to pursue. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. 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. 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. 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). The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. 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 . That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. Tribune Publishing last month approved a $630m takeover deal with Alden Global Capital. Am I going to win against capitalism in America? To find the papers current headquarters one afternoon in late June, I took a cab across town to an industrial block west of the river. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. The bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. Its the meanness and the elegance of the capitalist marketplace brought to newspapers, Doctor told me. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. 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 . But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. Already the largest shareholder . These were not exactly boom times for newspapers, after allat least someone wanted to buy them. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. . The 1% own and operate the . "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. But in the case of local news, nothing comparable is ready to replace these papers when they die. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. 'Vulture' Fund Alden Global, Known For Slashing Newsrooms, Buys Tribune Papers, Stop The Presses! Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. Alden Global Capital owns 56 dailies under Digital First Media (Alden also owns 32% of Tribune 10 dailies in Column C.) Tribune Media owns 10 dailies. One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. They had a father-figure relationship, one told me. That may well be the future of local news, he says. 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. The show draws from a book written by a Sun reporter, and Simon was quick to point out that the paper still has good journalists covering important stories. Nov. 22, 2021. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? It played with my mind a little bit, Glidden told me. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. On the appointed afternoon, I dialed the number provided by his spokesperson and found myself talking to the most feared man in American newspapers. [4] [5] The company added more newspapers to its portfolio in May 2021 when it purchased Tribune . What happens next? 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. When the Smiths win, they pass on the house and take the cash prize insteada $20,000 haul that Randy will eventually use to seed a small trading firm he calls R.D. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. [8][24] Tribune Publishing publishes nine major metropolitan dailies. Tribune Publishing, publisher of the Chicago Tribune and other major newspapers, has agreed to be acquired by Alden Global Capital in a deal valued at $630 million . 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. This investment strategy does not come without social consequences. Of course, its easy to romanticize past eras of journalism. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. 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. Alden Global Capital is a hedge fund based in Manhattan, New York City. In a news release Monday, Alden said it sent Lee's board a letter with the offer. They could be vain, bumbling, even corrupt. So what is this Distressed Opportunities fund? 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.. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. All good works, and Knight is to be commended for them. As a reporter who's 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 America's largest newspaper chains?. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of journalism. 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. , From the February 1905 issue: The confessions of a newspaper woman, The papers union hired a PR firm to launch a public-awareness campaign under the banner Save Our Sun and published a letter calling on the Tribune board to sell the paper to local owners. (Freeman has, in the past, disputed Bainums account of the negotiations.) In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. October 14, 2021. To be sure, the Knight Foundation does much to help promote and sustain local news. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. [6][7][8][9], The company operates its media holdings through Digital First Media (DFM), which it acquired in 2010 after DMG's parent company, MediaNews Group, declared bankruptcy. 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. (Freeman denied this through a spokesperson.) When John Glidden first joined the Vallejo Times-Herald, in 2014, it had a staff of about a dozen reporters, editors, and photographers. 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. 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. 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. With its acquisition of Tribune Publishing earlier this year, Alden now controls more than 200 newspapers, including some of the countrys most famous and influential: the Chicago Tribune, The Baltimore Sun, the New York Daily News. Alden completed its takeover of the Tribune papers in May. By Julie Reynolds. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. Youd be surprised. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. G ARY MARX and David Jackson, two veteran investigative reporters at the Chicago Tribune, spent most of last year seeking potential buyers who might save their newspaper from Alden Global Capital . Bainum told me hed come to appreciate local journalism in the 1970s while serving in the Maryland state legislature. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. He had spoken on this issue before, and it was easy to see why. For two men who employ thousands of journalists, remarkably little is known about them. 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. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. Its hard to imagine theyd show, anyway. To him, its the same as oil, the publisher said. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. 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. But for Simon, that paper exists entirely in the past. hide caption. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. It emphasizes supporting the emergence of new, sustainable models for local news, through both grantmaking and research, Sherry told me, including grant programs for nonprofit news organizations. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. "[34], In October 2021, The Atlantic examined the impact of Alden's acquisition of the Chicago Tribune, noting that, "The new owners did not fly to Chicago to address the staff, nor did they bother with paeans to the vital civic role of journalism. Aldens calculus was simple. 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. I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. 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. 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. Probably not.. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. 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. 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. Instead, they gutted the place. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. 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. 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 . Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. The New York-based hedge fund Alden Global Capital - known for slashing its newspapers' budgets to extract escalated profits - won shareholder approval Friday for its $633 million bid to acquire the Tribune Publishing newspaper chain..