Now it might be facing extinction. 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. Baltimore has always had its problems, he told me. By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. By the 1980s, this strategy has made Randy luxuriously wealthyvacations in the French Riviera, a family compound outside New York Cityand he has begun to school his children on the wonders of capitalism. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. "[25], In early December, the board of Lee unanimously rejected the Alden bid, saying that the Alden proposal "grossly undervalues Lee and fails to recognize the strength of our business today. 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. Alden currently owns 32%. Lee's board of directors . This company that owns us now seems to still be prettyI dont even know how to put it, the editor said, according to a recording of the meeting obtained by The Atlantic. 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. Instead, they gutted the place. Layout design was outsourced to freelancers in the Philippines. But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. 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. But that's not true for all of them. Instead, the money was used to finance the hedge funds other ventures. Interestingly, Smiths foundation didnt do well with its Alden investments in 2016. 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. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. 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. "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 said that he still appreciated their journalism, but that he couldnt speak for his corporate bosses. about two hundred American newspapers. Alden Global Capital had recently purchased a nearly one-third stake in the Suns parent company, Tribune Publishing, and the firm was signaling that it would soon come for the rest. But 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. By that point, Alden was widely known as the grim reaper of American newspapers, as Vanity Fair had put it, and news of the acquisition plans had unleashed a wave of panic across the industry. 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. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. They could be vain, bumbling, even corrupt. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. As a privately held hedge fund, Alden doesnt have to reveal much to the public. 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). Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. But even for a group of journalists, it was tough to keep the publics attention. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. In the face of that setback, Alden said it would turn to the tactic of filing a proxy statement asking the company's shareholders to vote no on board members Mary Junck and Herbert Moloney during the March 2022 board elections. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. 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. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. [2] Its managing director is Heath Freeman. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. 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. Have you heard of the hedge fund Alden Global Capital? ", "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? Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. But in the case of local news, nothing comparable is ready to replace these papers when they die. Some have even suggested that this represents Americas last chance to save its local-news industry. 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. Enter the email address you signed up with and we'll email you a reset link. Ken Kelleher is an American sculptor. . Some of these papers likely would have been liquidated if the fund had not stepped in to buy them, as Alden's president told Coppins. When it was over, a quarter of the newsroom was gone. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. 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. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. "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.". hide caption. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. Since they bought their first newspapers a decade ago, no one has been more mercenary or less interested in pretending to care about their publications long-term health. 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. The scene was somehow even grimmer than Id imagined. When Simon called me, he was on the set of his new miniseries, We Own This City, which tells the true story of Baltimore cops who spent years running their own drug ring from inside the police department. 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. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. It was founded in 2007 by Randall D. Smith. Its hard to imagine theyd show, anyway. Theres little evidence that Alden cares about the sustainability of its newspapers. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. A vulture doesnt hold a wounded animals head underwater. [11], In November 2021, Alden Global Capital made an offer to purchase Lee Enterprises for $24 a share in cash, or about $141 million. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. Margaret Sullivan: The Constitution doesnt work without local news. 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. I asked Knight about those investments and whether the Foundations officers had any regrets, knowing what we now do about Aldens devastating effect on its own newspapers. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. 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. All good works, and Knight is to be commended for them. Feb. 16, 2021 8:04 PM PT. Former Knight-Ridder headquarters. So what is this Distressed Opportunities fund? 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. NPR reached out to Alden for a response. Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. It has not, however, retained the Chicago Tribune. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. Around this time, Randy becomes preoccupied with privacy. But outside the industry, few seemed to notice. The bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. On . Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. 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. By McKay Coppins. 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. When I asked Freeman what he thought was broken about the newspaper industry, he launched into a monologue that was laden with jargon and light on insightsummarizing what has been the conventional wisdom for a decade as though it were Aldens discovery. The 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.. 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. The pitch had a certain romantic appeal to the reporters in the room. Tribune Publishing last month approved a $630m takeover deal with Alden Global Capital. Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. 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. 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. It was all about the next quarters profit margins, says Matt DeRienzo, who worked as a publisher for Aldens Connecticut newspapers before finally resigning.