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. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. 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?. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. A look at Alden Global Capital is the cover story of the latest . He says he visited the Tribune's office and was "really shocked by how grim the scene was." [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. Collectively, they control about one-half of daily newspapers in the U.S. With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. As a privately held hedge fund, Alden doesnt have to reveal much to the public. When the sale failed to attract a sufficiently high offer, Freeman turned his attention to squeezing as much cash out of the newspapers as possible. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. 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. A more honest argument might have claimed, as some economists have, that vulture funds like Alden play a useful role in creative destruction, dismantling outmoded businesses to make room for more innovative insurgents. 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. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. 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. The Tribune had been profitable when Alden took over. 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 . Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. 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? The Alden Global Capital . But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. 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. '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. 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. 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. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. 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. 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. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. 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. . Morale tanked; reporters burned out. This investment strategy does not come without social consequences. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. Since Alden's . 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. Freeman was clearly aware of his reputation for ruthlessness, but he seemed to regard Aldens commitment to cost-cutting as a badge of honorthe thing that distinguished him from the saps and cowards who made up Americas previous generation of newspaper owners. But we dont know, because they arent saying. A Secretive Hedge Fund Is Gutting Newsrooms. So who is investing with them? Instead, the money was used to finance the hedge funds other ventures. Coppins notes that there's even some research indicating that city budgets increase as a result, because corruption and dysfunction can take hold without a newspaper to hold powerful people to account. Feb. 16, 2021 8:04 PM PT. One researcher tells me that if that money were invested in the S&P 500 Index Fund, it would have earned roughly $11 million over the same period. Here was one of Americas most storied newspapersa publication that had endorsed Abraham Lincoln and scooped the Treaty of Versailles, that had toppled political bosses and tangled with crooked mayors and collected dozens of Pulitzer Prizesreduced to a newsroom the size of a Chipotle. So Freeman pivoted. [3] [4] With its acquisition of Tribune Publishing in late . 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. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. Ken Kelleher is an American sculptor. . Those that have survived are smaller, weaker, and more vulnerable to acquisition. 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 men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. Alden Global Capital has currently bid to buy all of Tribune. The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . 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. In a news release Monday, Alden said it sent Lee's board a letter with the offer. but sadly on a global scale there is hardly any independent news sources left currently. In truth, Freeman didnt seem particularly interested in defending Aldens reputation. [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. 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. Lee's board of directors . Enter the email address you signed up with and we'll email you a reset link. Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.[23]. . [33], Alden Global Capital's management of American newspapers has been criticized. 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 . The 1% own and operate the . So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? 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. Heath Freeman in an undated photo provided by Goldin Solutions . But for Simon, that paper exists entirely in the past. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. 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. 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 bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. 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. 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. 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. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. 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. Inside Alden Global Capital. [21], Under the acquisition plan, MediaNews Group debt fell to $165 million from about $930 million. But I had underestimated how little Aldens founders care about their standing in the journalism world. 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. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. Am I going to win against capitalism in America? Freeman was more animated when he turned to the prospect of extracting money from Big Tech. I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. Alden's holdings already spanned the country, including the . Dec 9, 2021. Most of his investments are defined by a cold pragmatism, but he takes a more personal interest in the media sector. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. 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. 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 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 . 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. 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. It turned out that those ownersNew York hedge funders whom Glidden took to calling the lizard peoplewere laser-focused on increasing the papers profit margins. "[21], 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. He declined to meet me in person or to appear on Zoom. He started as a general-assignment reporter, covering local crime and community events. 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. Some people believe that local newspapers will eventually be replaced by new publications, which Coppins describes as "built from the ground-up for the digital era." The Ubiquity - The student news site of Quartz Hill High School But this acquisition was profound, making Alden Global . The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. But outside the industry, few seemed to notice. [4][5] 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. According to Aldens scarce SEC filings, it currently has fewer than 10 investors, most of them from overseas. But who most of those few souls are, and how much of the hundreds of millions skimmed from DFM papers theyve received remains a deep, dark mystery. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. 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. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. Its not as if the Tribune is just withering on the vine despite the best efforts of the gardeners, Charlie Johnson, a former Metro reporter, told me after the latest round of buyouts this summer. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. And everyone knows its going to run dry.. 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 . Financially, it was a raw deal. That may well be the future of local news, he says. The men killing Americas newspapers, how Slack upended the workplace, and the new meth. If accepted, the $24 per share purchase price would . These papers were in many cases left for dead by local families not willing to make the tough but appropriate decisions to get these news organizations to sustainability. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. 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. "A lot of cities almost operate with the assumption that there will be at least one local newspaper, in some cases several local newspapers, acting as a check on the authorities," he says. How do you know who wins? the boy asks. In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. 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. "[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. He stops talking to the press, refuses to be photographed, and rarely appears in public. All good works, and Knight is to be commended for them. Of course, its easy to romanticize past eras of journalism. 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. The audio for this interview was produced by Ryan Benk and edited by Scott Saloway. When John Glidden first joined the Vallejo Times-Herald, in 2014, it had a staff of about a dozen reporters, editors, and photographers. 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). 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?. Today, we know that Knight, CalPERS and others no longer invest with Alden. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. But that's not true for all of them.