Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. The bid by Alden Global Capital, which already owns about 200 local newspapers, had faced resistance from Tribune staff and last-ditch competition. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. Freeman would show up at business meetings straight from the gym, clad in athleisure, the executive recalled, and would find excuses to invoke his college-football heroics, saying things like When I played football at Duke, I learned some lessons about leadership. (Freeman was a walk-on placekicker on a team that won no games the year he played.). [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. The paper had weathered a decade and a half of mismanagement and declining revenues and layoffs, and had finally achieved a kind of stability. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. (Freeman denied this characterization through a spokesperson. He was fired after criticizing Alden in a Washington Post interview. City budgets balloon, along with corruption and dysfunction. "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?" [13], Newspapers in Alden's portfolio include Chicago Tribune, The Denver Post, the St. Paul Pioneer Press, the Boston Herald, The Mercury News, East Bay Times, The Orange County Register, and Orlando Sentinel. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. Coordinated by . They want to know who exactly profits when we learn, as Harvard Nieman Lab's Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media . 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. Baltimore has always had its problems, he told me. I asked. For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. 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. Heath Freeman in an undated photo provided by Goldin Solutions . I would know he didnt mean it, and he would know he didnt mean it, but he would at least go through the motions. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. 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. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. But Glidden felt sure he knew the real reason: Alden wanted him gone. 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. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. ", "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? It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. 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. To him, its the same as oil, the publisher said. 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. 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. 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. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. 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. 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 details of how Smith got to know him are opaque, but the resulting loyalty was evident. Scott Olson/Getty Images 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. Now he was feeling the effects of their management. The Tribune Company (which owns the newspapers mentioned above) was still turning a profit when Alden bought it, but the hedge fund immediately offered aggressive rounds of buyouts and shrunk its newsrooms in the name of increasing profit margins. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. 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. California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, Alden's holdings already spanned the country, including the . When the city-hall reporter left a few months later, he picked up that beat too. This investment strategy does not come without social consequences. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. Feb. 16, 2021 8:04 PM PT. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. "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 . Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. 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. Glidden, then a mild-mannered 30-year-old, had come to journalism later in life than most and was eager to prove himself. hide caption. The scene was somehow even grimmer than Id imagined. 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. About a month after The Baltimore Sun was acquired by Alden, a senior editor at the paper took questions from anxious reporters on Zoom. 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 . Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. The editor in chief mysteriously resigned, and managers scrambled to deal with the cuts. When a reporter asked if their work was still valued, the editor sounded deflated. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. By the charitys own accounting, it lost $ 2.3 million in book value on a $17 million investment that year. If you want to know what its like when Alden Capital buys your local newspaper, you could look to Montgomery County, Pennsylvania, where coverage of local elections in more than a dozen communities falls to a single reporter working out of his attic and emailing questionnaires to candidates. Alden currently owns 32%. It was like watching a slow-motion disaster, says Gregory Pratt, a reporter at the Chicago Tribune. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of . Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. 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. [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. So Freeman pivoted. Im worried the worst is yet to come. Alden began its acquisition of Tribune Publishing in 2019, when they paid $117.9 million to Michael Ferro for his 25.2-percent stake. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. While some finance reporters noted that Smiths newspaper investments were all losing value, none seemed to notice that Smith and Aldens president Heath Freeman would soon start strip mining their news companies real estate and other assets. 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. This story originally appeared on the Morning Edition live blog. Other records turned up from public pension funds and filings of publicly traded companies. 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. 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. [33], Alden Global Capital's management of American newspapers has been criticized. For Freeman and his investors to come out ahead, they didnt need to worry about the long-term health of the assetsthey just needed to maximize profits as quickly as possible. 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. By McKay Coppins. So who is investing with them? [10][19][20], The company has its origins in R.D. Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. This is a subscription-based business..
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