Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. 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. This is a subscription-based business.. In my many conversations with people who have worked with Freeman, not one could recall seeing him read a newspaper. 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. In the past 15 years, more than a quarter of American newspapers have gone out of business. he asks. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." Tuesday, 23 November 2021 07:46 PM EST. . What happens next? After congratulating him on closing the deal, Bainum said he was still interested in buying the Sun if Alden was willing to negotiate. Freeman was only slightly more accessible. But that would require slow, painstaking workand there are easier ways to make money. But there are some clues here and there. In 2011, Paton launched an ambitious initiative he called Project Thunderdome, hiring more than 50 journalists in New York and strategically deploying them to supplement short-staffed local newsrooms. "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 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.". And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. But outside the industry, few seemed to notice. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. I put the question to Freeman, but he declined to answer on the record. 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. Updated May 21, 2021 at 2:13 PM ET. By 2011, when Aldens Distressed Opportunities Fund lost more than 20 percent of its value, Knights holdings in the fund were valued at $10.7 million. 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 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. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . Alden, which already owned one-third of . 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. By McKay Coppins. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. Its a hedge that went and bought up some titles that it milks for cash.. Soon, Tribune-owned newsrooms across the country were kicking off similar campaigns. "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?" 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. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. It financed the deal with the help of Cerberusa private-equity firm that owned, among other businesses, the security company that trained Saudi operatives who participated in the murder of the journalist Jamal Khashoggi. My answer is its hard to know. Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. Alden Global Capital, the New York hedge fund that bought Tribune Publishing this year, said on Monday that it was making an offer for another big American newspaper chain, Lee . 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. 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 newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. In May, The Alden Global Capital a hedge fund, acquired Tribune Publishing TPCO for $633 million. To industry observers, Aldens brazen model set it apart even from chains like Gannett, known for its aggressive cost-cutting. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. 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. 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. Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. As a reporter whos 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 Americas largest newspaper chains? This was the core of Freemans argument. 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. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. That gave the journalists at the Sun a brief window to stop the sale from going through. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. 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. 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. 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 Tampa Bay Times has sold its printing plant at 1301 34th St. N to a real estate arm of Alden Global Capital, a New York hedge fund that is the second-largest newspaper owner in the country. [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. 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 the group that jumps out to me on the list is the John S. and James L. Knight Foundation. "[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. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. A young man named Randall Duncan SmithRandy for shortstands next to his wife, Kathryn, answering quick-fire trivia questions in front of a live studio audience. It feels like were going up against capitalism now, Lillian Reed, the reporter who helped launch the Save Our Sun campaign, told me. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.[23]. but sadly on a global scale there is hardly any independent news sources left currently. 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. They could be vain, bumbling, even corrupt. Alden is in the business of making money, not journalism. Alden Global Capital is a hedge fund based in Manhattan, New York City. In budget meetings, according to the former executive, Freeman hectored local publishers, demanding that they produce detailed numbers off the top of their head and then humiliating them when they couldnt. For Baltimore to avoid a similar fate, Simon told me, something new would have to come alonga spiritual heir to the Sun: A newspaper is its contents and the people who make it. 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. What threatens local newspapers now is not just digital disruption or abstract market forces. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. AP. "[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. When he did, he exhibited a casual contempt for the journalists who worked there. 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. 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. 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. 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 Tribune had been profitable when Alden took over. ", "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? Send any friend a story As a subscriber, you . Freeman never responded. To replace a paper like the Sun would require a large, talented staff that covers not just government, but sports and schools and restaurants and art. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. But maybe the clearest illustration is in Vallejo, California, a city of about 120,000 people 30 miles north of San Francisco. 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? But beneath all the recriminations and infighting was a cruel reality: When faced with the likely decimation of the countrys largest local newspapers, most Americans didnt seem to care very much. [31], In 2019, Twenty Lake Holdings reported that it had acquired about 180 properties with 2.3 million square feet of real estate in 29 states. 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). Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. But I had underestimated how little Aldens founders care about their standing in the journalism world. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. When it was over, a quarter of the newsroom was gone. 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. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. So what is this Distressed Opportunities fund? Alden currently owns 32%. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, Alden Global Capital swallowed all of the Tribune's newspapers, including the New York Daily News, earlier in 2021. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. Clearly, for Smith and Freeman, chop-shopping their newspapers paid off. Who Profits From Alden Global Capital? 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. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. ", "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? 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. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. Well, that wasnt the point. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. City budgets balloon, along with corruption and dysfunction. 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. Craigslist killed the Classified section, Google and Facebook swallowed up the ad market, and a procession of hapless newspaper owners failed to adapt to the digital-media age, making obsolescence inevitable. I asked. A search through nonprofit groups publicly available financial reports, commonly known as Form 990s, reveals that all kinds of organizations some surprising have invested their monies with Alden over the years. 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. 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. 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. 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. Most of his investments are defined by a cold pragmatism, but he takes a more personal interest in the media sector. For two men who employ thousands of journalists, remarkably little is known about them. They were very tight. Freeman has resisted elaborating on his relationship with Smith, saying simply that they were family friends before going into business together.