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. Instead, the money was used to finance the hedge funds other ventures. A Cornell grad with an M.B.A., Randy is on a partner track at Bear Stearns, where hes poised to make a comfortable fortune simply by climbing the ladder. 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. He scores big with a bankrupt aerospace manufacturer, and again with a Dallas-based drilling company. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. Around this time, Randy becomes preoccupied with privacy. [7][8] Alden's purchase price was $635 million, or $17.25 per share. 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. 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. A reporter at one of his newspapers suggested I try doorstepping Smithshowing up at his home unannounced to ask questions from the porch. Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. 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. 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. The rationale offered by the board was, Consistent with its fiduciary duties, Lees Board has taken this action to ensure our shareholders receive fair treatment, full transparency and protection in connection with Aldens unsolicited proposal to acquire Lee. Im repulsed by the incestuous world of New York journalism, he tells New York magazine. 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. 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. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. A Secretive Hedge Fund Is Gutting Newsrooms. | Michael Gray, WIkimedia Commons. 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. His editor cited a supposed journalistic infraction (Glidden had reported the resignation of a school superintendent before an agreed-upon embargo). Coppins describes Alden as a specific type of firm: a "vulture hedge fund." 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. Newspapers Affect Us, Often In Ways We Don't Realize, 'Project Mayhem': Reporters Race To Save Tribune Papers From 'Vulture' Fund. After college he worked at Hudson Studio, Art Foundry in Niverville, NY . Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. 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? 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 . It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. But this acquisition was profound, making Alden Global . A native of Vallejo, he was proud to work for his hometown paper. 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. Alden Global Capital is a hedge fund based in Manhattan, New York City. Connecting this to the current state of American newspaper ownership seems rather tenuous.. 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. 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. 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. The new owners had announced a round of buyouts, some beloved staffers were leaving, and those who remained were worried about the future. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. Next year, Bainum will launch The Baltimore Banner, an all-digital, nonprofit news outlet. [33], Alden Global Capital's management of American newspapers has been criticized. He gained 100 pounds and started grinding his teeth at night. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. 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. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. 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. 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. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. Those that have survived are smaller, weaker, and more vulnerable to acquisition. Feb 16, 2021 at 8:05 pm. But a sense of fatalism permeated the work. How exactly Randall Smith chose Heath Freeman as his protg is a matter of speculation among those who have worked for the two of them. Aldens Distressed Opportunities Fund was launched in 2008 and saw astounding success in its first few months, showing returns of more than 30 percent a big rescue for Alden, whose investments in Russia the year before had lost more than 61 percent of their value. But outside the industry, few seemed to notice. At their worst, they used their papers to maintain oppressive social hierarchies. What happens next? But Glidden felt sure he knew the real reason: Alden wanted him gone. , 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. Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. Knight first reported its investment in Alden in 2010, noting the fair market value of its Alden holdings was $13.4 million. 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. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. Send any friend a story As a subscriber, you . 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. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. 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. 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? Freeman never responded. It was all about the next quarters profit margins, says Matt DeRienzo, who worked as a publisher for Aldens Connecticut newspapers before finally resigning. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. 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. 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 story of Alden Capital begins on the set of a 1960s TV game show called Dream House. So who is investing with them? Nov. 22, 2021. 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." That may well be the future of local news, he says. [2] [3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. Reporters kept reporting, and editors kept editing, and the union kept looking for ways to put pressure on Alden. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. As the months passed, things kept getting worse. 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. 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 . The hollowing-out of the Chicago Tribune was noted in the national press, of course. 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. [10] With its acquisition of Tribune Publishing in late May 2021, Alden is collectively the second-largest owner of newspapers in the United States, as calculated by average daily print circulation, second only to Gannett. and our desire to support local newspapers over the long term." Alden said it wants to work Lee's board of . 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. Hellman and BNP together own 46.4 per cent of Allfunds' shares. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. [21], Under the acquisition plan, MediaNews Group debt fell to $165 million from about $930 million. 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. After serving in the Carter administrations Treasury Department, Brian became widely knownand fearedin the 80s for his hard-line negotiating style. Alden Global Capital is a hedge fund based in Manhattan, New York City. (Freeman denied this through a spokesperson.) Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. In truth, Freeman didnt seem particularly interested in defending Aldens reputation. Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World. 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. Some in the city started to wonder if the paper was even worth saving. Located in the same Manhattan office building as Alden, it funds stem-cell research, health-related charities, arts and culture and Duke University, alma mater of Smiths protg Heath Freeman. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. He stops talking to the press, refuses to be photographed, and rarely appears in public. Probably not.. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. Dec 9, 2021. When plans for the building were announced in 1922, Colonel Robert R. McCormick, the longtime owner of the Chicago Tribune, said he wanted to erect the worlds most beautiful office building for his beloved newspaper. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. 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. Now it might be facing extinction. With his own money, he helps his brother launch the New York Press, a free alt-weekly in Manhattan. ", "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? Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. 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. In May, The Alden Global Capital a hedge fund, acquired Tribune Publishing TPCO for $633 million. It was clear that they didnt care about this being a business in the future. Orders for non-defence capital goods excluding aircraft a closely watched proxy for business investment, rose 0.8 per cent in January from a month earlier, comfortably above economists . Heath Freeman, president of Alden Global Capital, is known for pushing big cost reductions, which he says help to save newspapers. Two days after the deal was finalized, Alden announced an aggressive round of buyouts. 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. Like many alumni of the Sun, Simon is steeped in the papers history. The Alden Global Capital . [10][19][20], The company has its origins in R.D. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. How do you know who wins? the boy asks. Feb. 16, 2021 8:04 PM PT. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. But he couldnt help feeling that the police scandal would have been exposed much sooner if the Sun were operating at full force. Alden currently owns 32%. We were like, Theyre not going to take our newspaper from us! Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. Smith & Company. Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.[23]. Some have even suggested that this represents Americas last chance to save its local-news industry. [8][24] Tribune Publishing publishes nine major metropolitan dailies. The firm has a history of purchasing newspapers to cut costs wherever . I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. The model is simple: Gut the staff, sell the real estate, jack up subscription prices, and wring as much cash as possible out of the enterprise until eventually enough readers cancel their subscriptions that the paper folds, or is reduced to a desiccated husk of its former self. 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. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. Maybe this obscure hedge fund had a plan. On the appointed afternoon, I dialed the number provided by his spokesperson and found myself talking to the most feared man in American newspapers. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? So Freeman pivoted. about two hundred American newspapers. This was the core of Freemans argument. Unless the Tribunes trajectory changes, Chicago may soon provide a grim case study. At the end of last month, Alden Global Capital, a notorious newspaper-owning hedge fund, sought to stake its claim on one of the last newspaper chains it hasn't yet touched: Lee Enterprises, which owns 90 publications across the country.Alden, which currently owns six percent of Lee's stock, sent an unsolicited offer to purchase the newspaper chain for $24 per share. But that's not true for all of them. The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . Vallejo deserves better. A few weeks after the story came out, he was fired. The pay was terrible and the work was not glamorous, but Glidden loved his job. Alden, a New York City-based firm that has become the grim reaper of American newspapers, had recently increased its stake in Tribune Publishing to 32%making it the largest shareholder of the . 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. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? 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. When a reporter asked if their work was still valued, the editor sounded deflated. You need real capital to move the needle, he told me. . "[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. The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. Freeman was more animated when he turned to the prospect of extracting money from Big Tech. The question was how. When it was over, a quarter of the newsroom was gone. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. 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. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. But that would require slow, painstaking workand there are easier ways to make money. At the Pioneer Press , where its staff is down to 60, the paper produced a . With aggressive cost-cutting, Alden can operate its newspapers at a profit for years while turning out a steadily worse product, indifferent to the subscribers its alienating. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. They could be vain, bumbling, even corrupt. NPR reached out to Alden for a response. Baltimore has always had its problems, he told me. But for all the theatrics, his marching orders were always the same: Cut more. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. "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. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. On the surface, the answer might seem obvious. 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. For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. Scott Olson/Getty Images 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. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. 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 . Lee's board of directors . Theres little evidence that Alden cares about the sustainability of its newspapers. If they did it right, Venetoulis said, they just might be able to line up a local, civic-minded owner for the paper. 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. 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. Alden, which already owned one-third of . 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. Ken Kelleher is an American sculptor. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. 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. 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 .