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In May, the Tribune was acquired by Alden Global Capital, a secretive hedge fund that has quickly, and with remarkable ease, become one of the largest newspaper operators in the country. Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million. 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. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. Heath Freeman in an undated photo provided by Goldin Solutions . 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. 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. 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. 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. Scott Olson/Getty Images Two days after the deal was finalized, Alden announced an aggressive round of buyouts. Below are highlights from his conversation with Morning Edition's A Martnez. Alden Capital's gutting of the Denver Post is the most discussed example of this, but there are many others. The Tribune Tower rises above the streets of downtown Chicago in a majestic snarl of . For those who cared about the future of local news, it was hard to imagine a better outcomewhich made it all the more devastating when the bid fell through. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. 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. The purchase represents the culmination of Alden's years-long drive to take over the company and its storied titles . At the time, even savvy media insiders like Martin Langeveld wistfully predicted Alden would keep newspapers future in mind: Smith knows that the only way to win his big bet on the future of newspapers is to turn them into nimble, modern digital news enterprises.. Alden is known for . But by 2014, it was becoming clear to Aldens executives that Patons approach would be difficult to monetize in the short term, according to people familiar with the firms thinking. MNG Enterprises, Inc., doing business as Digital First Media and MediaNews Group, is a Denver, Colorado -based newspaper publisher owned by Alden Global Capital. Already the largest shareholder . The new owners had announced a round of buyouts, some beloved staffers were leaving, and those who remained were worried about the future. "[26] Shortly thereafter, Alden Global, through its operating unit Strategic Investment Opportunities, filed a lawsuit in state court in Delaware against Lee Enterprises. In its bid to acquire Tribune Publishing, the hedge fund Alden Global Capital vowed to provide $375 million in cash to the owner of the Chicago Tribune, the Baltimore Sun and other titles a . Next up: Chicago, Baltimore, and the New York Daily News. These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. [2] Its managing director is Heath Freeman. This is the story weve been telling for decades about the dying local-news industry, and its not without truth. [10][19][20], The company has its origins in R.D. Margaret Sullivan: The Constitution doesnt work without local news. Connecting this to the current state of American newspaper ownership seems rather tenuous.. [32], The company has been criticized for investing money for pensions of newspaper employees in funds it manages itself. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. 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.). Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. I sort of bully people around to get stuff done, he boasted to The Washington Post in 1985. Alden currently owns 32%. 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. 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 Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. Am I going to win against capitalism in America? 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. And two, by at least 2013, those of us who worked at Alden-controlled papers (like me) were already experiencing the slashing and burning. 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. Instead, they gutted the place. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. 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. On the surface, the answer might seem obvious. 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. 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. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. [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. Alden's holdings already spanned the country, including the . 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. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. 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. 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. 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. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. It will rely initially on philanthropic donations, but he aims to sell enough subscriptions to make it self-sustaining within five years. Alden completed its takeover of the Tribune papers in May. John Temple: My newspaper died 10 years ago. Alden, which already owned one-third of . On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. Knight began selling off its Alden holdings in 2012, and got completely out in 2014. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." When Alden first started buying newspapers, at the tail end of the Great Recession, the industry responded with cautious optimism. Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. But for that to happen, the Big Tech money would need to flow to underfunded newsrooms, not into the pockets of Aldens investors. 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. [33], Alden Global Capital's management of American newspapers has been criticized. 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. Alden began its acquisition of Tribune Publishing in 2019, when they paid $117.9 million to Michael Ferro for his 25.2-percent stake. hide caption. A recent Financial Times analysis found that half of all daily newspapers in the U.S. are controlled by financial firms, and Coppins says that number is all but certain to keep growing. Joe Pompeo pilloried Alden in Vanity Fair for reducing newsrooms. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. 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. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. It . Vallejo deserves better. A few weeks after the story came out, he was fired. 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. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. * Edited from 'independent . To be sure, the Knight Foundation does much to help promote and sustain local news. Like many alumni of the Sun, Simon is steeped in the papers history. Layout design was outsourced to freelancers in the Philippines. These papers would have been liquidated if not for us stepping up.. To him, its the same as oil, the publisher said. 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. A vulture doesnt hold a wounded animals head underwater. 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. But in the meantime, there isn't really anything that can fill the hole these newspapers will leave if they're shut down. . Reinventing their papers could require years of false starts and fine-tuningand, most important, a delayed payday for Aldens investors. "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 . 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. 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. They call Alden a vulture hedge fund, and I think thats honestly a misnomer, Johnson said. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. Another ex-publisher told me Freeman believed that local newspapers should be treated like any other commodity in an extractive business. When he did, he exhibited a casual contempt for the journalists who worked there. He can cite decades-old scoops and tell you whom they pissed off. One conclusions even these reporters are hesitant to make is that we are all dealing within a capitalist system which has none, or few, principles to guide itself, apart from making a profit, no matter how. 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. 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 . California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 24%, October 14, 2021. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. Alden Global Capital owns 56 dailies under Digital First Media (Alden also owns 32% of Tribune 10 dailies in Column C.) Tribune Media owns 10 dailies. But as an organization that believes that quality information is essential for individuals and communities to make their own bestchoices, it was disappointing that the foundation couldnt simply own up to its error in judgment when it came to Alden. In truth, Freeman didnt seem particularly interested in defending Aldens reputation. Lee Enterprises, the owner of daily newspapers in Winston-Salem and Greensboro, this morning rejected a hedge fund's proposal to take over the company. Who Profits From Alden Global Capital? Send any friend a story As a subscriber, you . Youd be surprised. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. 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. The Ubiquity - The student news site of Quartz Hill High School Around this time, Randy becomes preoccupied with privacy. Feb 16, 2021 at 8:05 pm. Heath hopes the well never runs dry, but hes going to keep pumping until it does. Over the course of seven years, Alden doubled profits in its Bay Area News Group newspapers, another home to cutbacks. 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. Freeman, his 41-year-old protg and the president of the firm, would be unrecognizable in most of the newsrooms he owns. How do you know who wins? the boy asks. He was fired after criticizing Alden in a Washington Post interview. She was writing about Aldens growing newspaper empire, and wanted to know what it was like to be the last news reporter in town. Instead, they gutted the place. The question was how. 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?. [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. 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. "[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. [2][3] By mid-2020, Alden had stakes in roughly two hundred American newspapers. They had a father-figure relationship, one told me. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. Newspaper publisher Lee Enterprises is asking its shareholders to help it fight off a hostile takeover . He used his own money to pull court records, and went years without going on a vacation. For two men who employ thousands of journalists, remarkably little is known about them. 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. 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 . The new owners did not fly to Chicago to address the staff, nor did they bother with paeans to the vital civic role of journalism. Freemans father, Brian, was a successful investment banker who specialized in making deals on behalf of labor unions. 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. 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. 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. 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. 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. [4], In 2019, Alden attempted, but failed at, a hostile takeover of Gannett. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. A spokesman took issue with the entirety of the story, and laid out a long list of questions attacking the integrity of the reporter, The Atlantic and some of his sources without addressing some of the more specific claims within the report. 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 Julie Reynolds. 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. Baltimore has always had its problems, he told me. They are also defined by an obsessive secrecy. But Glidden felt sure he knew the real reason: Alden wanted him gone. "[28], In mid-February 2022, the Delaware court found in favor of Lee Enterprises. Tribune Publishing last month approved a $630m takeover deal with Alden Global Capital. 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. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? 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 . What threatens local newspapers now is not just digital disruption or abstract market forces. [2] Its managing director is Heath Freeman. (Freeman denied this characterization through a spokesperson. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. In the ensuing exodus, the paper lost the Metro columnist who had championed the occupants of a troubled public-housing complex, and the editor who maintained a homicide database that the police couldnt manipulate, and the photographer who had produced beautiful portraits of the states undocumented immigrants, and the investigative reporter whod helped expose the governors offshore shell companies. Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions. . Otherwise, youre just peeing in the ocean.. 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 . Its hard to imagine theyd show, anyway. Have you heard of the hedge fund Alden Global Capital? After college he worked at Hudson Studio, Art Foundry in Niverville, NY . To many, it just didnt seem possible that Alden would instead choose to destroy newspapers by laying off the workforce en masse and stripping papers of all their assets. Today, we know that Knight, CalPERS and others no longer invest with Alden. Meanwhile, with few newsroom jobs left to eliminate, Alden continued to find creative ways to cut costs. He says he visited the Tribune's office and was "really shocked by how grim the scene was." The Tribune Tower, the iconic former home of the Chicago Tribune, seen in Chicago, Illinois in 2015. At the time, the Sun had a bustling bureau in Annapolis, and he marveled at the reporters ability to sort the honest politicians from the political whores by exposing abuses of power. The scene was somehow even grimmer than Id imagined. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. 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. 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. Hedge fund Alden Global Capital is attempting to acquire Davenport-based Lee Enterprises, one of the country's largest newspaper chains, in all the markings of a hostile takeover. But if you really started fucking up in grandiose and belligerent ways, if you started stealing and grifting and lying, eventually somebody would come up behind you and say, Youre grifting and youre lying and theyd put it in the paper., The bad stuff runs for so long now, he went on, that by the time you get to it, institutions are irreparable, or damn near close., Take away the newsroom packed with meddling reporters, and a city loses a crucial layer of accountability. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. Well, he told me, they have some very good reporters., This article appears in the November 2021 print edition with the headline The Men Who Are Killing Americas Newspapers., A Secretive Hedge Fund Is Gutting Newsrooms, I Dont Know That I Would Even Call It Meth Anymore, W. G. Sebald Ransacked Jewish Lives for His Fictions.