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Hedge Fund Seeks Control of Tribune Publishing, a Major News Chain
Alden Global Capital, which is already Tribune’s biggest shareholder, valued the company at about $520.6 million.
Alden Global Capital, a hedge fund that has amassed a newspaper empire, has expressed interest in taking full control of Tribune Publishing, the parent of major metropolitan dailies including The Chicago Tribune, The New York Daily News and The Baltimore Sun.
If a deal goes through, it would strengthen the financial industry’s grip on the struggling news media business.
Alden controls some 200 newspapers nationwide through its MediaNews Group subsidiary, and its acquisition of Tribune Publishing would make it an even more formidable rival to the largest United States newspaper chain, Gannett, a company controlled by the private equity fund Fortress Investment Group.
Alden’s designs on Tribune Publishing, a publicly traded company that runs eight prominent metro dailies across the country, became clear in 2019, when the hedge fund revealed that it had taken a 32 percent stake in the chain, making it the company’s largest shareholder. Many Tribune Publishing reporters denounced Alden’s hold on the company, citing the hedge fund’s strategy of slashing newsroom costs at its MediaNews Group publications.
Alden’s intentions became more plain on Dec. 14, when it sent a letter to Tribune’s board expressing strong interest in making a deal. In the letter, which became public in an S.E.C. filing on Thursday, Alden said it was willing to buy the Tribune shares it did not already own at $14.25 apiece. That would represent an 11 percent premium to Tribune’s Wednesday closing price. The offer, first reported by The Wall Street Journal, values Tribune at about $520.6 million.
The letter was signed by the Alden founder Randall D. Smith, a onetime Bear Stearns partner who runs the hedge fund with its president, Heath Freeman. Mr. Smith gained a seat on the Tribune board in July after weeks of negotiations between Alden and Tribune. With the move, Mr. Smith became the third executive from Alden or affiliated companies to join the Tribune board, which grew to seven seats, from six.
Alden’s offer, if it goes through, may strike fear into the hearts of journalists at Tribune newspapers, who have publicly urged benefactors to keep the hedge fund from taking control of the chain’s papers. Among those who have courted potential patrons were two Chicago Tribune investigative reporters.
Alden’s most famous run-in with journalists came in 2018, when the staff of The Denver Post openly rebelled, publishing a special opinion section devoted to blasting its hedge fund ownership, which had made drastic cuts at the paper. “If Alden isn’t willing to do good journalism here, it should sell The Post to owners who will,” the paper’s editorial board wrote.
Tribune was a chain in trouble before Alden’s entry into the company. For many years it billed itself under a new name meant to suggest its digital emphasis — Tronc — and its executives tangled with journalists at The Los Angeles Times in a series of spats that did not end until Tribune sold that paper to the medical entrepreneur Dr. Patrick Soon-Shiong and his wife, Michele B. Chan. In 2018, Tribune cut the staff of The New York Daily News, once the largest-circulation newspaper in the country, in half.
Since Alden acquired its 32 percent stake in Tribune, the hard times have continued. The company has offered buyouts and closed several newsrooms while trying to endure the effects of the coronavirus pandemic on an already distressed industry.
In August, after most newspaper employees had worked remotely for months, Tribune announced that it was permanently closing the newsroom of The Daily News. That announcement was quickly followed by the company’s shuttering of the physical newsrooms of The Morning Call in Allentown, Pa.; The Orlando Sentinel; The Carroll County Times in Westminster, Md.; and The Capital Gazette in Annapolis, Md. In December, the newsroom at another Tribune daily, The Hartford Courant, which has been in operation since 1764, also went dark.
In the Dec. 14 letter to Tribune, Mr. Smith of Alden said that his company had engaged in conversations with Stewart Bainum Jr., the chairman of a hotel chain and a onetime politician in Maryland “to hear, on a high level, the Investor’s interest in respect of certain assets of Tribune.”
Revenue has plummeted for local newspapers over the past 15 years as readers have increasingly favored getting the news on screens rather than in print newspapers. Alden and other hedge funds have found that they have nonetheless been able to wring profits from newspaper chains through austere management practices.
Journalists and press advocates have expressed alarm over the influx of private equity into the news-gathering business, arguing that finance firms make imperfect stewards of an industry built on the work of watching closely over government and commerce.
In 2019, Gannett, the publisher of USA Today, was acquired by the parent company of GateHouse Media to create a behemoth that publishes approximately one in five of the country’s daily newspapers.
In 2020, the last of the major family-owned chains, McClatchy, entered bankruptcy and emerged in the hands of Chatham Asset Management, a New Jersey hedge fund that also owns a majority stake in Postmedia, one of Canada’s largest newspaper publishers. Since Chatham took over the Canadian company, 1,600 newspaper employees have been laid off and more than 30 publications have been shut down.
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