Why revelations about Alden’s acquisition of Tribune should force a do-over

Photo (cc) 2012 by the Chicago Tribune

Could Alden Global Capital’s acquisition of Tribune Publishing be headed for a do-over? Julie Reynolds, who’s been reporting on the hedge fund’s evisceration of newspapers for years, has written a fascinating story for the Nieman Journalism Lab suggesting that the $633 million deal may have been illegal.

Alden, which already owned 32% of Tribune’s papers, pledged to pay $375 million in cash in order to bring its share up to 100%. But Reynolds reports that Alden didn’t actually have the cash, a fact that may have been known only to the three members of Tribune’s board who were affiliated with the hedge fund.

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As soon as the transaction was consummated, Alden forced the papers to borrow about $300 million. That included $60 million from Alden’s other newspaper chain, MediaNews Group, at an eye-popping interest rate of 13%. As everyone predicted, Alden has gone on a cost-cutting rampage, offering buyouts throughout the chain.

Nieman Foundation curator Ann Marie Lipinski, a former editor of Tribune’s largest paper, the Chicago Tribune, tweeted, “The scale of talent leaving the Chicago Tribune is staggering.

Reynolds also reports that the full Tribune board may have been left in the dark about a private meeting that Tribune board member and Alden founder Randall Smith had with Baltimore hotel magnate Stewart Bainum last year.

You may recall that Bainum had initially worked out an agreement under which Alden would buy Tribune’s nine major-market dailies and then sell one of them, The Baltimore Sun, to Bainum, who planned to donate it to a nonprofit organization. After Bainum concluded that Alden was trying to gouge him, he tried to put together a bid for the entire chain. Most if not all of the papers would have been spun off to local buyers. But he was never able to put together a firm offer, and the board went with Alden instead. Alden is keeping all nine papers, including the Sun.

As Reynolds notes, the Tribune board spurned Bainum’s higher offer because the financing was not in place — and ignored the reality that Alden’s wasn’t in place, either. She writes:

Given the healthy profits Tribune has generated over the last several quarters, the cuts are there for just one reason: to achieve higher margins for Alden. Randall Smith will get richer while communities served by Tribune are starved of the information they need.

If Reynolds is correct in asserting that laws were broken in order to pave the way for Alden’s acquisition of Tribune, then the punishment ought to be more than a fine and a slap on the wrist. The sale should be voided and the Tribune board should be forced to vote again.

Maybe this time Patrick Soon-Shiong, the billionaire owner of the Los Angeles Times, can be persuaded to stop Alden. As a 25% owner of Tribune before the sale, Soon-Shiong could have said no. Instead, he abstained, and did it in a manner that allowed the transaction to go through.

I’m also lighting up the Bat Signal again for Jeff Bezos.

Previous coverage.

New York Times journos discuss Innovation Report

Screen Shot 2014-09-28 at 4.28.30 PMAn all-star panel came together on Friday evening at the Online News Association conference in Chicago to discuss The New York Times’ celebrated Innovation Report — an internal document about the Times’ efforts to adjust to the digital age that became public when it was leaked to BuzzFeed.

The report, wrote Joshua Benton of the Nieman Journalism Lab last May, is “one of the most remarkable documents I’ve seen in my years running the Lab.” Both the full document and a comprehensive summary are available as part of Benton’s piece, and they are well worth reading. The report describes how the Times — in many ways an innovator in the transition to digital — is still being held back by an antiquated management structure, an overemphasis on what goes on page one of the print edition, and a lack of understanding of how to promote and distribute the Times’ journalism.

The ONA panel was moderated by Ann Marie Lipinski (@AMLwhere), curator of Harvard’s Nieman Foundation. The panelists were Amy O’Leary (@amyoleary), deputy editor for digital operations at the Times and one of the authors of the report; Tyson Evans (@tysone), the Times’ editor of newsroom strategy, who also contributed to the report; and Alex MacCallum (@alexmaccallum), recently promoted to a newly created assistant managing editor’s slot to oversee audience engagement.

Hundreds of people were on hand, and many of them — including me — live-tweeted the panel. Bursts of fragmentary news are no substitute for a well-crafted story about the event (here’s one by a student who covered it), but they can give you some flavor of the discussion. Here’s what I had say, including a couple of retweets that I thought were worth sharing.

Ann Marie Lipinski to run Nieman Foundation

Ann Marie Lipinski

Former Chicago Tribune editor Ann Marie Lipinski has been named curator of Harvard’s Nieman Foundation for Journalism, replacing Bob Giles, who’s retiring this June. Steve Myers has the details and the links at Poynter.org.

Nieman is a leading journalism education and research foundation, as well as a center for mid-career journalists looking to recharge their batteries. (Note: I am an occasional contributor to its journal, Nieman Reports.) Lipinski instantly becomes one of the most important media thinkers in Boston.

From the press release:

Lipinski brings three decades of journalism experience to her new post. Prior to joining the University of Chicago in 2008, where she is credited with major contributions to the discourse around the future of the city, arts programs in the community, and collaborations with local public schools, she served as editor of the Chicago Tribune for more than seven years. Under her stewardship, the Tribune became known as a leader in public service journalism, publishing stories with both investigative depth and literary detail, including a multiyear reporting effort that helped bring about a moratorium on the death penalty in Illinois. Under her leadership, the Tribune won Pulitzers for international, explanatory, investigative, feature, and editorial writing. The paper also significantly expanded its portfolio of print and digital offerings.

Lipinski was a Nieman Fellow in 1990, so she knows her way around Harvard Square — although, if she’s like the rest of us, she’ll find it considerably less interesting than it was the last time she was here.