Tag: Cerberus Capital Management

A riveting Boston Globe story about a medical disaster with ties to the local news crisis

St. Elizabeth’s Medical Center in 2012. Photo (cc) by John Phelan.

If you haven’t seen The Boston Globe’s story about a mother who died shortly after giving birth, perhaps because the hospital lacked a device it needed to stop her bleeding, then you have to stop what you’re doing and give it a read. Globe reporter Jessica Bartlett’s 2,800-word story is both riveting and incredibly disturbing. It’s also so well-crafted that I asked my intermediate reporting students to read it in class so we could talk about how it was put together.

Bartlett skillfully shifts back and forth between the frantic attempts to save Sungida Rashid’s life and the larger crisis at St. Elizabeth’s Medical Center, the Brighton hospital that Rashid and her husband, Nabil Haque, had chosen for the birth of their first child. We learn that St. Elizabeth’s did not have the device, known as an embolism coil, because the hospital’s supply had been repossessed. It turns out that Steward Health Care, a for-profit company that owns St. Elizabeth’s and eight other hospitals in Massachusetts, hadn’t been paying its bills.

Incredibly, Haque didn’t know that devastating fact until the Globe informed him about it after he and his daughter had moved back to Bangladesh.

The major question a reader might have after reading the story was how St. Elizabeth’s and Steward had fallen into such a financial mess. That story is laid out in an earlier story by Bartlett and in a column by Globe business columnist Larry Edelman, who explain that a private equity firm known as Cerberus Capital Management had bailed out the hospitals in 2010. According to Edelman, Cerberus quadrupled its money and flipped the hospitals in 2017.

As Edelman points out, Cerberus is “named after the three-headed dog that guards the gates of Hades in Greek mythology.” The firm is also deeply involved in the destruction of the newspaper business. In 2021, Julie Reynolds reported for Nieman Lab that Cerberus was the financial backer for the notorious hedge fund Alden Global Capital when it acquired Tribune Publishing’s nine major-market daily newspapers, including the Chicago Tribune, The Baltimore Sun and the Hartford Courant. Cerberus gets much of its money, in turn, from investments made by public employee pension funds, especially in California and Pennsylvania.

Reynolds talked about the Alden-Cerberus connection on our “What Works” podcast back in November 2021.

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How public pension funds are helping to finance the destruction of local news

This is Cerebrus, not Cerberus. Photo (cc) 2006 by Andrew Becraft

Public employee pension funds are investing — perhaps unwittingly — in the destruction of local news.

That’s the most important takeaway in a recent report by Julie Reynolds for the Nieman Journalism Lab. Reynolds writes that Alden Global Capital, the hedge fund that has destroyed newspapers across the country, has financed a number of its deals with the help of Cerberus Capital Management, a private equity firm. That includes Alden’s acquisition earlier this year of Tribune Publishing, which owns major-market papers such as the Chicago Tribune, The Baltimore Sun and, in New England, the Hartford Courant.

Cerberus’ top investor is the California Public Employees Retirement System, followed by the Public School Employees’ Retirement System of Pennsylvania. Eight of Cerberus’ top 10 investors are public employee pension funds. “Perhaps it’s time to demand that public pensions divest from shadow banks that aid and abet the aggressive dismantling of the free press,” Reynolds writes.

Cerberus turns out to have quite a track record, and it extends well beyond its role in helping Alden destroy local news. As Reynolds reports:

The firm has been accused of profiting from the Sandy Hook school massacre, because it promised to unload its ownership in gun manufacturers but then didn’t — at least not until its company Remington Arms went bankrupt in 2018. And Cerberus is the owner and founder of Tier 1 Group, the company that trained four members of the Tiger Squad that assassinated and dismembered Washington Post journalist Jamal Khashoggi.

The role of public pension funds in newspapers isn’t new. CNHI, based in Montgomery, Alabama, owns 89 local news outlets in 21 states, including The Eagle-Tribune of North Andover and its affiliated papers north of Boston. CNHI, in turn, is owned by the Retirement Systems of Alabama.

But though CNHI has cut deeply over the years, its track record isn’t nearly as grim as that of Alden. At least in Massachusetts, its newspapers remain well-staffed enough to do a reasonably good job of covering their communities.

In the trade magazine Editor & Publisher, Gretchen A. Peck reports that Jon Schleuss, president of the NewsGuild-CWA, wonders if Alden’s purpose in buying up newspapers is to exert political influence aimed at staving off regulation:

Schleuss speculated whether there might be political play behind these newspaper acquisitions. The NewsGuild president also opined about legislative remedies that Congress might enact to force hedge funds like Alden to be “radically transparent” about their investors. That would allow the public to discern if investors are earnest and market-minded or if they’re bad actors attempting to hold sway over the press.

It’s a real concern, though to date I haven’t seen any signs that Alden has an agenda other than cutting its papers to the bone and squeezing out whatever profits remain.

Peck’s article is also accompanied by a “publisher’s note” that is interesting mainly because it represents one of the few occasions when Alden has deigned to address the way it’s running its newspapers:

Publisher’s Note: E&P reached out to Heath Freeman of Alden Global Capital, welcoming his comment and contribution. The company’s crisis manager responded, post-deadline, with the following remark he attributed to MediaNews Group’s COO, Guy Gilmore: “A subscription-driven revenue model, long overdue payments from tech behemoths including Google and Facebook for the use of our content and the modernization of non-editorial operations are some of the keys to ensuring local newspapers can thrive over the long term and serve the local communities that depend on them.”