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.

A major setback in the quest to save Tribune Publishing from Alden Global Capital

Col. Robert McCormick, legendary publisher of the Chicago Tribune

There was some very bad news Saturday in the race to save Tribune Publishing from the hedge fund Alden Global Capital. Hansjörg Wyss, who made his billions in the medical device field, ended his relationship with the hotel magnate Stewart Bainum, according to Katie Robertson of The New York Times.

Bainum insists he’s going to go it alone, but this is a major setback. Bainum and Wyss had outbid Alden, but it still wasn’t clear if they were going to succeed. Now Bainum has to find new investors.

Wyss’ main interest was the Chicago Tribune; apparently he got under the hood and discovered that the finances were a mess. He also reportedly came to the conclusion that his hope of transforming the Tribune into a national paper along the lines of what Jeff Bezos did with The Washington Post was unrealistic. Too bad that serving the third-largest metro area in the U.S. wasn’t good enough for him.

Back when this all started, Alden was going to increase its share in Tribune from 32% to 100%, keep eight of the chain’s nine major-market newspapers, and spin off The Baltimore Sun and several smaller sister papers to Bainum — who, in turn, planned to take them nonprofit. Bainum decided to bid for the entire chain after he concluded that Alden was chiseling him on fees, as Lukas Alpert reported in The Wall Street Journal.

What’s not clear is what happens if we return to the first iteration of the deal. Will Bainum still get The Baltimore Sun? Or is Alden now prepared to take charge of the entire chain — and start putting the squeeze on newsrooms that are already a shadow of their former selves?

Previous coverage.

A dark day for Tribune’s storied newspapers — but great news in Baltimore

There is terrible news to report tonight for readers and employees of the Chicago Tribune, New York’s Daily News and the Hartford Courant — but good news in Baltimore.

A deal that had been in the works since late 2020 is close to being consummated, with the hedge fund Alden Global Capital on the verge of becoming the sole owner of Tribune Publishing. As has been documented on numerous occasions here and elsewhere, Alden is the most avaricious of the chain newspaper owners, squeezing the life (and the journalism) out of its properties.

Lukas I. Alpert reports in The Wall Street Journal that Alden is paying an estimated $630 million to bring its share of Tribune from 32% to 100%. Tribune, currently a publicly traded company, will go private.

Last month the News Guild, the union that represents workers at seven of Tribune’s nine papers, filed a complaint with the Securities and Exchange Commission charging irregularities in Alden’s bid. No word on whether that challenge is over or if it will continue.

Meanwhile, there’s good news in Baltimore. As part of the transaction, Tribune will sell The Baltimore Sun, The Capital Gazette of Annapolis, Maryland, and several other publications to a nonprofit organization called the Sunlight for All Institute. The sale caps a campaign of many months on the part of community activists.

Joseph Lichterman of the Lenfest Institute, the nonprofit that owns The Philadelphia Inquirer, tweeted:

It’s a ray of sunshine — or a rainbow, if you will — on what is otherwise another dark day for American newspapers.

Previous coverage:

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How Alden Global Capital is strangling Connecticut’s Hartford Courant

Note: Susan Campbell, a Hartford Courant columnist, posted the following on Facebook earlier today, writing, “I am told the Courant is shifting focus to cover the coronavirus and the column I submitted wouldn’t be read, or run this Sunday. So here is the column I wrote.” I contacted her and asked if I could republish it at Media Nation. She gave her permission, and so here it is. Her column has also been republished by #NewsMatters, “a NewsGuild project for Digital First Media workers.” Digital First Media is an earlier name for MediaNews Group, the newspaper chain that Alden controls. — DK

By Susan Campbell

Dear Hartford Courant reader,

Your roof is on fire.

The signs have been there, but you may not be aware of the damage overhead. What you, the reader, sees are a few typos, a missed paper, or someone on the other end of the phone who cannot stop your paper delivery during your vacation. Worse, there’s no one at your local meeting, because when newspapers had more people on staff, they could afford to come to your traffic commissions, town council meetings, and panel discussions.

Nothing just happens, dear reader, but before we explore what’s going on, see if you can figure out this math: Recently, Tribune Publishing Co. announced that the company’s fourth-quarter profit was $4 million. That should be good news, but these days, newsroom blood-letting has moved from paper cuts to full-on beheadings.

And for that, you can thank Alden Global Capital, a New York-based hedge fund, which owns 32% of the Tribune company. Alden is known for one thing and one thing only: Alden kills newspapers. The corporation walks through the battlefield of struggling newspapers (which pretty much describes 99% of newspapers), lifts up the wounded, props them up at a computer, and then methodically sucks up all the resources until there’s nothing left. Their shady business practices — including an accusation that they moved employee pension assets into their own accounts — have earned the notice of the Department of Labor.

The next time you want to complain about your local coverage, remember that you have no idea how hard the dead-last-remainders of America’s newsrooms work to do what they do. They are part of a broken business model, but there is your reporter/photographer/editor, spinning as fast as s/he can.

I know. I was a remainder, until I realized I was so angry at the system I couldn’t exist in it. I left in 2012 when I thought things were pretty bad.

But this isn’t just me, a disgruntled former employee. Last May, some U.S. senators, including Sherrod Brown (husband of Pulitzer-winning newspaper columnist Connie Schultz), Tammy Baldwin and Cory Booker, wrote Alden a letter begging them to abandon their attempted hostile takeover of Gannett because newspapers are a “public good.” Gannett shareholders ultimately rejected the takeover.

Alden’s holdings include The Denver Post, where in December, members of the Denver City Council passed a resolution that called on the company to either invest in the Post or sell it. Alden has been draining the blood from that once-fine newspaper since 2011.

In January, two respected Chicago Tribune columnists wrote a New York Times op-ed calling attention to their own newspaper’s struggles as an Alden holding. In February, the Chicago City Council passed a resolution similar to Denver’s.

We need that here, in Hartford. We need a concerted effort to save the Oldest Continuously Published Newspaper in the Nation, the newspaper that printed a copy of the Declaration of Independence, and was sued for libel by Thomas Jefferson. We need a full-throated show of support, like that of state Sen. Saud Anwar and others. We, too, need to encourage Alden to put up or shut up. We, too, need wealthy people to invest in local journalism.

Mostly, we need to stop the dangerous trend that threatens our free press. According to the Pew Research Center, post-Watergate, the circulation of daily newspapers peaked in the late ’80s. About that same time, third-generation newspaper families began to lose interest in the family business, while corporations began to notice the healthy profit margins found in the newspaper industry. At a rate that accelerated as we barreled through the ‘90s, more and more newspapers became part of media conglomerates.

If the carnage continues, Alden will kill our newspaper. When that happens, we’re left with news deserts, with our “news” shoveled at us by social media, with its lack of fact-checkers and professionalism. Our information age will suffer from an appalling lack of information.

Passivity is not an option. This is our damn newspaper. This is our damn democracy.

Susan Campbell teaches at University of New Haven, and is the author of several books, including, most recently, “Frog Hollow: Stories From an American Neighborhood.” She can be reached at slcampbell417@gmail.com.

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Goldsmith investigative award goes to the Chicago Tribune

Now it can be told. The Goldsmith Prize for Investigative Reporting was awarded on Tuesday evening to the Chicago Tribune for its “Playing with Fire” series, on an unholy alliance between the chemical and tobacco industries. As the Tribune puts it:

The average American baby is born with 10 fingers, 10 toes and the highest recorded levels of flame retardants among infants in the world. The toxic chemicals are present in nearly every home, packed into couches, chairs and many other products. Two powerful industries — Big Tobacco and chemical manufacturers — waged deceptive campaigns that led to the proliferation of these chemicals, which don’t even work as promised.

If you are interested in learning more about the Goldsmith event, please click here for a Storify put together by the Joan Shorenstein Center at Harvard’s Kennedy School, which administers the awards. (A few of the tweets are mine.) It includes coverage of the keynote address by New York Times columnist Nicholas Kristof, who received the Goldsmith career award.

Goldsmith awards reflect the changing media landscape

I recently had the privilege of helping to judge more than 100 entries for the 2013 Goldsmith Prize for Investigative Reporting, which is administered by Harvard’s Joan Shorenstein Center. We chose six finalists, which were announced immediately, and a winner, which will be honored on Tuesday evening.

At a time when news organizations are struggling to survive, it was heartening to see so much good work. But the finalists also show how the world of investigative journalism is changing.

For instance, two of the newspapers that made it to the finalists’ circle, the Los Angeles Times and the Chicago Tribune, are owned by the troubled Tribune Co., which recently came out of bankruptcy and is now up for sale. If Tribune Co. ends up with the wrong owner, investigative excellence at its newspapers could become a thing of the past.

On the other hand, another finalist was produced by a collabortion among nonprofit news organizations: the Center for Public Integrity, Global Integrity, Public Radio International and the Investigative News Network. This is no longer surprising. Rather, it is further evidence that nonprofits are essential to carrying out public-service journalism.

Further evidence of the way things are in 2013: two of the finalists were produced by the New York Times, which, despite financial problems of its own, is more firmly established today as our leading news organization than perhaps at any other time in our history.

The sixth finalist is from the Atlanta Journal-Constitution, a Cox paper that has been experiencing something of a revival in recent years.

The finalists’ entries themselves run the gamut, from sexual abuse in Boy Scout troops, to Walmart’s corporate misbehavior in Mexico, to how the chemical and tobacco industries conspired to foist toxic flame retardants upon the public.

In addition to the investigative reporting award, also to be presented on Tuesday will be the Career Award for Excellence in Journalism, which will go to keynote speaker Nicholas Kristof, a columnist for the New York Times. The Goldsmith Book Prize will go to Jonathan M. Ladd for “Why Americans Hate the Media and How it Matters” and Rebecca MacKinnon for “Consent of the Networked: The Worldwide Struggle for Internet Freedom.”

The event, which is open to the public, will begin at 6 p.m. in the John F. Kennedy Jr. Forum at 79 JFK St. near Harvard Square.