Alden Global Capital is wasting no time in taking a chainsaw to its newly acquired newspapers. NPR media reporter David Folkenflik tweeted a thread that contains some horrifying details about what the hedge fund has in store for Tribune Publishing:
$60MM of that debt carries a 13% rate – it was borrowed from Media News – Alden Global's other newspaper division.
h/t to @benyt for initial tweet about NYDNews & memo
Last year, Tribune Publishing employment fell by 30%, dropping from 4,114 employees at the end of 2019 to 2,865 employees at the end of 2020, according to the company’s annual reports. The company had a total of 896 newsroom employees across its eight markets entering this year.
Finally, the New York Post’s Keith Kelly writes that Los Angeles Times owner Patrick Soon-Shiong, who was in a better position than anyone to stop the sale of Tribune to Alden, is “taking a lot of heat” for not voting against it — or at least for not abstaining in a way that would have stopped the deal.
Kelly quotes an unnamed source who calls Soon-Shiong “second most despised man in newspapers today behind Heath Freeman,” Alden’s president. Nice quote. I wonder who said it?
Not too many years ago, New England was home to a number of medium-size and smaller daily newspapers that did an excellent job of covering their communities. There are a dozen or so that come to mind. But among the largest and the best were The Providence Journal and the Hartford Courant.
The Journal, as we all know, has been decimated by its corporate-chain owner, Gannett, the successor to GateHouse Media. The Hartford Courant, which bills itself as the oldest continuously published paper in the country, has been battered for years under the ownership of a chain now known as Tribune Publishing. The Courant’s printing has been outsourced, and the newsroom was shuttered recently as well. There is no indication that reporters and editors will have a place to work other than their homes even after the COVID pandemic is behind us.
As I’ve written several times recently, the hedge fund Alden Global Capital, whose MediaNews Group is widely regarded as the worst newspaper owner in operation, controls 32% of Tribune — and is seeking a majority share.
The Financial Times recently published a lengthy article on the plight of local news focused on the Courant. There is nothing new in the story — we hear about the widespread closure of community newspapers, the rise of hedge-fund ownership and other familiar themes. Nevertheless, it’s a strong overview for anyone who’s unfamiliar with the tale of what happened to a key part of democratic life.
There are also a few points that deserve to be emphasized. At a time when profits in local news are elusive at best, Alden is living high:
The cost cutting is certainly working. MediaNews Group achieved about 20-25 per cent operating margins in 2019, according to people familiar with the matter, more than double that of peers such as Gannett or even The New York Times. In 2020, although the pandemic shattered advertising and MNG’s revenues fell by 20 per cent, the company was still on track to make a profit.
The Courant itself is doing well from a bottom-line perspective as well, earning a profit of $2 million a year, according to the FT’s reporting.
What this shows is that there is still an inflow of cash into even the most moribund newspapers. Readers buy them despite their ever-decreasing value. Businesses advertise in them. If you’re willing to gut the newspapers you own to keep expenses well below income, and to keep cutting as income continues to fall, well, yes, you can earn a profit. At some point, needless to say, you’ll reach the point at which you can no longer cut. And that’s when you shut your doors. (Oops. Bad analogy. They already have.)
Heath Freeman and other officials at Alden rarely speak for the record. When Freeman cooperated with a Washington Post reporter last year, it, uh, did not go well. So I was interested to see that the FT did manage to get a comment out of a company spokesperson named Chrissy Carvalho. It was a classic:
It’s a lot easier to make snippy anonymous comments than actually undertake the difficult task of making sure news organisations across America are able to serve their communities during a prolonged period of declining revenues.
As the FT notes, there are efforts to try to get Tribune to sell the Courant to local interests. But that’s going to be hard to do given the paper’s continued profitability. The tragedy is that the crisis afflicting local news is only partly related to external factors such as technology, the decline of advertising and the rise of Google and Facebook. Corporate greed is at least as responsible.
Among those of us who follow the business of local news, there is a tendency to lump the two most notorious corporate chain owners together. Gannett Co. and Alden Globe Capital, after all, are both notorious for slashing their newsrooms to the bone. Their newspapers and websites in too many instances fail to meet the information needs of the communities they purportedly serve.
Yet there is a difference. And I was reminded of that difference recently by Rick Edmonds, who analyzes the media business for the Poynter Institute.
After a decade’s worth of cuts, Gannett is planning to bolster its reporting corps in the near future, Gannett chief executive Mike Reed told Edmonds — although he didn’t provide any numbers. Currently, Gannett employs about 5,000 journalists at its properties, which include USA Today, about 260 regional dailies and many other weekly papers and websites, including dozens in Greater Boston.
“We need to get even better,” Reed was quoted as saying. Well, OK. I would replace “even” with “a lot.” Still, such talk would be unimaginable at Alden Global Capital, whose MediaNews Group chain of about 200 papers has sparked newsroom revolts as well as demands from 21 U.S. senators that the company stop its “reckless acquisition and destruction of newspapers,” according to a recent story by Sarah Ellison in The Washington Post.
The difference between how Gannett and MediaNews are perceived may have something to do with their ownership structures.
The current Gannett is the result of a merger late last year between Gannett and GateHouse Media. Despite keeping the Gannett name, it was clearly GateHouse that got the better of the deal: Reed was the chief executive at GateHouse before assuming the same position at Gannett. The new Gannett immediately embarked on an estimated $400 million in cuts in order to pay down the debt it had taken on in financing the merger, according to the media-business analyst (and newly minted entrepreneur) Ken Doctor at Nieman Lab.
Gannett is a publicly traded corporation, which means that Reed’s ultimate goal is long-term growth and sustainability — albeit with as little journalism as the company can get away with. Reed hopes to do that by leveraging Gannett’s media holdings with digital marketing subsidiaries the company owns as well as an events business, which is obviously on hold during the COVID pandemic.
If everything works out over time, it is possible to imagine Gannett’s local news outlets staffing up and providing better, more comprehensive coverage than they have in recent years. As good as what would be offered by independent newspapers and websites? Almost certainly not. But any improvements would be welcome.
Alden Global Capital, on the other hand, is a hedge fund. And as best as anyone can tell, the company has no strategy for MediaNews Group beyond extracting as much money as it can for as long as it can. Its Massachusetts papers, the Boston Herald, The Sun of Lowell and the Enterprise & Sentinel of Fitchburg, operate on a shoestring. The Fitchburg office was closed several years ago. The Herald’s office in Braintree was recently shut down as well, although it’s unclear whether that was a temporary, COVID-related move or something permanent.
In Ellison’s Washington Post article, Alden managing director Heath Freeman tried to portray himself as a savior of journalism. “I would love our team to be remembered as the team that saved the newspaper business,” he was quoted as saying. Ellison, though, ran through a list of MediaNews papers across the country that have been so gutted that they have virtually no one to cover the news.
“Don’t buy the idea that Alden is trying to save newspapers. I don’t think any idiot would buy that,” said Dean Singleton, the owner of an earlier iteration of MediaNews Group whose own reputation as a cost-cutter looks benign by today’s standards. Freeman’s retort: “We’ve saved the very newspapers that Dean Singleton ran into bankruptcy, so take his recriminations with a grain of salt.”
Stop me if you’ve heard me say this before, but quality local news can be a key to reviving civic engagement, which in turn could help us overcome the hyperpolarization that defines our culture nationally. According to a recent survey by Gallup and the Knight Foundation, 70% of Americans believe the news media play a “critical” (30%) or “very important” (42%) role “in making residents feel connected to their local community.”
“While national press was perceived by residents of all political backgrounds as distant, privileged, and dismissive of local culture,” she wrote, “it was not uncommon for residents to have first- or secondhand interactions with local reporters. So while participants could identify shortcomings, there was a base-level familiarity and trust.”
Those interactions are important — but they are becoming increasingly rare at the local news organizations being run by Gannett and MediaNews Group. At least there’s some reason to hope that the situation might improve at Gannett. As for MediaNews, a former reporter for the chain, Julie Reynolds, put it this way in The Nation several years ago: “Don’t just blame the Internet for journalism’s decline. Old-fashioned capitalist greed also strangles newspapers.”
Sarah Ellison of The Washington Post profiles Heath Freeman, the undertaker-in-chief for Alden Global Capital’s MediaNews Group, the worst newspaper chain in the known universe.
Alden is notorious for destroying good newspapers like The Denver Post and The Mercury News of San Jose, and is now making a play for Tribune Publishing, which owns big metros like the Chicago Tribune and The Baltimore Sun. In Massachusetts, Alden owns the Boston Herald, The Sun of Lowell and the Sentinel & Enterprise of Fitchburg.
“I would love our team to be remembered as the team that saved the newspaper business,” Freeman tells Ellison. She follows up with this withering paragraph:
This is what Freeman’s approach to saving the newspaper business looks like in St. Paul, Minn.: A local sheriff blew his budget by $1 million and there was no Pioneer Press reporter available to cover the county board meeting. In San Jose: There was no reporter on the education beat at the Mercury News when the pandemic started closing schools. In Denver: In the aftermath of the 2012 Aurora movie theater mass shooting, the editor was asked to slash staff to improve the next month’s budget numbers. In Vallejo, Calif.: There is exactly one news reporter left at the Times-Herald to cover a community of 120,000 people.
The best thing that could happen for those communities is for MediaNews Group to collapse. The papers would still be there, and they would almost certainly have a brighter future on their own.