They had a father-figure relationship, one told me. AP. Most of his investments are defined by a cold pragmatism, but he takes a more personal interest in the media sector. But years later, when Randy relocates to Palm Beach and becomes a major donor to Donald Trumps presidential campaign, it will make a certain amount of sense that his earliest known media investment was conceived as a giant middle finger to the journalistic establishment. But it turned out that Smith had so many doorsteps16 mansions in Palm Beach alone, as of a few years ago, some of them behind gatesthat the plan proved impractical. For a fleeting moment, Aldens newspapers became unexpected darlings of the journalism industrywritten about by Poynter and Nieman Lab, endorsed by academics like Jay Rosen and Jeff Jarvis. But most of them also had a stake in the communities their papers served, which meant that, if nothing else, their egos were wrapped up in putting out a respectable product. Instead, they gutted the place. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. . Youd be surprised. Now he was feeling the effects of their management. by Magnus Shaw..An enormous advertising company (Leo Burnett) and a small creative film company (Asylum) have had a difficult couple of weeks. The men who devised this model are Randall Smith and Heath Freeman, the co-founders of Alden Global Capital. Coppins describes Alden as a specific type of firm: a "vulture hedge fund." This summer, Alden Global Capital acquired Tribune Publishing and its titles, from small community newspapers to major metro titles like its flagship, The Chicago Tribune, and The Baltimore Sun. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. Aldens website contains no information beyond the firms name, and its list of investors is kept strictly confidential. All good works, and Knight is to be commended for them. What most concerns him is how his city will manage without a robust paper keeping tabs on the people in charge. A vulture doesnt hold a wounded animals head underwater. he asks. I felt like a terrible reporter because I couldnt get to everything.. It financed the deal with the help of Cerberusa private-equity firm that owned, among other businesses, the security company that trained Saudi operatives who participated in the murder of the journalist Jamal Khashoggi. But whats happening in Chicago is different. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of journalism. A month after he started, one of his fellow reporters left and Glidden was asked to start covering schools in addition to his other responsibilities. [31], In 2019, Twenty Lake Holdings reported that it had acquired about 180 properties with 2.3 million square feet of real estate in 29 states. The best architects of the era were invited to submit designs; lofty quotes about the Fourth Estate were selected to adorn the lobby. At the time, finalternatives.com reported that the Global Distress Opportunities fund would focus on financial firms as well as homebuilding, gaming and auto-related names.. Some expressed exasperation with the staff of the Chicago Tribune, who were unable to find a single interested local buyer. . Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. Since Alden's . Rapid-fire changes underway at newspapers sold to cost-slashing hedge fund Alden Global Capital have led to a profound case of the jitters at newsrooms like the New York Daily News. They want to know who exactly profits when we learn, as Harvard Nieman Labs Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media newspapers. The 5 global Trends in Journalism: 1 We've moved from a world where media organizations were gatekeepers to a world where media still creates the news agenda, but platform companies control access to audiences 2 this move to digital media generally does not generate filter bubbles Instead automated Serendipity + incidental exposure drive people . (Freeman has, in the past, disputed Bainums account of the negotiations.) Feeling burned by the hedge fund, Bainum decided to make a last-minute bid for all of Tribune Publishings newspapers, pledging to line up responsible buyers in each market. But within weeks, Bainum said, Alden tried to tack on a five-year licensing deal that would have cost him tens of millions more. Researchers at the University of North Carolina found that Alden-owned newspapers have cut their staff at twice the rate of their competitors; not coincidentally, circulation has fallen faster too, according to Ken Doctor, a news-industry analyst who reviewed data from some of the papers. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. Freeman was only slightly more accessible. It's newspaper-endorsement season again, and that means it's Should newspapers do endorsements?season again. But as long as Alden had made back its money, the investment would be a success. This story originally appeared on the Morning Edition live blog. Lee's board of directors . about two hundred American newspapers. Heath hopes the well never runs dry, but hes going to keep pumping until it does. . The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. But in the case of local news, nothing comparable is ready to replace these papers when they die. Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. [4][13], In November 2021, Alden made an offer to Lee to purchase the company in its entirety for roughly $141 million. He declined to meet me in person or to appear on Zoom. We were in collective revolt, Lillian Reed, a Sun reporter who helped organize the campaign, told me. Longtime Tribune staffers had seen their share of bad corporate overlords, but this felt more calculated, more sinister. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. Research shows that when local newspapers disappear or are dramatically gutted, communities tend to see lower voter turnout, increased polarization, a general erosion of civic engagement and an environment in which misinformation and conspiracy theories can spread more easily. Alden, which has built a reputation as one of the newspaper industry's most aggressive cost-cutters, became Tribune Publishing's largest shareholder in November 2019 and owns a 31.3% stake. Financially, it was a raw deal. During its five-year run with Alden, it seems quite unlikely that no one at Knight knew about the hedge funds slash-and-burn strategy for two reasons. For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. He says he visited the Tribune's office and was "really shocked by how grim the scene was." [15][16] In March 2018, Margaret Sullivan, the media columnist for The Washington Post, called Alden "one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism. At the time, the Sun had a bustling bureau in Annapolis, and he marveled at the reporters ability to sort the honest politicians from the political whores by exposing abuses of power. After weeks of back-and-forth, he agreed to a phone call, but only if parts of the conversation could be on background (which is to say, I could use the information generally but not attribute it to him). Like many alumni of the Sun, Simon is steeped in the papers history. In budget meetings, according to the former executive, Freeman hectored local publishers, demanding that they produce detailed numbers off the top of their head and then humiliating them when they couldnt. Its a game, Randy explains to his son. A Cornell grad with an M.B.A., Randy is on a partner track at Bear Stearns, where hes poised to make a comfortable fortune simply by climbing the ladder. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. Scott Olson/Getty Images Now it might be facing extinction. Russ Smith is a puckish libertarian whose self-described contempt for the journalistic class animates the pages of the publication. Stewart Bainum, since losing his bid for the Sun, has been quietly working on a new venture. [13], Newspapers in Alden's portfolio include Chicago Tribune, The Denver Post, the St. Paul Pioneer Press, the Boston Herald, The Mercury News, East Bay Times, The Orange County Register, and Orlando Sentinel. [8][24] Tribune Publishing publishes nine major metropolitan dailies. Read: Local news is dying, and Americans have no idea, From 2015 to 2017, he presided over staff reductions of 36 percent across Aldens newspapers, according to an analysis by the NewsGuild (a union that also represents employees of The Atlantic). Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.[23]. ", "Denver Post Rebels Against Its Hedge-Fund Ownership", "Tribune Says Sale to Alden Wins Approval Amid Confusion Over Key Shareholder's Vote", "Lee Enterprises Shares Jump on Takeover Offer From Alden", "The vulture is hungry again: Alden Global Capital wants to buy a few hundred more newspapers", "Colorado Group Pushes to Buy Embattled Denver Post From New York Hedge Fund", "The battle for Tribune: Inside the campaign to find new owners for a legendary group of newspapers", "Is this strip-mining or journalism? It is a subsidiary of Alden Global Capital, the New York City hedge fund that backed the purchase of and dramatic cost-cutting at more than 100 newspapers causing more than 1,000 lost jobs. This is a subscription-based business.. Eventually he was the only news reporter left on staff, charged with covering the citys police, schools, government, courts, hospitals, and businesses. But he says the worst culprit is the hedge fund Alden Global Capital, which bought the Mercury in 2011 and has since sold the paper's building and slashed newsroom staff by about 70%. Otherwise, youre just peeing in the ocean.. Newspaper publisher Lee Enterprises is asking its shareholders to help it fight off a hostile takeover . You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. Several years later, when Heath was still in his mid-20s, Smith co-founded Alden Global Capital with him, and eventually put him in charge of the firm. Misinformation proliferates. But while its true that Alden entered the industry by purchasing floundering newspapers, not all of them were necessarily doomed to liquidation. It's traded in a prestigious downtown newsroom for a "Chipotle-sized office" near the printing press. . Theyre being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. Since they bought their first newspapers a decade ago, no one has been more mercenary or less interested in pretending to care about their publications long-term health. The Alden Global Capital . According to Aldens scarce SEC filings, it currently has fewer than 10 investors, most of them from overseas. But who most of those few souls are, and how much of the hundreds of millions skimmed from DFM papers theyve received remains a deep, dark mystery. Hedge fund Alden Global Capital, one of the country's largest newspaper owners with a reputation for intense cost cuts and layoffs, has offered to buy the local newspaper chain Lee Enterprises for about $141 million. His editor cited a supposed journalistic infraction (Glidden had reported the resignation of a school superintendent before an agreed-upon embargo). But by 2013, despite deep losses to Alden funds overall values in the previous two years, Smith was able to begin buying his now infamous swath of South Florida mansions for $58 million and Freeman was acquiring multi-million-dollar New York condos. The company has been growing its portfolio and as of May 2021, owns over 100 newspapers and 200 assorted other publications. Yes, today, it's a newspaper without a newsroom. Others pointed to Bainums financing partner, who pulled out of the deal at the 11th hour. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. At one point, he told me, the citys entire civil-service commission was abruptly fired without explanation; his sources told him something fishy was going on, but he knew hed never be able to run down the story. Knight spokesman Andrew Sherry declined to answer any of those questions, saying instead, Our endowment investments support our grantmaking., We invested approximately one half of one percent of our endowment in an Alden fund between late 2009 and early 2014, he said via email. To David Simon, the whimpering end of The Baltimore Sun feels both inevitable and infuriating. How exactly Randall Smith chose Heath Freeman as his protg is a matter of speculation among those who have worked for the two of them. [33], Alden Global Capital's management of American newspapers has been criticized. My request for an interview with Smith was dismissed by his spokesperson before I finished asking. In conversations with former Alden employees, I heard repeatedly that their partnership seemed to transcend business. Alden-owned newspapers have cut their staff at twice the rate of their competitors, for all of Tribune Publishings newspapers, security company that trained Saudi operatives. Its hard to imagine theyd show, anyway. Coppins notes that there's even some research indicating that city budgets increase as a result, because corruption and dysfunction can take hold without a newspaper to hold powerful people to account. Alden is in the business of making money, not journalism. In 2016 (year of the most recent 990 available), the foundation invested $17 million in Alden funds. It's a tangled tale but essentially Asylum produced a film for the McDonald's charitable foundation for Leo. Freeman was clearly aware of his reputation for ruthlessness, but he seemed to regard Aldens commitment to cost-cutting as a badge of honorthe thing that distinguished him from the saps and cowards who made up Americas previous generation of newspaper owners. The men killing Americas newspapers, how Slack upended the workplace, and the new meth. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. To replace a paper like the Sun would require a large, talented staff that covers not just government, but sports and schools and restaurants and art. G ARY MARX and David Jackson, two veteran investigative reporters at the Chicago Tribune, spent most of last year seeking potential buyers who might save their newspaper from Alden Global Capital . Its being snuffed out, quarter after quarter after quarter. We were sitting in a coffee shop in Logan Square, and he was still struggling to make sense of what had happened. [12] Lee owns daily newspapers in 77 markets in 26 states, and about 350 weekly and specialty publications. hide caption. The show draws from a book written by a Sun reporter, and Simon was quick to point out that the paper still has good journalists covering important stories. One tagline he was considering was Marylands Best Newsroom., When I asked, half in jest, if he planned to raid the Sun to staff up, he responded with a muted grin. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. How do you know who wins? the boy asks. The 1% own and operate the . At the time, even savvy media insiders like Martin Langeveld wistfully predicted Alden would keep newspapers future in mind: Smith knows that the only way to win his big bet on the future of newspapers is to turn them into nimble, modern digital news enterprises.. Coppins offers several examples, like the Chicago Tribune and California's Vallejo Times-Herald. So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? The California Public Employees Retirement System, a few European banks, and Citigroup and Coca Cola Companys pension funds have all invested in Alden, along with charities such as the Circle of Service Foundation and the Alfred University Endowment. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. Alden is known for . They want to know who exactly profits when we learn, as Harvard Nieman Lab's Ken Doctor recently reported, that the firm netted $160 million last year from its Digital First Media . The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. We dont hear from them Theyre, like, nameless, faceless people., In the months that followed, the Sun did not immediately experience the same deep staff cuts that other papers did. In the ensuing exodus, the paper lost the Metro columnist who had championed the occupants of a troubled public-housing complex, and the editor who maintained a homicide database that the police couldnt manipulate, and the photographer who had produced beautiful portraits of the states undocumented immigrants, and the investigative reporter whod helped expose the governors offshore shell companies. Instead, the money was used to finance the hedge funds other ventures. [4], Alden purchased a 5.9-percent stake in Lee Enterprises in January 2020. And that has consequences for democracy, as journalist McKay Coppins writes in The Atlantic. People who know him described Freemanwith his shellacked curls, perma-stubble, and omnipresent smirkas the archetypal Wall Street frat boy. Alden is not a newspaper company, says Ann Marie Lipinski, a former editor in chief of the Chicago Tribune. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. To him, its the same as oil, the publisher said. Probably not.. The New York-based hedge fund Alden Global Capital - known for slashing its newspapers' budgets to extract escalated profits - won shareholder approval Friday for its $633 million bid to acquire the Tribune Publishing newspaper chain.. Alden's holdings already spanned the country, including the . Well, he told me, they have some very good reporters., This article appears in the November 2021 print edition with the headline The Men Who Are Killing Americas Newspapers., A Secretive Hedge Fund Is Gutting Newsrooms, I Dont Know That I Would Even Call It Meth Anymore, W. G. Sebald Ransacked Jewish Lives for His Fictions. That's because the fund is stepping in to buy and then gut newsrooms across the country. Hedge fund Alden Global Capital will acquire the rest of what it does not already own of Tribune Publishing, owner of the Chicago Tribune, the New York Daily News and other local newspapers, in a . A group of 11 community newspapers owned by Red Wing Publishing Co. have been sold to MediaNews Group, owner of the St. Paul Pioneer Press and more than 100 newspapers across the country. Meanwhile, the Tribunes remaining staff, which had been spread thin even before Alden came along, struggled to perform the newspapers most basic functions. The pay was terrible and the work was not glamorous, but Glidden loved his job. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. But there was still a sliver of hope: Tribune and Alden agreed that the hedge fund would not increase its stake in the company for at least seven months. One early article, in the trade publication Poynter, suggested that Aldens interest in the local-news business could be seen as flattering and quoted the owner of The Denver Post as saying he had enormous respect for the firm. We were like, Theyre not going to take our newspaper from us! New York hedge fund and U.S. newspaper consolidator Alden Global Capital LLC has made a proposal to take Lee Enterprises Inc. private in a deal that values the company at around $141 million. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. If accepted, the $24 per share purchase price would . Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World.

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