[10][19][20], The company has its origins in R.D. To him, its the same as oil, the publisher said. To be sure, the Knight Foundation does much to help promote and sustain local news. The newsroom was moved to a single room rented from the local chamber of commerce. More to the point, Tribune Publishingwhich represents a substantial portion of Aldens titleswas profitable at the time of the acquisition. In recent months, hes been meeting with leaders of local-news start-ups across the countryThe Texas Tribune, the Daily Memphian, The City in New Yorkand collecting best practices. 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 . 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. Bainum envisioned rebuilding the paperwhich, by 2020, was down to a single full-time statehouse reporteras a nonprofit. Baltimore is an underdog town, Liz Bowie, a Sun reporter who was at the meeting, told me. These include the Chicago Tribune, the New York Daily News, and The Baltimore Sun. For Freeman, newspapers are financial assets and nothing morenumbers to be rearranged on spreadsheets until they produce the maximum returns for investors. From the March 1914 issue: H. L. Mencken on newspaper morals, A story circulated throughout the companypossibly apocryphal, though no one could say for surethat when Freeman was informed that The Denver Post had won a Pulitzer in 2013, his first response was: Does that come with any money?. On March 9, 2020, a small group of Baltimore Sun reporters convened a secret meeting at the downtown Hyatt Regency. * Edited from 'independent . I asked, What is the Foundations perspective on those investments now, as news of Aldens gutting of these newspapers has come to light?. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner. The story of Alden Capital begins on the set of a 1960s TV game show called Dream House. If Knights total divestment from Alden in 2014 was because someone made an ethical decision to stop dealing with the vulture fund, good for them. It hurts to see the paper like this, he told her. I asked if anyone there at the time was aware of Aldens vulture business strategy. Its not as if the Tribune is just withering on the vine despite the best efforts of the gardeners, Charlie Johnson, a former Metro reporter, told me after the latest round of buyouts this summer. If you're a reader of local newspapers particularly the Chicago Tribune, The Baltimore Sun or New York Daily News you're going to want to make sure the answer is yes. Smith, a reclusive Palm Beach septuagenarian, hasnt granted a press interview since the 1980s. With Alden in control, he believes the Sun is now a prisoner that stands little chance of escape. 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 . But that's not true for all of them. 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. Now he was feeling the effects of their management. That may well be the future of local news, he says. How do you know who wins? the boy asks. October 14, 2021. Clearly, for Smith and Freeman, chop-shopping their newspapers paid off. A vulture doesnt hold a wounded animals head underwater. . What happens next? While some finance reporters noted that Smiths newspaper investments were all losing value, none seemed to notice that Smith and Aldens president Heath Freeman would soon start strip mining their news companies real estate and other assets. 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. When I asked Freeman what he thought was broken about the newspaper industry, he launched into a monologue that was laden with jargon and light on insightsummarizing what has been the conventional wisdom for a decade as though it were Aldens discovery. A search through nonprofit groups publicly available financial reports, commonly known as Form 990s, reveals that all kinds of organizations some surprising have invested their monies with Alden over the years. What threatens local newspapers now is not just digital disruption or abstract market forces. Alden Global Capital already owns 200 publications and a 6% stake in Lee Enterprises. . Alden Global Capital, the New York hedge fund that bought Tribune Publishing this year, said on Monday that it was making an offer for another big American newspaper chain, Lee . Theres no industry that I can think of more integral to a working democracy than the local-news business, he said. Alden Global Capital owns 56 dailies under Digital First Media (Alden also owns 32% of Tribune 10 dailies in Column C.) Tribune Media owns 10 dailies. Those that have survived are smaller, weaker, and more vulnerable to acquisition. With its acquisition of Tribune Publishing earlier this year, Alden now controls more than 200 newspapers, including some of the countrys most famous and influential: the Chicago Tribune, The Baltimore Sun, the New York Daily News. The newspaper lost a quarter of its staff to buyouts after it was acquired by Alden Global Capital in May. The firm has a history of purchasing newspapers to cut costs wherever . 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 century later, the Tribune Tower has retained its grandeur. One known investor, however, is the Randall and Barbara Smith Foundation, named for Alden founder Smith and his wife. 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. He started as a general-assignment reporter, covering local crime and community events. By the 1980s, this strategy has made Randy luxuriously wealthyvacations in the French Riviera, a family compound outside New York Cityand he has begun to school his children on the wonders of capitalism. Scott Olson/Getty Images Smith. When the Chicago Tribune held a Save Local News rally, most of the people who showed up were members of the media. 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. Baltimore has always had its problems, he told me. "[17] and Vanity Fair dubbed Alden the "grim reaper of American newspapers. But by 2014, it was becoming clear to Aldens executives that Patons approach would be difficult to monetize in the short term, according to people familiar with the firms thinking. Some in the industry say they wouldnt be surprised if Smith and Freeman end up becoming the biggest newspaper moguls in U.S. history. There were sober op-eds and lamentations on Twitter and expressions of disappointment by professors of journalism. ", "The most feared owner in American journalism looks set to take some of its greatest assets", "Minority shareholder sues Denver Post parent and NY hedge fund over 'breaches of fiduciary duty', "What does the Chicago Tribune sale mean for the future of newsrooms? One researcher tells me that if that money were invested in the S&P 500 Index Fund, it would have earned roughly $11 million over the same period. When a reporter asked if their work was still valued, the editor sounded deflated. (Freeman has, in the past, disputed Bainums account of the negotiations.) So why be surprised that Knight-Ridder or anyone else is investing in destructive but profitable ventures? These included several Cayman Island-based funds and another profiting from Greek debt stemming from that countrys financial crisis. Some publications, such as the Minneapolis Star Tribune, have developed successful long-term models that Aldens papers might try to follow. The Ubiquity - The student news site of Quartz Hill High School Other records turned up from public pension funds and filings of publicly traded companies. A quarter of the newsroom (including many big-name reporters, columnists and photographers) took the buyouts Alden offered, and while some great reporters remain on staff, it's nearly impossible for them to fill those gaps, Coppins says. [14], Alden has a reputation for sharply cutting costs by reducing the number of journalists working on its newspapers. According to its 990s, Knight ended up making $185,000 over five years on its initial $13.4 million investment. The families that used to own the bulk of Americas local newspapersthe Bonfilses of Denver, the Chandlers of Los Angeleswere never perfect stewards. Other large shareholders include Californian asset manager Capital Group and UK fund manager Jupiter Asset Management. Earnest and unpolished, with a perpetually mussed mop of hair, Bainum presented himself as a contrast to the cutthroat capitalists at Alden. 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. He was fired after criticizing Alden in a Washington Post interview. The details of how Smith got to know him are opaque, but the resulting loyalty was evident. A recent Financial Times analysis found that half of all daily newspapers in the U.S. are controlled by financial firms, and Coppins says that number is all but certain to keep growing. [3] [4] With its acquisition of Tribune Publishing in late . [2] Its managing director is Heath Freeman. 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. Morale tanked; reporters burned out. Last week, Alden Global Capital, the hedge fund notorious for slashing costs at its local titles, came down on the No side of the question, with editorial boards at papers that it owns stating that they will no longer endorse candidates for governor, US senator, or president. "Local newspaper brands and operations are the engines that power trusted local news in communities across the United States," Heath Freeman, president of Alden Global Capital, said in a . He can cite decades-old scoops and tell you whom they pissed off. When the journalists created a Slack channel to coordinate their efforts across multiple newspapers, they dubbed it Project Mayhem.. Reading these stories now has a certain horror-movie quality: You want to somehow warn the unwitting victims of whats about to happen. Shareholders of Tribune Publishing, one of the country's largest newspaper chains, on Friday approved a takeover by hedge fund Alden Global Capital. Even in the greed is good climate of the era, Randy is a polarizing character on Wall Street. 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). The pay was terrible and the work was not glamorous, but Glidden loved his job. At the Suns peak, it employed more than 400 journalists, with reporters in London and Tokyo and Jerusalem. Freeman would show up at business meetings straight from the gym, clad in athleisure, the executive recalled, and would find excuses to invoke his college-football heroics, saying things like When I played football at Duke, I learned some lessons about leadership. (Freeman was a walk-on placekicker on a team that won no games the year he played.). Yes, today, it's a newspaper without a newsroom. The movement gained traction in some markets, with local politicians and celebrities expressing solidarity. He says he visited the Tribune's office and was "really shocked by how grim the scene was." | Michael Gray, WIkimedia Commons. 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 . Freeman was only slightly more accessible. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. 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. The Banner will launch with about 50 journalistsnot far from the size of the Sunand an ambitious mandate. If you want to know what its like when Alden Capital buys your local newspaper, you could look to Montgomery County, Pennsylvania, where coverage of local elections in more than a dozen communities falls to a single reporter working out of his attic and emailing questionnaires to candidates. One acquaintance tells The Village Voice that hes the kind of guy who divests himself every couple of years to avoid ending up on lists of the worlds richest people. Inside Alden Global Capital. 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. Already the largest shareholder . The $633 million sale made Alden the nation's second largest newspaper owner in terms of circulation, with more than 200 newspapers. But this acquisition was profound, making Alden Global . For Smith, the Palm Beach conservative and Trump ally, sticking it to the mainstream media might actually be a perk of Aldens strategy. 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. It was founded in 2007 by Randall D. Smith. This story originally appeared on the Morning Edition live blog. When The New York Times profiles him in 1991, it notes that he excels at profiting from other peoples misery and quotes a parade of disgruntled clients and partners. This was the core of Freemans argument. Misinformation proliferates. This once-proud publication is now owned and run by Alden Global Capital, a multibillion-dollar hedge fund with a long record of buying papers on the cheap, selling off their assets and slashing pay and jobs. Gerry Smith. Alden's holdings already spanned the country, including the . If accepted, the $24 per share purchase price would . On the appointed afternoon, I dialed the number provided by his spokesperson and found myself talking to the most feared man in American newspapers. MediaNews Group came out of bankruptcy in March 2010 under the majority ownership of its lenders. He quotes H. L. Mencken, the papers crusading 20th-century columnist, on the joys of journalism: It is really the life of kings. The 21st century has seen many of these generational owners flee the industry, to devastating effect. 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. 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. It has filed a lawsuit in its bid to buy out news publisher Lee Enterprises. but sadly on a global scale there is hardly any independent news sources left currently. But he has a big idea: He believes theres serious money to be made in buying troubled companies, steering them into bankruptcy, and then selling them off in parts. ", "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? The final product, completed in 1925, was an architectural spectacle unlike anything the city had seen beforeromance in stone and steel, as one writer described it. Alden Global Capital had recently purchased a nearly one-third stake in the Suns parent company, Tribune Publishing, and the firm was signaling that it would soon come for the rest. But the group that jumps out to me on the list is the John S. and James L. Knight Foundation. The largest share of the blame was assigned to the Tribune board for allowing the sale to Alden to go through. Caleb will later recall, in an interview with D Magazine, asking his dad why he works so hard. The term vulture capitalism hasnt been invented yet, but Randy will come to be known as a pioneer in the field. That gave the journalists at the Sun a brief window to stop the sale from going through. They had a father-figure relationship, one told me. Even as Aldens portfolio grew, Freeman rarely visited his newspapers. [29] This attempt also failed, as shareholders returned both directors to the Lee board despite Alden's opposition. In early 2011, Alden was still considered a non-controlling investor, but by the end of the year, that would change. hide caption. That might sound like a losing formula, but these papers dont have to become sustainable businesses for Smith and Freeman to make money. My question was did Knight know what Alden was doing to newspapers when it invested with the hedge fund, and does it regret that investment now? At their worst, they used their papers to maintain oppressive social hierarchies. As a reporter who's covered Alden Global Capital for more than two years, people often ask me who are the investors behind the hedge fund that owns one of America's largest newspaper chains?. A more honest argument might have claimed, as some economists have, that vulture funds like Alden play a useful role in creative destruction, dismantling outmoded businesses to make room for more innovative insurgents. A native of Vallejo, he was proud to work for his hometown paper. After Brian took his own life, in 2001, Smith became a mentor and confidant to Heath, who was in college at the time of his fathers death. Next year, Bainum will launch The Baltimore Banner, an all-digital, nonprofit news outlet. One conclusions even these reporters are hesitant to make is that we are all dealing within a capitalist system which has none, or few, principles to guide itself, apart from making a profit, no matter how. In a press release Monday, Nov. 22, 2021 Alden said it sent Lee's board a letter with the offer. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. At one point, I tracked down the photographer whod taken the only existing picture of Smith on the internet. He had spoken on this issue before, and it was easy to see why. After a powerful Illinois state legislator resigned amid bribery allegations, the paper didnt have a reporter in Springfield to follow the resulting scandal. Smith & Company. Three days later, Bainumstill smarting from his experience with Alden, but worried about the Suns fatesent a pride-swallowing email to Freeman. Frustrated and worn out, Glidden broke down one day last spring when a reporter from The Washington Post called. But for Simon, that paper exists entirely in the past. The most promising prospect materialized in Baltimore, where a hotel magnate named Stewart Bainum Jr. expressed interest in the Sun. About a month after The Baltimore Sun was acquired by Alden, a senior editor at the paper took questions from anxious reporters on Zoom. City budgets balloon, along with corruption and dysfunction. Next up: Chicago, Baltimore, and the New York Daily News. Through it all, the owners maintained their ruthless silencespurning interview requests and declining to articulate their plans for the paper. 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.. Smith & Company, a firm founded by Randall Duncan Smith, initially using the $20,000 cash prize he and his wife won on the 1968-1970 gameshow Dream House. Alden Global Capital revealed a proposal Monday to purchase Lee Enterprise Inc. and its newspapers at $24 a share, casting alarm through the many newsrooms owned by Lee. The papers printing was moved to a plant more than 100 miles outside town, Glidden told me, which meant that the news arriving on subscribers doorsteps each morning was often more than 24 hours old. They are also defined by an obsessive secrecy. ", "Hedge Fund Reaches a Deal to Buy Tribune Publishing", "Opinion - Will The Chicago Tribune Be the Next Newspaper Picked to the Bone? The one central theme, the Times reports, seems to be that Smith and its web of affiliates are out, first and foremost, for themselves. If this reputation bothers Randy and his colleagues, they dont let on: For a while, according to The Village Voice, his firm proudly hangs a painting of a vulture in its lobby. Convinced that the Sun wont be able to provide the kind of coverage the city needs, he has set out to build a new publication of record from the ground up. Glidden had heard rumblings about the papers owners when he first took the job, but he hadnt paid much attention. In a news release Monday, Alden said it sent Lee's board a letter with the offer. 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. Prior to the buildings completion, McCormick directed his foreign correspondents to collect fragments of various historical sitesa brick from the Great Wall of China, an emblem from St. Peters Basilicaand send them back to be embedded in the towers facade. Around this time, Randy becomes preoccupied with privacy. Some people believe that local newspapers will eventually be replaced by new publications, which Coppins describes as "built from the ground-up for the digital era." He studied art at Alfred University under sculptors Glenn Zweygardt and William Parry. Heath hopes the well never runs dry, but hes going to keep pumping until it does. After a contentious presidential race and amid a still-raging pandemic, there was a limited supply of outrage and sympathy to spare for local reporters. These were not exactly boom times for newspapers, after allat least someone wanted to buy them. (Freeman denied this characterization through a spokesperson. A former Sun reporter whose work on the police beat famously led to his creation of The Wire on HBO, Simon told me the paper had suffered for years under a series of blundering corporate ownersand it was only a matter of time before an enterprise as cold-blooded as Alden finally put it out of its misery. 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. Enter the email address you signed up with and we'll email you a reset link. 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. Hes acutely aware of the risksI may end up with egg on my face, he saidbut he believes its worth trying to develop a successful model that could be replicated in other markets. [21], Under the acquisition plan, MediaNews Group debt fell to $165 million from about $930 million. Randy claims no editorial role in the Press, and his investment in the projectwhich has little chance of producing the kind of return hes accustomed tocould be chalked up to brotherly loyalty. It emphasizes supporting the emergence of new, sustainable models for local news, through both grantmaking and research, Sherry told me, including grant programs for nonprofit news organizations. 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 . [30], Alden Global Capital includes a real estate division called Twenty Lake Holdings, which primarily buys excess real estate from newspapers. Most responded with variations on the same question: Which recent stories from your newspapers have you especially appreciated? One, the warning shot was fired in 2011, in a Poynter Institute article titled Who is investor Randall Smith and why is he buying up newspaper companies? Randall Smith is the co-founder of Alden, together with his young protg, Heath Freeman, and has been called the grandfather of vulture investing. Vulture funds by definition dont reinvest in their properties they suck them dry. In February 2021, he announced a handshake deal to buy the Sun from Alden for $65 million once it acquired Tribune Publishing. Connecting this to the current state of American newspaper ownership seems rather tenuous.. Alden began its acquisition of Tribune Publishing in 2019, when they paid $117.9 million to Michael Ferro for his 25.2-percent stake. Alden, which owns more than 200 newspapers across the country, has developed a reputation for using extensive layoffs and severe cost cuts at the newspapers it owns. Alden, which already owned one-third of . But when I emailed his studio looking for information, I was informed curtly that the photo was no longer available. Had Smith bought the rights himself? Lee Enterprises owns 77 daily newspapers, including the Buffalo News, Omaha World-Herald and the Tulsa World. John Temple: My newspaper died 10 years ago. Hes impressed by their journalism, he told me, but his clearest takeaway is that theyre not nearly well funded enough. Neither man will ever be the guest of honor at the annual dinner for the Committee to Protect Journalistsand thats probably fine by them. Alden completed its takeover of the Tribune papers in May. Shortly after the Tribune deal closed earlier this year, I began trying to interview the men behind Alden Capital. To find the papers current headquarters one afternoon in late June, I took a cab across town to an industrial block west of the river. The question was how. All good works, and Knight is to be commended for them. A young man named Randall Duncan SmithRandy for shortstands next to his wife, Kathryn, answering quick-fire trivia questions in front of a live studio audience. Craigslist killed the Classified section, Google and Facebook swallowed up the ad market, and a procession of hapless newspaper owners failed to adapt to the digital-media age, making obsolescence inevitable. He shut down Project Thunderdome, parted ways with Paton, and placed all of Aldens newspapers on the auction block. Financially, it was a raw deal. When lawmakers pressed for details last year on who funds Alden, the company replied that there may be certain legal entities and organizational structures formed outside of the United States.. "And what we've seen in a lot of these places where newspapers have been scaled back or even closed is there really is no comparable product in place, whether it's by the government or by another news organization, to do what these local newspapers have done for hundreds of years.". When he did, he exhibited a casual contempt for the journalists who worked there. In May 2021, Tribune Publishing finalized its sale to Alden, after having announced in February 2021 that it intended to pursue this path.