Alden Global Capital, a hedge fund known for cutting journalists in local newspapers to maximize profits, is buying the rest of Tribune Publishing, the parent company of the Chicago Tribune, the New York Daily News and other local newspapers.
Driving the news: With the sale, the two companies also announced that The Baltimore Sun would be acquired by a nonprofit organization supported by a Maryland hotel billionaire.
Why it matters: The deal creates one of the biggest giants of local publishing in America. Alden already owns hundreds of newspapers through his majority ownership of MNG (MediaNews Group) Enterprises, commonly known as Digital First Media, which controls newspapers like the Denver Post and the Boston Herald.
Details: The deal gives Alden 68% of the shares it does not yet own in the Tribune for about $ 431 million, according to The Chicago Tribune – valuing the entire company at $ 630 million.
- The merger’s share price has risen slightly since the two companies started trading last year, with interest in the acquisition likely giving a boost.
- As part of the deal, Alden agreed to sell the Baltimore Sun, The Capital Gazette in Annapolis, and a few other smaller newspapers, to a nonprofit organization called Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., a former Maryland politician and hotel tycoon.
Yes but: Given Alden’s story, an acquisition is expected to lead to a restructuring that could result in more jobs being cut in the local newspaper.
- Tribune newsrooms are preparing for this moment. The acquisitions were offered to journalists from the Chicago Tribune and Orlando Sentinel in early January last year, after Alden’s increased participation in the Tribune in 2019, as reported by Axios.
Be smart: The total acquisition took a long time to arrive.
- Alden initially acquired a 25% stake in Tribune at the end of 2019 from Tribune’s largest shareholder, Michael Ferro, in 2019. Subsequently, it revealed a larger stake, 32%.
- He has increased his presence on the Tribune in recent months, negotiating for a third seat on the seven-person Tribune board.
- The negotiation for that seat on the board meant that Alden had to extend an agreement that prevented the hedge fund from increasing its stake in the company, unless there was an outside bidder’s interest, until 2021.
- Tribune has been pushing to dump assets, mostly real estate, to survive the financial headwinds caused by the pandemic.
The big picture: The acquisition of Tribune is the latest example of a famous local news company being swallowed up by a hedge fund in a dark time for local news.
- Tribune rival McClatchy, home to newspapers like the Miami Herald and The Sacramento Bee, was bought by a hedge fund last year as a result of a bankruptcy auction.
- A study released in 2018 by the University of North Carolina found that newspaper sales, closings and mergers through the seven largest owners of paper investments have increased in the past five years. As Axios noted earlier, hedge funds or private equity groups based in large cities are usually responsible for acquisitions.
- Alden tried to buy local media company Gannett in 2019, but failed, leaving the parent company to USA Today to merge with giant rival newspaper Gatehouse.
What to watch: The deal, which still requires shareholder approval, is expected to close in the second quarter of this year. One of Tribune’s biggest shareholders, who said little publicly about the takeover bid, is Patrick Soon-Shiong, who bought Tribune’s Los Angeles Times and San Diego Union-Tribune in 2018 for $ 500 million.
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