A deal that would reshape the American newspaper industry went into trouble just a month after a deal was struck, according to three people with knowledge of the matter. As a result, New York hedge fund Alden Global Capital may have to defend itself against a new suitor from Tribune Publishing, the network that owns major metropolitan newspapers across the country, including The Chicago Tribune, The Daily News and The Baltimore Sun, the people said.
On February 16, Alden, the largest shareholder in Tribune Publishing, with a 32 percent stake, reached an agreement to buy the rest of the network in a deal that valued the company at $ 630 million. In the deal, Alden would take ownership of all Tribune Publishing newspapers – and then separate The Sun and two smaller Maryland newspapers at a price of $ 65 million for a nonprofit organization controlled by Maryland hotel magnate Stewart W. Bainum Jr.
In the past few days, Bainum and Alden have found themselves at odds over the details of the operating agreements that would be in effect when the Maryland papers were transferred from one owner to another, people said. In response, Bainum took a preliminary step to making an offer across Tribune Publishing, people said.
Mr. Bainum asked the Tribune Publishing special committee, a group of three independent board members, for permission to be released from a confidentiality agreement that forbids him to discuss the deal, so that he can seek partners for a new offer. , people said.
A spokeswoman for Bainum said he had no comment. Through a spokesman, Tribune Publishing’s special committee declined to comment. An Alden spokesman did not comment.
Alden has invested in the newspaper industry for more than a decade. It has about 60 daily newspapers, including The Denver Post and The San Jose Mercury News, through a subsidiary, MediaNews Group. Its deal to acquire the rest of Tribune Publishing would make it an even bigger force in the news media industry, in some cases the second largest newspaper company after Gannett, the company that publishes a fifth of all American newspapers, including USA Today.
Journalists have criticized Alden for cutting its newspapers deeply, often sacking journalists and shrinking their local news coverage. Last year, journalists from several Tribune newspapers led public campaigns asking local benefactors to buy the newspapers that employ them, so that they would not fall under the control of the hedge fund. Alden says it is the rare company that prevents local newspapers from closing.
The Alden-Tribune business requires the approval of shareholders who own about two-thirds of the shares in Tribune Publishing not owned by Alden. The biggest holder of these shares, with a total stake of almost 25%, is Patrick Soon-Shiong, the biotechnology billionaire who owns The Los Angeles Times with his wife, Michele B. Chan. Dr. Soon-Shiong, who owns enough of Tribune Publishing to veto the deal, declined to comment on the deal between Alden and Tribune. He did not immediately respond to a request for comment.
If Bainum is able to reach an agreement to buy Tribune, he will likely seek out local owners for his other newspapers, which also include The Hartford Courant, The Orlando Sentinel and The South Florida Sun Sentinel, people said.
Two of the people said that Bainum, who lives in a suburb of Washington, Maryland, was prepared to make a $ 100 million bid and then seek additional investment from others. Since 1997, Mr. Bainum has been president of Choice Hotels, a multi-billion dollar public company that owns the brands Comfort Inn, Quality Inn and MainStay Suites, a company that was born out of his father’s business.
Alden has sought full ownership of Tribune Publishing since 2019, when he revealed that he had bought his 32 percent stake. Last year, it was unable to reach an agreement to buy the rest of the company with an offer that valued the company’s total at $ 520 million.
Tribune announced last month that it held $ 99 million in cash at the end of 2020. It also announced in December the sale of a majority-owned subsidiary for $ 160 million.