Alden Global Capital, a hedge fund known for cutting journalists in local newspapers to maximize profits, is buying the rest of Tribune Publishing, the Chicago Tribune’s parent company, the New York Daily News and other local newspapers.
Leading the news: With the sale, the two companies also announced that The Baltimore Sun would be acquired by a non-profit organization backed by a billionaire Maryland-based hotel.
Why it’s important: The deal creates one of America’s largest local publishing giants. Alden already owns hundreds of papers through the majority ownership of MNG (MediaNews Group) Enterprises, commonly known as Digital First Media, which controls papers such as 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 share price of the merger has risen slightly from when the two companies began trading last year, and interest in the acquisition is likely to give it a boost.
- As part of the deal, Alden agreed to sell the Baltimore Sun, The Capital Gazette in Annapolis, and a few smaller newspapers, to a nonprofit called Sunlight for All Institute, a public charity formed by Stewart Bainum. Jr., former Politician and tycoon of the Maryland Hotel.
Yes, but: Given Alden’s history, a takeover is expected to lead to a restructuring that could lead to the cutting of more local news jobs.
- Tribune editorials have been prepared for this time. Purchases were offered to Chicago Tribune and Orlando Sentinel reporters in early January last year, following Alden’s increased participation in Tribune in 2019, Axios reported.
Be smart: The full takeover has been a long time coming.
- Alden initially took a 25% stake in Tribune in late 2019 from Tribune’s first shareholder, Michael Ferro, in 2019. He later revealed a larger 32% stake.
- It has increased its footprint in Tribune in recent months, negotiating a third place on the seven-person council of Tribune.
- Negotiating this board post meant Alden had to extend an agreement that would prevent the hedge fund from increasing its stake in the company, unless there was interest from an external bidder, until 2021.
- Tribune has been pushing to unload assets, mostly real estate, to survive the financial winds driven by the pandemic.
The big picture: The acquisition of Tribune is the latest example of a well-known local news company that was engulfed by a hedge fund in the midst of a bleak moment for local news.
- Tribune rival McClatchy, which houses papers such as the Miami Herald and The Sacramento Bee, was bought by a hedge fund last year as a result of a bankruptcy auction.
- A study published in 2018 by the University of North Carolina found that newspaper sales, closures and mergers through the seven largest owners of paper investments have increased over the past five years. As Axios has already pointed out, 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 in USA Today to merge with rival newspaper Gatehouse giant.
What to see: The deal, which still requires shareholder approval, is expected to end in the second quarter of this year. One of the Tribune’s major shareholders, who has said little publicly about the takeover bid, is Patrick Soon-Shiong, who bought the Los Angeles Times and the San Diego Union-Tribune in 2018 from Tribune for $ 500 million .
In depth: