Alden Global Capital, a hedge fund known for cutting journalists at local newspapers to maximize profits, buys out the rest of Tribune Publishing, the parent company, to the Chicago Tribune, 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 supported by a Maryland hotel billionaire.
Why it matters: The deal creates one of the largest local publishing giants in America. Alden already owns hundreds of newspapers through its majority stake in MNG (MediaNews Group) Enterprises, commonly known as Digital First Media, which operates newspapers such as the Denver Post and the Boston Herald.
Details: The deal gives Alden 68% of the shares it doesn’t already own in the Tribune for about $ 431 million, according to The Chicago Tribune – valuing the entire company at $ 630 million.
- The merger share price has risen slightly from when the two companies started negotiating last year, and interest in the acquisition has likely boosted this.
- As part of the agreement, Alden agreed to sell the Baltimore Sun, The Capital Gazette in Annapolis, and a few other smaller newspapers to a nonprofit called the Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., a former Maryland politician and hotel magnate.
Yes but: Given Alden’s history, it is expected that an acquisition will lead to a restructuring that could result in more local news jobs being dropped.
- Tribune editors are bracing for this moment. As Axios reported, buyouts were offered to Chicago Tribune and Orlando Sentinel journalists in early January last year, following Alden’s increased stake in Tribune in 2019.
Be smart: The full takeover has been a long time coming.
- Alden initially took a 25% stake in Tribune from Michael Ferro, Tribune’s largest shareholder in 2019, at the end of 2019. It later announced a larger stake of 32%.
- It has increased its footprint at Tribune in recent months, negotiating a third seat on Tribune’s seven-member board.
- The negotiation of that board seat meant that Alden had to renew a deal that prevented the hedge fund from increasing its stake in the company, unless there was interest from an outside bidder, until 2021.
- Tribune has pushed for assets, mainly real estate, to be discharged to survive the financial headwinds caused by the pandemic.
The big picture: The Tribune acquisition is the latest example of a legendary local news company being swallowed up by a hedge fund in a gloomy 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 following a bankruptcy auction.
- A study published in 2018 by the University of North Carolina found that newspaper sales, closings and mergers through the seven largest paper investment owners have increased over the past five years. As Axios noted earlier, hedge funds or private equity groups based in major cities are typically responsible for the acquisitions.
- Alden attempted to buy local media company Gannett in 2019, but failed, leaving the parent company to USA Today to merge with rival newspaper giant Gatehouse.
What to watch: The deal, which still requires shareholder approval, is expected to close in the second quarter of this year. One of the Tribune’s largest 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 from Tribune in 2018 for $ 500 million.
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