If you’ve been watching the drama over a hedge fund’s attempts to acquire Tribune Publishing’s newspapers, here’s how it’s ended:
The hedge fund, Alden Global Capital, won.
Citizens in the communities served by Tribune Publishing’s nine metro newspapers — including the Chicago Tribune, the Baltimore Sun, the Orlando Sentinel and others — likely will turn out to be the losers.
The deal finally went down last week, when Tribune shareholders approved Alden’s bid for the company, valued at $633 million. Alden closed on the deal Monday, the Chicago Tribune reported. Between Tribune’s properties and the papers in Alden’s MediaNews Group, Alden now is the second-largest newspaper chain in the country, according to Rick Edmonds of The Poynter Institute. Gannett remains the nation’s largest. (In the mid-valley, Gannett owns the Statesman Journal in Salem and the Register-Guard in Eugene.)
Alden Global Capital has a well-earned reputation for ruthlessly cutting costs in its newsrooms, and there’s no expectation that it will follow a different playbook with its new Tribune properties. This is why organizations such as The NewsGuild and even editorial boards at Tribune newspapers opposed the deal.
To quote a recent story in The New York Times:
Alden’s potential acquisition of Tribune has been fiercely opposed by many journalists at Tribune papers. Alden has aggressively cut costs at many MediaNews Group publications, including The Denver Post and The San Jose Mercury News. Critics say the hedge fund sacrifices journalistic quality for greater profits, while Alden argues that it saves papers that would otherwise join the thousands that have gone out of business in the last two decades.
Heath Freeman, the managing director of Alden Global, put it this way in a statement Alden issued Friday:
Local newspaper brands and operations are the engines that power trusted local news in communities across the United States. The purchase of Tribune reaffirms our commitment to the newspaper industry and our focus on getting publications to a place where they can operate sustainably over the long term.
In theory, Dr. Patrick Soon-Shiong, the owner of the Los Angeles Times, could have stopped the deal. Soon-Shiong held a 24% share of Tribune Publishing stock — second only to the 32% Alden had accumulated. As Poynter’s Edmonds explained in his piece, rules for the shareholder vote required two-thirds approval by the shareholders not affiliated with Alden. So a “no” vote from Soon-Shiong would have sunk the deal.
But Soon-Shiong didn’t vote “no..” He didn’t vote “yes,” either. He said through a spokesperson that he “abstained from voting,” and the rules apparently said that unmarked ballots would be counted as a vote for the plan. As Edmonds noted, this little loophole allowed Soon-Shiong the opportunity to avoid going on record as supporting the deal — but he now stands to collect anywhere from $150 million to $160 million at closing.
You might recall that a Maryland-based hotelier, Stewart W. Bainum Jr., earlier had made a bid to buy the Baltimore Sun and two other Tribune papers; his motivation apparently was to prevent these papers from falling into Alden Global’s hands. When that deal hit a roadblock, Bainum moved to put together an offer to buy all the Tribune papers, but financing fell through. By last week’s deadline, the Alden offer was the only one on the table for Tribune Publishing. (Bainum hinted in a statement after the vote that he might renew his pursuit for the Sun or possibly explore launching nonprofit news outlets.)
As Edmonds has written elsewhere, now that Alden Global has taken Tribune Publishing private, the only remaining publicly traded U.S. newspaper companies are Garnett, The New York Times Co. — and Lee Enterprises, which owns the Corvallis Gazette-Times and the Albany Democrat-Herald. Last year, Alden acquired a 7.1% share in Lee, sparking speculation from Poynter’s Edmonds and others that Alden had marked Lee as a potential takeover target. It appears from recent filings, however, that Alden recently closed its position on Lee — but, with so few remaining publicly traded newspaper companies available, it’s not out of the question that Alden could take a run at Lee sometime in the future.
As a final note, check out Margaret Sullivan’s column in The Washington Post about the Tribune Publishing deal: Sullivan argues that the failure of potential private investors, particularly in Chicago, to step up and save their community’s newspapers from Alden is yet another bad sign for democracy. She quotes Mark Jacob, a former editor at the Chicago Tribune:
Chicago’s wealthy class failed the city by refusing to rescue the Chicago Tribune from a hedge fund. A newspaper is both a watchdog and a binding agent. The weaer the media, the more inequitable a city is allowed to be. Rich Chicagoans sent a signal that they do not care.
Update: In what could be the least-surprising development in this whole saga, on Wednesday Alden Global rolled out a voluntary-buyout plan to Tribune Publishing employees. The Chicago Tribune’s Robert Channick has the story.