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Digital First Media Workers

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Now more than ever, the right to report facts and to tell the truth matters. News matters.

We call on all Americans to join us in fighting attempts by government and other powerful institutions to undermine freedom of the press.

Please consider signing the petition here, sponsored by the NewsGuild and National Association of Broadcast Employees and Technicians, sectors of the Communications Workers of America (CWA).

#Right2Report
#PressFreedom

Click here to sign.

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How newspapers — and communities — pay for bad hedge fund bets

Inside the Alden–Fred’s pharmacy $100 million debacle

 

In the book The Big Short: Inside the Doomsday Machine, author Michael Lewis asks:

“What are the odds that people will make smart decisions about money if they don’t need to make smart decisions — if they can get rich making dumb decisions?”

Less than a year ago, Alden Global Capital, the owner of the Digital First Media newspaper chain, made a losing bet. But like all creative hedge fund investors, Alden has managed to make up for its losses in an unlikely arena: America’s newspapers.

At the time of its gamble, staff at DFM papers across the country were suffering through ever-steeper cutbacks, layoffs and buyouts — with the company’s newsrooms shriveling at twice the national rate. Through it all, Alden demanded the papers keep producing profits. And they did.

Last month, CEO Steve Rossi sent an emailed announcement to workers stating that DFM was “solidly profitable,” that “advertising revenue has been significantly better than that of our publicly traded industry peers,” and the company was on course to achieve its financial goals in 2018.

Despite this apparent good news, more than 300 union DFM news workers have been sent packing due to layoffs, buyouts and position eliminations in 2016 and 2017. Those workers, at an average salary of $60,000 per year, could have kept producing the news for five more years — at a cost of less than the $100 million Alden has lost to date on one bad investment.

That’s a lot of journalism lost to America’s towns and cities, a lot of critical information communities won’t have because a handful of New York investors made a very unwise gamble.

The unwise gamble was the hedge fund’s aggressive acquisition of one quarter of the Tennessee-based Fred’s drugstore chain. According to the Wall Street Journal, Alden paid $158 million. Today, eight months later, Alden’s 9.3 million shares are worth only $56 million — a loss of $102 million.

In the midst of this disastrous investment, the hedge fund has inexplicably added Steve Rossi, a career newspaperman, to the drug chain’s board of directors.

How did this happen? And why is Alden mixing up America’s newspapers with risky investments in pharmacies?

A “country club environment”

Manhattan-based Alden announced it was acquiring shares in Fred’s shortly before Christmas in 2016. Securities and Exchange Commission records show that from Dec. 20 to Dec. 22, it bought more than 5.5 million shares at around $20 a pop.

Fred’s stock had been hovering around $10-$11 for weeks before it suddenly doubled in late December. As the DFM-owned Denver Post reported, “Shares shot up 81 percent… after (Fred’s) announced it would more than double its size by purchasing 865 stores Rite Aid Corp. needs to sell.”

“It appears that Alden’s own aggressive behavior may have contributed to the deal’s collapse.”

In essence, Alden’s bid was a takeover attempt at what appeared to be an opportune moment. Fred’s was about to expand considerably by purchasing hundreds of stores from Rite Aid, which was trying to merge with Walgreen’s and had to divest a large number of its properties to comply with federal antitrust requirements.

But within months, the proposed merger was set to be nixed by the Federal Trade Commission, and it appears that Alden’s own aggressive behavior may have contributed to the deal’s collapse.

Fred’s internal problems became public after its officials resisted Alden’s attempts to take over the board. In March, Alden issued a press release alleging bad business decisions by the pharmacy chain’s board and management.

“We have remained patient and respectful of the company’s heightened sensitivity around any public communications during the pendency of the deal with Rite Aid Corporation,” wrote Alden president Heath Freeman.

But he went on to sharply criticize the chain: “Fred’s abysmal business decision-making and country club environment in the executive suite and boardroom are serving as significant obstacles to maximizing shareholder value.”

“That letter unintentionally tipped the FTC off to problems with Fred’s as a buyer,” the New York Post later reported, quoting an unnamed source.

FTC officials reportedly doubted that Fred’s was capable of acquiring hundreds of divested Rite Aid stores, a key part of the plan to help lessen Walgreen’s dominance.

“The FTC, burned previously by retail merger divestitures that didn’t work out, is concerned that Fred’s doesn’t have the market presence or financial strength to replace the competition that would be lost with the removal of Rite Aid from the pharmacy chain sector,” The Street reported.

“In April, Rossi joined the board. It was an odd move for a man who has spent his career in newspapers.”

Mixing news and pharma

While it awaited news of the merger and Rite Aid sale, Alden proceeded to push its way into Fred’s management. In April, Rossi joined the board. It was an odd move for a man who has spent his career in newspapers, starting in 1987 at the Philadelphia Inquirer and Daily News.

But by June, the FTC was preparing to sue over the Rite Aid-Walgreens merger and concerns that the U.S. would be left with only two major pharmacy chains: Walgreens and CVS.

Days before the FTC’s expected filing, Walgreens and Rite Aid announced their engagement was over. Fred’s stock quickly tanked by 20 percent, and the decline has continued. From a high of $20 a share on Dec. 21, Fred’s stock listed this week at $6.

Last week, Alden added its president Heath Freeman to Fred’s board. As the Memphis Business Journal put it, “A former critic of the Fred’s Inc. board of directors now has a seat at the table.” Freeman is said to be the architect behind DFM’s draconian, record-setting cost-cutting.

Some industry analysts estimate that DFM papers are still earning profits of 20 percent and upwards. Now, through ever more layoffs and cost cuts, DFM newspapers continue to keep profits flowing, helping to ease Alden’s wounds from the Fred’s bust.

 

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I am ashamed: Veteran reporter slams a major news chain’s failure to cover Charlottesville

Editor’s note: The following is an open letter to Digital First Media’s Philadelphia-area publisher Edward Condra from Evan Brandt, an award-winning reporter from the Pottstown (Pennsylvania)  Mercury. It has been slightly shortened from the original version.

—————————————————————

From: Evan Brandt
Date: 8/13/17 2:03 PM (GMT-05:00)
To: Edward Condra
Subject: I am ashamed ….

… to look at our front pages today.

Ed, you once chided me for venting on Facebook about our failures and poor judgement as a company and said I should give you a chance to fix it first.

This is it.

As you may know, certainly not from reading any of our papers or visiting most of our web sites, there was a major incident in Charlottesville Virginia that an entire nation is talking about.

There is no morning mention of it anywhere on the front pages of the majority of DFM’s proud properties.

Continue reading “I am ashamed: Veteran reporter slams a major news chain’s failure to cover Charlottesville”

DFM papers hit with (yes, more) layoffs

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East Bay Times Pulitzer winners (California).

Last-minute layoffs target long-time workers, hit newsrooms hard

OAKLAND — More news workers have been laid off at Digital First Media newspapers as the company approaches its new fiscal year on July 1.
The layoffs appear to be targeting long-time newsroom employees as well as management in the newspapers’ human resources departments.
After three people in an already bare-bones newsroom were given two weeks’ notice at The Monterey Herald, five more California news workers were let go this week from the Bay Area News Group (BANG), which includes the East Bay Times (Oakland) and the Mercury News (San Jose). Four of the five were women.
The news hit BANG employees hard as they were still reeling from last month’s copy desk layoffs that followed a Pulitzer Prize for coverage of the Ghost Ship fire in Oakland.

Continue reading “DFM papers hit with (yes, more) layoffs”

More awards, more layoffs

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Better days: Herald employees on World Press Freedom Day, May 3.

UPDATE: At least two other DFM papers laid off workers this week: the Denver Post announced the layoffs of four Guild-covered employees and at least two managers in inside circulation, while the East Bay Times — whose staff was recently hit with layoffs days after winning the Pulitzer Prize — has laid off two advertising employees.

MONTEREY — The Monterey Herald laid off three news workers Wednesday, leaving an already minimally staffed newsroom stripped to bare bones.

The layoffs come just weeks after The Herald’s staff won five awards and two honorable mentions from the California News Publishers Association for environmental and business reporting, writing, photo illustration and best front pages.

The workers — two longtime newsroom employees and the paper’s obituary clerk — were given two weeks’ notice.

Continue reading “More awards, more layoffs”

Keeping democracy alive in a rust belt town

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Evan Brandt’s calling

“When I miss a meeting, these days most often due to a threadbare staff, officials literally say ‘The Mercury’s not here, what should we get done?’” —Evan Brandt, reporter at the Pottstown (Pa.) Mercury

 

November will mark the 20 years since Evan Brandt came to Pottstown, Pennsylvania.

It was November, 1997 when he was hired as a reporter for The Mercury, the smallest circulation daily ever to win two Pulitzer Prizes.

Both Pulitzers were awarded long before Brandt arrived in this economically hobbled rust belt town on the banks of the Schuylkill River, but it does indicate the quality and initiative of the newsroom he joined — at least at the time.

Continue reading “Keeping democracy alive in a rust belt town”

Why we fight

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Staff at The Trentonian (New Jersey).

By JULIE REYNOLDS

In my first week at a new reporting job in 2004, I received a shock while covering a city council meeting in Pacific Grove, California. The city was unveiling a proposed low-income housing plan. The stunning part came when I realized I actually qualified under the salary my newspaper was paying me. I, a college-educated professional working full time, was officially “low income.”

Things haven’t gotten any better for my colleagues in the news business.

A new report by an online rental listing service says that as journalists’ wages have fallen, rents have “increased steadily.” The report, published in the “Rentonomics” section of ApartmentList.com, looked at 10 years of Bureau of Labor Statistics and U.S. Census data, from 2005-2015.

Continue reading “Why we fight”

When hedge funds own newspapers…

 

In case you missed it, read The Price of a Pulitzer.

A mosaic of solidarity for Press Freedom

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Denver Post Newsroom Unit (Colorado).

NewsGuild units representing 1,500 news workers across the country marked May 3, World Press Freedom Day, with coordinated actions between Digital First Media and Gatehouse Media union members. The actions, which included rallies and displaying desk tent signs and banners, aimed to raise awareness of the growing threat that “vulture” hedge funds pose for the nation’s community newspapers. Union leaders say the newspaper owners’ excessive profiteering threatens journalism at a critical time of politicized attacks on the news media.

Continue reading “A mosaic of solidarity for Press Freedom”

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