Digital First Media Workers



Join more than 11,000 others demanding transparency from Alden Global Capital, the secretive owner decimating Digital First Media newspapers: “The public has a right to know about who owns the news outlets we depend on. Make your investments, investors and political donations transparent to the public.”

Sign the petition today.

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Heath Freeman’s view from the 34th floor

The brash young executive behind the thousand cuts at your local newspaper

By Julie Reynolds

“What do all these people do?”

Patrick McMullan Archives
Heath Freeman | by Patrick McMullan, Getty Images

Heath Bradford Freeman, the 37-year-old New York hedge fund president behind the unprecedented downsizing at Digital First Media newspapers across the country, is by all accounts a driven man.

Former Denver Post reporter Robert Sanchez paints this picture:

“The few people willing to talk on background about Freeman describe him as aggressive and highly intelligent, ‘flinty-eyed and focused,’ and a man who has no real affinity for newspapers. Freeman is said to be the kind of person who makes a demand, listens to the counterpoint, and then reasserts his demand.”

To say he has no affinity for newspapers puts it mildly.

“In taking a more active ownership role,” writes the Harvard Nieman Lab’s Ken Doctor, “Alden’s Heath Freeman has been asking a key question: ‘What do all those people do?’ So DFM editors now draw up reports justifying what newsroom staffing remains.”

Continue reading “Heath Freeman’s view from the 34th floor”

The Pulitzer

Pursuing great journalism in the hedge fund era

By Thomas Peele

I was back to work that second Monday in April after a week off, aware of the day and tense about it, almost queasy.

Thomas Peele

After we’d won first the Scripps Howard and then the American Society of Newspaper Editors breaking news awards for coverage of a fire in Oakland in which 36 people died last year, what would happen on this day became unmentionable. It was like in baseball when your pitcher had a perfect game going through six innings. Just shut up about it. While the chances of it really happening were still almost nil, you don’t want to jinx it.

I asked a colleague if any editors had been around. No, she said.

“That’s that,” I thought. If any of them believed we had a shot at this thing, they’d be up from San Jose.

Continue reading “The Pulitzer”


The rise (and myth) of Alden Global

Read Part 1 here.

By Julie Reynolds

While Randall Smith and his close relatives were investing in Western U.S. real estate, hotels and oil fields, Smith was also busy expanding his offshore empire.

His new firm was called Smith Management LLC, though that company (while still active today according to New York corporation filings) has taken a back seat to Smith’s worldwide vulture fund, Alden Global Capital, formed in 2007.

Continue reading “THE MAN BEHIND THE CURTAIN, Part 2”


Randy Smith and the destruction of the American newspaper

Read Part 2 here.

Part 1 The Birth of an Empire

By Julie Reynolds

Randall D. Smith is many things, but he’s not a man who’s ever showed an interest in protecting journalism.

Yet through his New York hedge fund firm, Alden Global Capital, Smith controls a U.S. newspaper giant — Digital First Media, which publishes scores of papers from the Eastern Seaboard to the San Francisco Bay Area.

In the past five years, Smith’s aggressive property sell-offs and budget slashing have gutted some of the country’s most beloved newspapers and their corresponding websites, even while they’re still quite profitable. And make no mistake — Smith has done this deliberately. As a specialist in “vulture” investments, he seeks out distressed businesses and plunders them with a ‘get in, sell all assets, cut costs like never before, and get out just before it tanks’ strategy.

Continue reading “THE MAN BEHIND THE CURTAIN, Part 1”

From newspapers to big coal: Alden’s questionable investments continue

By Julie Reynolds

Alden Global Capital, the hedge fund behind the wholesale pillaging of one of America’s largest newspaper chains, specializes in troubled industries.

At times, investing in businesses on the brink has been a losing bet for Alden, such as its recent excursion into the Fred’s Pharmacy chain that lost more than $100 million in value this year.

Hometown newspapers across the country are paying the price for such risky gambles. Staff at Alden-owned Digital First Media papers has been cut by 36 percent in the past two years, leaving many important issues — and even entire communities — without coverage. These draconian cuts, along with the mass sell-off of newspaper buildings and land, have helped Alden’s founder Randall Smith lead a lavish life in Palm Beach and the Hamptons while buying up more than $50 million in Florida mansions.

Now Alden’s investments include a foray into a bankrupt coal company rife with pollution scandals, alleged stockholder rip-offs, and worker pension and health plan controversies.

Once a titan of the industry, St. Louis-based Peabody Energy last year filed for Chapter 11 bankruptcy and has only recently emerged.

The Washington Post has called Peabody “the largest and most storied U.S. coal company.”

Since then, it’s been dubbed a “hedge fund hotel” by the financial press, because 80 percent of its stock is now held by a small number of “vulture” investment firms.

What followed Peabody’s bankruptcy “was not typical,” writes columnist Burt Rothberg for the investment website Seeking Alpha. “The bankruptcy settlement reserved much of the proceeds to certain of the stakeholders, notably a core group of creditors and Peabody management. Stockholders were wiped out and retail unsecured bondholders received much less than they expected… My sense is that many of the stockholders were long-time holders and were financially unsophisticated. Really awful, if you think about it.”

In a 2009 Newsweek ranking of 500 companies for environmental compliance, Peabody Energy came in last.

Peabody’s disregard for the little folks shouldn’t have come as a surprise. In 2013, the company tried to leave some 20,000 workers without pensions and retiree health care, but that plot was averted in an undisclosed settlement that Peabody apparently undertook in a failed attempt to avert bankruptcy.

When Peabody ultimately did file for bankruptcy, its lawyers again hoped to axe the workers’ pension plan, worth $643 million, according to the United Mine Workers of America. In a last-minute deal, the workers’ union settled for $75 million.

Court filings show that under another last-minute deal, this time with the Justice Department, Peabody was held responsible for environmental claims by the Environmental Protection Agency, seven Native American tribes and others. The original claims totaled in the billions, but under the settlement Peabody agreed to set up a $43 million trust for settlements with the tribes and others. The company’s environmental record has long been abysmal. In a 2009 Newsweek ranking of 500 companies for “green” compliance, Peabody came in last.

When a new, streamlined Peabody finally emerged from these dust-ups with the courts, many of its former top executives remained. Now they are poised to collect tens of millions in stock bonuses as part of the company’s bankruptcy exit plan.

Enter Alden.

SEC filings from late September show that Alden increased its shares in Peabody by nearly $51 million earlier this year, raising it from 2 percent of the stock holdings Alden owns to more than 30 percent. After Fred’s, Peabody is Alden’s largest stock investment.

“This is the same company that left my region in economic shambles.” — college student Matthew Galik

Bankrupt businesses are attractive to hedge funds because in the bankruptcy process they can lower their pension and other obligations, while their bargain-basement stock usually has nowhere to go but up.

Peabody has not become the loss for Alden that Fred’s was — in fact, its share value has steadily risen since July, despite revenue projections of $1.48 billion that were off by $10 million in the third quarter.

But Alden’s investment in big coal comes with other costs.

In a guest column for the St. Louis Dispatch, college freshman Matthew Galik wrote last year about Peabody’s impact on his coal-mining family and community.

“There is coal in my blood. It flows through my people, through our history, and through the land…” Galik wrote. “Drive through Southern Illinois and you will see what coal has done, and what it is doing. You will see Sesser, Waltonville, Tamaroa, Zeigler, Galatia, Coello, once-thriving mining communities now turned ghost towns…

“Companies like Peabody have turned their backs on my region, leaving the communities of my family’s history as little more than road signs on the highway, signs with population numbers that decrease with each census.

“This is the same company that left my region in economic shambles and is now threatening to take medical coverage and pension money from my grandfather’s widow, my lovely grandma.”

Alden and nine other hedge funds are now at the helm of Peabody. If Alden’s atrocious stewardship of community newspapers has been any example, the coal mining families of Illinois have just gone from the frying pan into the fire.

Mixing business and pleasure: newspaper asset sales mingled with home buying spree

By Julie Reynolds

When billionaire Randall Smith bought a $3.6 million mansion at 341 Hibiscus Avenue in Palm Beach County, the ownership papers traced back to a prestigious address in midtown Manhattan: Suite 1940 at 885 Third Avenue, better known as the Lipstick Building.

Suite 1940 has served as the real estate command center for Smith’s Alden Global Capital, a so-called “vulture hedge fund” that specializes in buying distressed newspapers, then stripping them of assets and staff to make the deals pay off.

Continue reading “Mixing business and pleasure: newspaper asset sales mingled with home buying spree”

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.

Continue reading “How newspapers — and communities — pay for bad hedge fund bets”

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