Hedge fund Alden is now free to pounce on additional shares

By Julie Reynolds

On Tuesday, an agreement expires that has kept Alden Global Capital from buying more shares of Tribune Publishing, raising the specter of a merger or takeover of Tribune by the vulture hedge fund that owns it rival newspaper chain, MNG Enterprises.

As the June 30 deadline looms, media watchers are still unclear about what will happen. Alden already owns almost a third of Tribune, whose papers include the Chicago Tribune, the New York Daily News, The Baltimore Sun, The Morning Call, the Hartford Courant, the Capital Gazette, The Virginian-Pilot, the Daily Press, the Orlando Sentinel and others.

The owner of the Los Angeles Times, Patrick Soon-Shiong, owns nearly one-quarter of Tribune’s shares, and Florida investor Mason Slaine owns 7.9 percent.

Soon-Shiong, like Alden, also signed a so-called standstill agreement that keeps him from buying more stock until June 30.

But Alden is the investor most observers worry about.

“If Alden were to get majority control of Tribune Publishing it would be a disaster for those papers, considering what Alden has done to its other holdings,” said Dan Kennedy, a media commentator and journalism professor at Northeastern University.

His concerns echo those of Tribune papers’ employees.

While Alden’s president Heath Freeman hasn’t been clear about his ultimate intentions, media-watchers assume he’s angling to take control of Tribune Publishing.

There are plenty of signs he intends to do exactly that — much to the alarm of newsroom staff and union representatives at all of Tribune’s dailies.

The worries started when Alden placed two of its cronies on Tribune’s board late last year, a move followed by furloughs and pay cuts across the entire chain.

Recently, Alden has bought more shares in other media companies as well (including a 7.1 percent stake in the Lee Enterprises chain), so it’s clearly still interested in the newspaper biz.

So come Tuesday, here are just a few of the possibilities:

  • Alden could buy Soon-Shiong’s shares, giving it a 58-percent ownership stake in Tribune — more than enough to become the controlling interest.
  • Soon-Siong or Slaine could buy the others’ shares, giving one of them a 32.5 percent stake and disrupting any attempt by Alden to secure a majority of the company.
  • Tribune ownership could stay the same if no one’s interested in selling.
  • Tribune and MNG could merge.

“Tribune has been under the thumb of bad ownership for years,” Kennedy said. “Sam Zell was one of the worst of the recent owners.” (Zell, who drove Tribune into bankruptcy a year after he bought it in 2007, infamously told a journalist ‘f**k you,’ when asked about “softening news coverage” under his watch. More importantly, Zell was also accused of fraud and nearly tanking the company.) 

“I’m completely pessimistic about what corporate chains are going to do,” Kennedy said, “but I’m optimistic about what can happen here and there where you have civic-minded leaders with vision.”

For example, at the Boston Globe, owned by investor and Red Sox owner John William Henry, “cutting has been absolutely minimal,” Kennedy said. After the COVID-19 pandemic started, “the Globe decided to go all-in on discounts on digital subscriptions. They are certainly running the paper as though they want to hold on to those subscribers. They’ve got some vision.”

The Harvard Nieman Lab’s Ken Doctor has speculated that Tribune and MNG will merge, but hasn’t yet gone into detail as to what that might look like.

Penny Abernathy, the University of North Carolina’s Knight Chair in Journalism and Digital Media Economics, says that’s likely Alden’s intention. She described Alden’s acquisition of Tribune shares late last year as “an attempt to force a merger” in her new report, “News Deserts and Ghost Newspapers: Will Local News Survive?”

Alden, she writes, “earned the nickname ‘Destroyer of Newspapers’ for selling off assets, cutting staff and loading papers up with so much debt that bankruptcy becomes inevitable. Alden insists it is saving newspapers already in decline, but according to The Washington Post, it manages to eke out profits that are substantially higher than those of other newspaper chains.”

Kennedy says now is the time to look at new business models for local news. “The legacy corporate chains have proven that they’re not going to fill the information needs of their communities. Why don’t they just go away? I’m looking for the chains to decide they’ve had enough and walk away.”

“The papers would be better off. They could get acquired by local groups, maybe go nonprofit.”

The Los Angeles Times was fortunate, he said, to have been bought from Tribune by Soon-Shiong before Alden came to the scene. “The people of L.A. are going to be spared whatever hell Alden has in store for Tribune papers,” he said.

Kennedy added he’d love to see more local newspapers run by civic-minded local groups, like The Berkshire Eagle in Massachusetts, which Alden sold to four local residents in 2016.

“I wish they would do more of that,” he said.

A group in Maryland has a similar wish — they’re trying to buy The Baltimore Sun from Tribune before Alden takes full control.

Launched in April, the Save Our Sun campaign is an alliance of concerned residents, local foundations and the NewsGuild. Its goal is to return the Sun to local ownership “under a non-profit model, reinvesting profit back into the paper that has been Maryland’s news source for nearly two centuries.”

Most importantly, Baltimore businessman and former county executive Ted Venetoulis says, the nonprofit structure would allow the paper to be “free of shareholder dividends, excessive executive salaries and burdensome debt payments.”

There’s even talk this week — from Doctor, at the Nieman Lab — speculating that a group is interested in buying the bankrupt McClatchy company and turning the entire news chain into a nonprofit operation.

These are interesting times. Stay tuned.