“A legal looting of the public trust.”
By Julie Reynolds
Nearly a third of the Denver Post’s newsroom will be laid off, management told staff Wednesday as the paper’s hedge fund owners continue slashing jobs to maintain high profit levels.
“The Denver Post had its heart ripped out Wednesday when the company announced layoffs of 30 Newsroom employees – 25 workers and five managers,” the Denver Newspaper Guild said in a statement.
“The layoffs are driven by owner Alden Global’s greed and its desperate attempt to recoup more than $130 million in investment losses from the Fred’s Pharmacy fiasco,” the statement said.
“Such gambles in unrelated business ventures are draining DFM newspapers of the resources they need to survive.”
The layoffs hit just as news business analysts were left reeling last week after court documents from a lawsuit against Alden showed the hedge fund had systematically siphoned hundreds of millions of dollars from the chain to invest in risky — often losing — unrelated ventures.
For the first time, what journalists at DFM papers suspected for years was spelled out in details, including the name of a secretive DFM subsidiary set up by Alden to funnel $158 million to an investment in in the Fred’s Pharmacy chain. That gamble has lost roughly $130 million in one year. Another previously unknown DFM subsidiary invested 70 million Euros in Greek debt.
“A mean-spirited evisceration”
Harvard Nieman Lab’s Ken Doctor described the suit as a “battle between two investors whose company has pursued the most aggressive, and sometimes mean-spirited, evisceration of some once-proud newspapers.”
“They’ve done damage to the papers, but more importantly to their communities and readers,” Doctor wrote.
He called the chain’s business activities “a legal looting of the public trust.”
“Alden’s ‘milking’ of its newspaper properties has been apparent for years,” Doctor wrote, adding that the papers continue to bring Alden profit margins of “20 percent plus.”
“There is no long-term strategy other than milking and continuing to cut,” he recently told DFMworkers.org. “Their view is that in 2021, they’ll deal with that then. Whatever remnants are there, they’ll try to find a buyer.”
The Denver Newspaper Guild said the cuts to DFM papers go far beyond the downsizing that has afflicted newspapers in general.
Unlike Alden-owned papers, newspapers with local owners such as the Minneapolis Star Tribune have kept staffing levels the same as they were four years ago.
In fact, the Star Tribune’s newsroom today has roughly 240 employees — about the same as the 12 unionized DFM newspapers combined. These include the flagship Denver Post, San Jose Mercury News, East Bay Times, St. Paul Pioneer Press, The Trentonian and six other papers. Guild-represented staffing at those papers has declined by more than 65 percent since 2012, when Alden first took over the chain. More than 44 percent was let go in the last two years alone.
After sweeping layoffs that are still ongoing, DFM’s non-union Southern California cluster also now has around the same total staff as the Star Tribune. That group includes the Orange County Register, Los Angeles Daily News, Long Beach Press-Telegram, San Bernardino Sun, Riverside Press-Enterprise and others.
Pulitzer winners speak out
The Denver layoffs follow an unprecedented public calling-out last week of the chain’s hedge fund owner by Pulitzer Prize winners at DFM’s East Bay Times and San Jose Mercury News in California.
“The broad industry trends are not what’s driving corporate-level trends at Digital First Media,” said Thomas Peele, who was part of the prize-winning team. “DFM is profitable. It’s just not been profitable enough for Alden Global Capital.” He called Alden’s continuing cuts a “repeated attack on democracy by destroying newspapers meant to be a check on government and corporate power.”
Peele, speaking on behalf of fellow prize winners from the East Bay Times and Mercury News, delivered the remarks at an outdoor press conference near the East Bay Times’ office in Oakland.