By Julie Reynolds

While defenders of transparency and democracy are alarmed over recent consolidation moves in the newspaper industry, New York hedge fund Alden Global Capital is preparing to pillage a vast trove of American newspapers’ remaining real estate.

And as if to demonstrate how Alden would behave if it became the largest newspaper publisher in the country, the hedge fund this week cut costs by putting one editor — one — in the impossible position of overseeing more than 50 dailies and weeklies across California.

Newspaper giant Gannett Co., which publishes USA Today and 100 other dailies, responded testily this week to efforts by Alden-controlled Digital First Media to take over Gannett’s board, and ultimately, its newspapers and real estate assets. If successful, a takeover would make Digital First the largest newspaper chain in the country.

Digital First, which recently re-branded itself as MediaNews Group or MNG, “refused to provide any substantive, actionable evidence of a credible proposal,” Gannett’s board said in a press release Monday. Alden replied that “Gannett grossly mischaracterized the meeting we had last week, as well as MNG’s ability to close this transaction. MNG expects to have fully committed financing in place within weeks …”

Gannett owns more than $2.3 billion in land, equipment and buildings, according to its financial statements for fiscal 2017. It has sold off some of that real estate since the report was filed last year, but its remaining swaths of property are undoubtedly the true lure for Alden’s chop-shop business strategy.

Alden in January launched a hostile takeover bid to buy Gannett for around $1.36 billion, an offer that Gannett’s board refused.

 

Pine’s expanded role means there will be only one editor for at least 14 dailies and scores of weeklies that are more than 450 miles apart.

Gannett has plenty of good reasons to rebuff Alden’s advances as the hedge fund takes newspaper cost-cutting to unheard-of extremes.

On Monday, employees at the San Jose Mercury News learned that Frank Pine, DFM’s editor for 11 daily newspapers in Southern California, is about to also become editor of its 30 Northern California daily and weekly papers. This stunning decision came after editor Neil Chase departed to head a nonprofit news site — apparently, Alden saw another opportunity to increase profits by eliminating Chase’s position.

After a last-minute announcement of his appearance, Pine showed up briefly in the Merc’s newsroom Monday before he was whisked off to the Bay Area News Group’s offices in Walnut Creek and Oakland. Pine’s promotion has not been publicly announced as of press time.

“In uniting the Bay Area and SCNG newsrooms under Frank’s leadership, we are strengthening our already formidable news teams and creating new opportunities to expand our audience and increase engagement,” an internal email to staff stated.

Pine’s expanded role means there will be only one editor for at least 14 dailies and scores of weeklies that are more than 450 miles apart.

One Bay Area journalist, who asked not to be named, called it an “odd recipe for success.”

“We know Frank Pine to be a strong manager. But how can any one person oversee multiple newsrooms, hundreds of miles apart, serving communities with vastly different identities without being a magician?” the journalist told DFMworkers.org. “Our newsrooms have been depleted and they will need reinvestment … Sadly, their primary focus seems to be on acquiring yet more publications (Gannett) rather than nurturing the ones they already own.”

After Gannett refused its buyout offer, Digital First nominated an entire Who’s-Who from Alden Global Capital to run for Gannett’s board, starting with Alden president and “cost-cutter-in-chief,” Heath Freeman. Also named was ex Alden exec and DFM chairman Joe Fuchs; DFM’s COO Guy Gilmore and its former CEO Steve Rossi; Timothy Barton, board member from the Alden-controlled Fred’s pharmacy chain; and corporate real estate wheeler-dealer and Fred’s board member Dana Needleman.

“MNG’s credibility was further undermined by its decision to nominate six director candidates, all of whom are affiliated with MNG and/or its majority shareholder Alden Global Capital, to stand for election to Gannett’s board,” Gannett’s board chair J. Jeffrey Louis said in a statement.

Gannett said three of the nominees “may be legally incapable of serving on the Gannett board under applicable antitrust laws, given their roles with MNG, which is a competitor of Gannett.”

It also raises concerns about nominating “78-year-old Mr. Fuchs, who exceeds Gannett’s mandatory retirement age applicable to all directors, and MNG’s statement that it reserves the right to substitute director nominees in direct contravention to Gannett’s bylaws.”

If some of the names — and takeover actions — ring familiar, it’s because we’ve seen this playbook before.

Here’s how it goes:

After they siphoned $158 million from DFM newspapers to invest in Fred’s pharmacies, Freeman, Rossi and former DFM vice president Joseph Anto started paying themselves nearly $1 million in salaries and bonuses just for serving on Fred’s board (and they recently gave Anto a raise to $675,000 — after he took a $100,000 signing bonus to leave DFM for Fred’s).

Fred’s has also sold off chunks of its business and moved the company’s headquarters from Memphis to a Dallas office building owned by Alden founder Randall Smith.

Alden’s team made to same move to Dallas for Payless ShoeSource, after extreme cuts to that chain’s staff and resources.

Now, after Fred’s stock plummeted to less than 20 percent of its value, its Alden-controlled board has begun the sell-off of Fred’s real estate.

The same fate likely would be in store for Gannett’s real estate holdings. Gannett typically conducts its annual meeting in early May, when many anticipate a shareholder showdown over Alden’s proposed board slate.

Stay tuned.