Letter highlights offshore investors “shrouded in secrecy” as more lawmakers decry Alden’s impact on local news
By Julie Reynolds
Senate Minority Leader Chuck Schumer (D-NY) is demanding information from Alden Global Capital President Heath Freeman and calling out the hedge fund for its destructive impact on local news.
In a Feb. 28 letter to Freeman, Schumer said he was requesting information about Alden’s foreign investors after he learned of Alden’s acquisition of a 32 percent stake in Tribune Publishing. Alden is known for stripping its MNG (formerly Digital First Media) newspapers of real estate and other assets while laying off nearly three-quarters of its newsroom staff.
“I am troubled by the lack of transparency surrounding Alden’s investors, which remain shrouded in secrecy,” Schumer wrote. “According to filings with the Securities and Exchange Commission (SEC), approximately 80 percent of Alden’s clients are unnamed non-United States persons.”
I’ve raised this concern about Alden before, as has author and investigative journalist Nicholas Shaxson in his recent book “The Finance Curse.”
In the financial world, “non-United States person” can refer to offshore corporations. Alden has a number of “feeder funds” that are based in the Cayman Islands and in turn own other funds. But it’s also possible that foreign individuals have invested in Alden’s holdings — and, because of Alden’s unprecedented levels of secrecy, there’s absolutely no way to tell.
“Alden also indicated that approximately $832 million in assets under management are attributable to non-United States persons,” Schumer wrote. “Would you commit to sharing more information on the identity or background of these clients?”
Schumer added his concerns about Alden’s extensive use of offshore tax secrecy havens.
“One of your major funds, the Alden Global Opportunities Fund, is registered in the Cayman Islands, a foreign jurisdiction known as a tax haven with weak corporate disclosure laws. This fund’s $536 million in assets is funded primarily by clients who are non-U.S. persons. Please provide more information on why Alden has chosen to domicile its largest fund in an offshore jurisdiction,” the letter states.
Schumer has been one of Alden’s fiercest critics since the firm tried unsuccessfully to take over Gannett newspapers in 2019, and has vowed to watch the hedge fund “like a hawk.”
Back in May, 2019, Schumer signed on to a letter with 20 fellow U.S. senators blasting Alden’s “newspaper-killing business model.”
In his February letter, Schumer also asked Freeman about the status of a federal investigation into Alden’s quiet shuffling of nearly $250 million in news workers’ pensions into its own investment accounts, as well as questions about how it intends to manage Tribune newspapers, which include the Chicago Tribune, the Baltimore Sun, the Hartford Courant and others.
A growing movement
In writing his most recent letter to Freeman, Schumer joins a growing chorus of lawmakers across the country who are expressing concern over Alden’s decimation of local newspapers.
Alarmed by Alden’s newly acquired influence over Tribune papers, Connecticut State Senator Saud Anwar sent a March 2 letter to Freeman and Alden co-founder Randall Smith.
“Alden’s business strategies are already showing their impact in Tribune Publishing, which offered employee buyouts two months after Alden acquired its 32 percent stake in the company. Weeks later, chief financial officer Terry Jimenez replaced Tim Knight as chief executive officer and executed his own round of cuts, slashing at least six Tribune Publishing executives,” Anwar wrote.
He noted that last month, “another leadership shakeup hit the Chicago Tribune” when editor-in-chief Bruce Dold and managing editor Peter Kendall abruptly left.
“It’s become clear that while journalists at the Hartford Courant continue to do award-winning work, Alden’s business practices threaten the very existence of the newspaper,” he wrote.
In the Virginia House of Representatives, Newport News Delegate Mike Mullins recently told fellow legislators that “local journalism is a lifeblood.” Two Tribune papers in that state, The Virginian-Pilot (Norfolk) and the Daily Press (Newport News), were already diminished when they lost 20 newsroom employees in the round of buyouts that came just weeks after Alden bought its 32 percent stake in Tribune.
Mullins said local reporters have earned the community’s trust and warned that “we shouldn’t take the disappearance of this trust lightly.”
ICYMI: @mikemullin4VA spoke today about the importance of local news.
“Local journalism is a lifeblood”
Thank you for your support, @mikemullin4VA
(1 of 2) pic.twitter.com/3UDck4ahiQ
— Kristen Zeis (@k_zeis) February 20, 2020
Last month, Chicago Alderman Matthew O’Shea introduced a proclamation urging Alden to “invest in Tribune Publishing and its newspapers so that they may more expansively perform their role in communities,” and to refrain from increasing its ownership interest in Tribune Publishing.
It also urged Alden to “consider in good faith any offers from outside entities that would return Tribune Publishing newspapers to civic-minded ownership.”
The resolution ends with a call to Alden to appear before the council’s Committee on Workforce Development “to fully address this matter.”
Chicago’s resolution came after the Denver City Council unanimously issued a similar proclamation on Dec. 23, authored by City Councilman and former reporter Kevin Flynn. That statement was issued out of concern for the Alden-owned Denver Post, and Alden’s “devastating effect on local journalism around the nation.”
> HERE’S THE COMPLETE TEXT OF ANWAR’S LETTER:
March 2nd, 2020
Mr. Randall D. Smith
Founder & Chief of Investments
Alden Global Capital LLC
885 Third Avenue #34 New York NY 10022
Dear Mr. Freeman and Mr. Smith:
I am writing to share my concerns about the future of Hartford Courant, the oldest continuously published newspaper in the United States, and the largest daily newspaper in the state of Connecticut.
During Alden Global Capital’s tenure as the major investor in MediaNews Group, which owns more than 100 newspapers, Alden has imposed a slash- and-extract-cash business model that is devastating the papers. The cutting staff to the bone and selling valuable assets, the company has invested the newspapers’ earnings in unrelated assets such as Peabody Energy, Fred’s, Inc. (a pharmacy chain) and Payless shoe store, not to mention Greek sovereign debt and mortgage-backed securities. This disinvestment has impaired the papers and the communities they serve.
I am highly concerned Alden is the largest shareholder in Tribune Publishing, which owns the Hartford Courant and 10 other daily newspapers, including the Chicago Tribune and New York Daily News. Newspapers are public good and fulfill an important responsibility to cover local perspective, are an ingredient of community development, connecting people in local communities, providing news updates on town, state government and national news. Informed citizens are the most critical part of our democracy and for our democracy to remain effective and functional, we need newspapers and independently functioning journalism.
Alden’s business strategies are already showing their impact in Tribune Publishing, which offered employee buyouts two months after Alden acquired its 32 percent stake in the company. Weeks later, chief financial officer Terry Jimenez replaced Tim Knight as chief executive officer and executed his own round of cuts, slashing at least six Tribune Publishing executives.
In February, another leadership shakeup hit the Chicago Tribune with the departures of Editor-in-chief Bruce Dold and Managing Editor Peter Kendall. Colin McMahon, senior vice president and chief content officer for Tribune Publishing, took over as editor in chief.
It’s become clear that while journalists at the Hartford Courant continue to do award-winning work, Alden’s business practices threaten the very existence of the newspaper.
These developments are not simply the result of economic forces beyond Alden’s control: They reflect a business model that is bad for newspapers, journalists, our communities and our democracy.
I am shocked to learn through, The Washington Post reports that Alden is under investigation by the U.S. Department of Labor for investing nearly $250 million of employees’ pension savings in other Alden funds.
If Alden is unwilling to make the needed investments in the Hartford Courant, I believe that the Hartford Courant board can always seek another partner, that is willing to protect the newspaper, the journalists, the staff and the values that have been lived by this institution since its inception.
Senator Saud Anwar