When Alden Global Capital became the primary equity holder in Digital First Media, no one knew what it would mean for a large newspaper chain to be run by a hedge fund.

More than five years later, the results have been devastating.

Data collected and analyzed by shows that Alden, already known for “milking” its news properties of assets, is downsizing its newspapers at twice the national rate.

An April 3 report from the Bureau of Labor Statistics shows that over the past five years (through Sept. 2016), newspapers across the country lost 26 percent of their workforce.

That’s bad enough, but a poll of NewsGuild representatives at 12 DFM papers for roughly the same period reveals workforce reductions that are more than twice the national average — with some staff losses at nearly 80 percent.

Here are the staff reductions seen at DFM newspapers since Alden became the boss:


Source: The NewsGuild and U.S. Bureau of Labor Statistics


The bottom line of the chart show the national staffing number and losses for five years through late 2016. For some perspective, consider that last week the Washington Post’s Catherine Rampell tweeted: “BTW US has lost many more newspaper jobs than coal jobs over that period, in both raw numbers and percentage terms.”

In the past year alone, the DFM newspaper units shrank by 30 percent.

“It seems like all the problems we normally have in the newspaper industry are exacerbated with hedge fund owners,” says Stephen Lerner, a fellow at Georgetown University’s Kalmanovitz Initiative for Labor and the Working Poor. “To them, this is just like any commodity that they’re hoping to extract from. You cut it to the bone.”

That cutting involves laying off unprecedented numbers of employees and selling newspapers’ buildings and real estate, which Alden did at a stunning rate after it took control of the chain in 2012.

On top of those cuts, newspapers save money by keeping wages at rock bottom.

This chart from the Bureau of Labor Statistics shows how the salaries of newspaper workers fare compared to others in publishing:

Pay Chart US

Source: Bureau of Labor Statistics

Here, too, Alden stands out. Employees at a number of DFM papers have waited up to ten years for even a modest raise to cover cost of living increases. (Last year, union members fought for and finally won a 3 percent pay increase after a national action campaign.)

Meanwhile, Alden’s founder Randall Smith spends a lavish life jetting between Manhattan and Palm Beach, Florida, where he resides in a $20 million waterfront home — one of many mansions he owns under a web of limited liability corporations.


Smith’s 16,000-square-foot Palm Beach mansion. Source: Google Maps

The problem with hedge funds, Lerner says, is the financial model they’re based on.

“Their model isn’t how to build something better, it’s how to extract the most from it,” he says. “They’re just looking for places where they can sink their teeth in and extract something — not ‘How can I make this successful?’”

Lerner is the architect of the 1980s Justice For Janitors campaign and today works with a national initiative called Hedge Clippers, which produces social action campaigns and investigative reports on billionaire hedge fund owners.

Hedge funds are “job destroyers in any sector they’re in,” Lerner says. “When they say the returns aren’t enough, they’re really saying ‘Let’s get rid of workers.’”

While disastrous for employees, these tactics also pose big risks for investors.

“The hedge funds are good at convincing investors that they have some secret sauce… It’s a little bit like compulsive gamblers, where investors are convinced they’re the one that’s going to win,” Lerner says. “What’s now been exposed is they actually don’t produce for people who invest in them. They’re fabulous for producing wealth for the people who own them.”

DFM management recently put employees’ pension dollars at such risk when it self-invested nearly $270 million of workers’ retirement monies in two Alden funds, including one Cayman Island account. DFM officials have said they plan to divest from at least one of the Alden funds by year’s end.

Lerner says it’s not surprising that Alden keeps a number of its funds in the Cayman Islands, long known as a tax haven.

Hedge funds in general are “tax avoiding machines,” Lerner says. “I wouldn’t say they’re immoral. They’re amoral.

“If you believe as I do that newspapers and reporting are important parts of democracy, then having them bought up by people who don’t care about democracy — well, the social consequences are terrible.” 


Read more about hedge funds at

To learn more about the financial state of the newspaper industry, with interactive charts, see the Bureau of Justice statistics report here.

Read our own Hedge Funds and Newspapers, or more about Alden