Shareholders for Tribune Publishing approved a $630 million takeover bid by NYC-based hedge fund, Alden Global Capital, known for expanding profits by slashing newsrooms. The unions representing several Tribune newspapers including the Baltimore Sun, Chicago Tribune and Hartford Courant, opposed the deal sparking concerns over the future of local papers. NPR’s David Folkenflik joins.
Yesterday, shareholders at the Tribune Publishing Company approved a $630 million deal from New York hedge fund Alden Global Capital to acquire the newspaper chain.
Journalists rallied to stop the deal with Tribune, which owns newspapers including the Chicago Tribune, Baltimore Sun and New York Daily News.
Alden already owns the digital first media chain which includes the San Jose Mercury News, Denver Post and Boston Herald
The deal is expected to close as early as next week.
For more on the reactions to the deal and potential ramifications, I spoke with NPR's David Folkenflik.
So, David, why does a hedge fund buying a newspaper chain cause such waves in the publishing world, the newspaper world?
This particular fund has an established record. It owns papers in the media news, digital first chain, and it has a record of eviscerating a lot of those newsrooms. In Denver, they cut The Denver Post by a third, then promised if they all moved to the newsroom, to the printing press property outside of town, that they wouldn't have to go through another wave of cuts. They did that. They took away their newsroom and then they cut them by another third. The San Jose Mercury News was once one of the great regional newspapers. After all, there, right in the backyard of Silicon Valley, a vibrant area, part of the Bay Area, they used to have more than 200 journalists in that newsroom. They now have a couple dozen.
You eliminate the ability of reporters to cover City Hall, to cover great corporate actors, cover sophisticated figures whose decisions have great implications for the lives of your audience and people in your region. If you no longer have enough journalists and give those journalists enough time to do the reporting, to figure out and then explain what's going on in the communities around them.
So there was resistance for this deal to take place. Some voices from inside the very newsrooms that would be affected were trying to drum up support for local buyers to say, please come in is kind of the white knight, if you will, to save us.
Yeah, I think there's an extraordinary level of newsroom activism. In this case, spearheaded by a former colleague of mine at the Baltimore Sun, a woman named Liz Bailey, an education reporter there. She created something called Project Mayhem with like minded journalists, also union figures within the newsrooms that a lot of the Tribune publishing newspapers to try to say, you need to save us if you believe in journalism, step forward and help us figure out a path forward. So you saw not-for-profits, you saw significant investors. There were investors in South Florida, other figures in Allentown, Pennsylvania, in Hartford, Connecticut, and in other markets who stepped forward to say, yes, we will participate in this. It fell short for a very specific reason. They weren't able to find anyone in Chicago itself, the home of the Tribune Company,
The Chicago Tribune, no one stepped forward and said, I'm willing to chip in $100 million for the overall bid in order to secure this paper, the largest in the chain, the dominant newspaper in the nation's third largest city. It's worth it to me. And despite all the wealth that's locked up from corporate figures in Chicago, despite the huge foundations that are based there, despite journalism foundations in the country at large, no one came forward and said, we'll plug the gap and make this happen.
And we should emphasize that this is happening not in a vacuum. This is at a time when local journalism, specifically newspapers, they've been battered now for decades.
After all these cuts. Even before Alden took a 32% share in Tribune Publishing, Tribune had been cutting back and often mismanaging these properties for some years. They've been cut back rather severely. They are profitable. I obtained audio of the chief content officer of the company, who also happens to be the editor in chief of the Chicago Tribune, telling his staff, hey, look, we make profit margins in this company of about 10 to 13 percent per newspaper. Now, that's significant profit margin. What he warned them was that Alden would want to basically double it to something north of 20% per newspaper. That's a significant chunk.
The only way you get that, you can do consolidation, but the only way you ultimately get that is reducing headcount, which means reducing the number of people around to do the journalism and also often reducing the seniority of the people you do hire to make sure that they come in at a much lower pay grade. So, you know, what you have, in essence, is an already very tough climate for local newspaper, and that is nonetheless settled in a seemingly profitable moment, if not an enviable one.
And they're saying, that's great. Now we've got to do more. And for all we know, Alden has the legal authority to load up the company with a couple of hundred million dollars to get as well. And that could occasion more cuts just to pay off those loans.
NPR's David Folkenflik, thanks so much.
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