Alden Global Capital, a hedge fund known for cutting journalists at local newspapers to maximize profits, is buying out the rest of Tribune Publishing, the parent company, to the Chicago Tribune, New York Daily News and other local newspapers.
Send the news: With the sale, the two companies also announced that The Baltimore Sun would be acquired by a non-profit organization backed by a hotel billionaire in Maryland.
Why it matters: The deal creates one of the largest local publishers in America. Alden already owns hundreds of newspapers through its majority ownership of MNG (MediaNews Group) Enterprises, commonly known as Digital First Media, which manages newspapers such as the Denver Post and the Boston Herald.
Details: The deal gives Alden 68% of the shares he does not yet own in the Tribune, for about $ 431 million per The Chicago Tribune, which values the full company at $ 630 million.
- The share price of the merger is slightly higher than when the two companies started negotiations last year, and interest in the takeover is likely to boost it.
- As part of the deal, Alden agreed to sell the Baltimore Sun, The Capital Gazette in Annapolis and a few other smaller newspapers to a non-profit organization called the Sunlight for All Institute, a public charity run by Stewart Bainum Jr. ., a former Maryland politician and hotel magnate.
Yes, but: Given Alden’s history, a takeover is expected to lead to a restructuring that could lead to the reduction of more local news outlets.
- Tribune newsrooms stimulated for this moment. In early January last year, buyouts were offered to journalists from Chicago Tribune and Orlando Sentinel after Alden’s increased stake in Tribune in 2019, as Axios reports.
Be smart: The full takeover is long overdue.
- Alden initially took a 25% stake in Tribune at the end of 2019 from Tribune’s largest shareholder Michael Ferro. He later revealed a larger stake of 32%.
- It has widened its footprint at Tribune over the past few months and is negotiating for a third seat on Tribune’s council for seven people.
- The management chair negotiation meant that Alden had to extend an agreement that prevented the hedge fund from increasing its stake in the company, unless there was interest from a bidder, until 2021.
- Tribune insisted on downloading assets, mainly real estate, to survive the financial wind driven by the pandemic.
The whole picture: The takeover of Tribune is the latest example of a local news company being spruced up by a hedge fund amid a gloomy time for local news.
- Tribune rival McClatchy, home of newspapers such as the Miami Herald and The Sacramento Bee, was bought by a hedge fund last year as a result of a bankruptcy auction.
- A study released in 2018 by the University of North Carolina found that newspaper sales, closures and mergers via the seven largest paper investment owners have increased over the past five years. As Axios noted earlier, hedge funds or private equity groups in large cities are usually responsible for the takeover.
- Alden tried to buy out local media company Gannett in 2019, but failed and left the parent company to USA Today to merge with rival newspaper giant Gatehouse.
What to look for: The agreement, which still requires shareholder approval, is expected to close in the second quarter of this year. One of the Tribune’s largest shareholders, who has said little publicly about the takeover, is Patrick Soon-Shiong, who bought the Los Angeles Times and the San Diego Union Tribune in 2018 for $ 500 million from Tribune.
Go deeper: