Alden Global Capital, a hedge fund known for reducing journalists to local newspapers to maximize profits, buys the rest of Tribune Publishing, the Chicago Tribune’s parent company, the New York Daily News and other local newspapers.
News management: With the sale, the two companies also announced that The Baltimore Sun will be acquired by a non-profit organization backed by a Maryland hotel billionaire.
Why does it matter: The deal creates one of the largest local publishing giants in America. Alden already owns hundreds of works through the majority ownership of MNG (MediaNews Group), commonly known as Digital First Media, which controls works such as the Denver Post and Boston Herald.
Details: The deal gives Alden 68 percent of the shares he doesn’t already own in the Tribune for about $ 431 million for The Chicago Tribune – valuing the entire company at $ 630 million.
- The price of the merged shares is slightly higher than when the two companies started negotiations last year, the interest in taking over probably giving it a boost.
- As part of the deal, Alden agreed to sell Baltimore Sun, The Capital Gazette in Annapolis and a few other smaller newspapers to a nonprofit called Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., a former politician. and hotel tycoon in Maryland.
Yes but: Given Alden’s history, a takeover is expected to lead to a restructuring that could lead to a reduction in local news jobs.
- Tribune newsrooms have prepared for this moment. The acquisitions were offered to journalists in the Chicago Tribune and Orlando Sentinel in early January last year, following Alden’s increased participation in the Tribune in 2019, as reported by Axios.
Be smart: The full takeover came a long time ago.
- Alden initially took a 25% stake in the Tribune at the end of 2019 from Tribune’s largest shareholder, Michael Ferro, in 2019. He later revealed a 32% higher stake.
- He has increased his footprint at the Tribune in recent months, negotiating for a third seat on the Tribune’s seven-person council.
- Negotiating for this leadership position meant that Alden had to extend a transaction that prevented the hedge fund from increasing its stake in the company, unless there was an interest from an external bidder by 2021.
- Tribune has made efforts to unload assets, primarily real estate, to survive the financial winds caused by the pandemic.
The whole picture: The takeover from the Tribune is the latest example of a well-known local news company, swallowed by a hedge fund, at a gloomy time for local news.
- McClatchy’s rival, which hosted newspapers such as the Miami Herald and The Sacramento Bee, was bought by a hedge fund last year following a bankruptcy auction.
- A study published in 2018 by the University of North Carolina found that newspaper sales, closures and mergers through the seven largest owners of paper investments have increased over the past five years. As Axios has previously pointed out, hedge funds or private equity groups based in large cities are usually responsible for takeovers.
- Alden tried to buy local media company Gannett in 2019, but failed, leaving the parent company to USA Today to merge with rival rival Gatehouse.
What to look for: The agreement, which still requires shareholder approval, is expected to be concluded in the second quarter of this year. One of Tribune’s largest shareholders, who said little about the takeover bid, is Patrick Soon-Shiong, who bought the Los Angeles Times and the San Diego Union-Tribune from the Tribune in 2018 for $ 500 million.
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