What's Left Behind

The shadow of hedge fund and corporate ownership leaves newsrooms in fear they’ll be picked clean

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Publisher’s Note: E&P reached out to Heath Freeman of Alden Global Capital, welcoming his comment and contribution. The company’s crisis manager responded, post-deadline, with the following remark he attributed to MediaNews Group's COO, Guy Gilmore: "A subscription-driven revenue model, long overdue payments from tech behemoths including Google and Facebook for the use of our content and the modernization of non-editorial operations are some of the keys to ensuring local newspapers can thrive over the long term and serve the local communities that depend on them."

This summer, Alden Global Capital acquired Tribune Publishing and its titles, from small community newspapers to major metro titles like its flagship, The Chicago Tribune, and The Baltimore Sun. It wasn’t the first newspaper acquisition for this hedge fund firm, nor is it the only firm of its kind eyeing the nation’s newspapers. But this acquisition was profound, making Alden Global Capital the owner, in effect, of more than 200 newspapers across the land. It was a deal rife with drama, as the Tribune newsrooms publicly pleaded for some other savior. In the end, no eccentric billionaire philanthropist descended on the scene to save them. Instead, the newsrooms steeled themselves for the future.

Meet the new owners

Following its unsuccessful play for Gannett, Alden Global Capital and its MediaNews Group set their sights on Tribune Publishing. In 2019, the investment firm showed its hand when it grabbed 32% ownership and two seats on its board of directors. Chronicling that power grab in a February 2020 Vanity Fair feature, senior media correspondent Joe Pompeo referred to Alden as “the grim reaper of American newspapers” and “a synonym for evil.” The previous month, Alden’s MediaNews Group had begun to buy shares in newspaper publisher Lee Enterprises.

The Chicago Tribune’s newsroom and guild were ready to go to the mattresses, waging a public relations war against the acquisitions as the private negotiations unfurled. Chicago Tribune investigative reporters David Jackson and Gary Marx penned an op-ed published in The New York Times on Jan. 19, 2020.  The op-ed warned that should the newspaper come under the control of Alden; it might become "a ghost version of the Chicago Tribune — a newspaper that can no longer carry out its essential watchdog mission.”

On May 4, 2021, The NewsGuild-Communications Workers of America — representing more than 20,000 news industry members — sent an appeal to Tribune Publishing's shareholders, imploring them to pump the brakes on the Alden Global Capital acquisition. The authors cited Tribune’s profitable model, suggesting the company was worth more than what Alden was offering and that other qualified buyers were still in play. They pulled no punches about Tribune Publishing's future buyer: "The reputation of Alden Global Capital is well known among reporters at every newspaper in this country. It hollows out newsrooms.  If Alden succeeds in buying Tribune Publishing — and after that cutting news beats, paring expenses, and depriving communities of the information they need — then we will have weakened one of the key pillars of American democracy.”

Why newspapers?

Alden Global Capital isn’t just an owner of newspapers. It famously acquired and shepherded to bankruptcy big brands like Fred’s Pharmacy and Payless Shoe Source. But the company has in recent years honed in on newspapers expressly, purposely targeting them for acquisition. 

"It's straightforward," said Margaret Sullivan, media columnist at The Washington Post. “Newspapers are mostly still profitable. They still have assets, and this is a late-stage effort to harvest those assets and the profit that still exists, without regard to long-term sustainability.”

“They are called ‘vulture capitalists’ for a reason.”

Sullivan has written extensively about the plight of newspapers in both her columns and a book, "Ghosting the News: Local Journalism and the Crisis of American Democracy." In addition, she's covered Alden’s Tribune Publishing acquisition specifically.

"They want to maximize profit, which tends to mean cutting staff sharply, eliminating many of the things that make for good journalism," Sullivan said. "They sharply increase consumer cost and take advantage of all these papers have developed over the years — the institutional knowledge and the goodwill in the community."

The famously elusive Heath Freeman, president at Alden Global Capital, communicated with The Washington Post back in 2020. Washington Post reporter Sarah Ellison disclosed that Freeman had told the newspaper, "We saw an opportunity to help fix the broken model." However, he did not expound on what he believed was broken, nor how he intended to "fix" it.

“I don’t get the sense they really care about that,” Sullivan said. “That is pure lip service.”

“They say they want to invest, that they see this as a good business opportunity,” said Jon Schleuss, president of The NewsGuild-CWA. “But they’ve never invested. All the numbers of employment and balance sheets show they do the opposite. They collect properties and strip them. They’ll cut staff or sell real estate.”

Without expressing Alden/MediaNews Group's vision for the more than 200 newspapers it now reportedly owns, the people at those papers and everyone around the industry are left to speculate based on these patterns.

"I believe that Alden sees this as a way to expand its credit," Schleuss said. "These companies don't operate by normal capitalism rules. Instead, they operate to expand their credit, so they can take on more and more debt, amass those assets, and then basically put them into little shell companies or have them go bankrupt, like Payless or Fred's."

Schleuss speculated whether there might be political play behind these newspaper acquisitions. The NewsGuild president also opined about legislative remedies that Congress might enact to force hedge funds like Alden to be "radically transparent" about their investors. That would allow the public to discern if investors are earnest and market-minded or if they're bad actors attempting to hold sway over the press.

“The Bureau of Labor and Statistics paints a pretty grim picture,” Schleuss said. Pew Research Center took a closer look at those numbers, revealing that newsroom employment decreased by 26% between 2008 and 2020.

“The Chicago Tribune has lost half its staff in three years,” he added. "It's been completely gutted through buyouts and attrition. So it's not like people are doing more with less. They're just doing a lot less."

He offered an example of how this translates to tragedy: “When we lose local journalism, we also lose trust in journalism, and in fact, in actual news. We saw the consequences of that on Jan. 6, when thousands of people swarmed the U.S. Capitol, breaking in based on lies. That's the devastating reality —when we lose trust in factual information, we get radicalized people based on lies.

In mid-August, word came that Colin McMahon, Chicago Tribune's editor-in-chief, had resigned. Mitch Pugh, formerly the executive editor at The Post and Courier in Charleston, South Carolina, was named as McMahon’s replacement.

Schleuss remains keen on a nonprofit model for newspapers. He cited The Salt Lake Tribune, an independent nonprofit news organization, and VTDigger, a local digital news site in Vermont that thrives off the community's support. "With paywalls and the aggressive capitalistic approach to monetizing news, we've forgotten that there are a whole bunch of people in the United States who can't afford to pay for the news," he said.

In May, the editorial board at the New York Daily News took a hopeful, defiant stance in the op-ed, “Not going anywhere: Under Alden Global Capital’s ownership, the Daily News will keep doing what it has always done.” The column reminded readers of the newspaper’s legacy and founding as the Illustrated Daily News back in 1919. It reminded readers of the newspaper’s reach — reporting on and for a city of 8 million.

And the authors reminded readers of the mission: “We care like hell about our schools, our subways and buses, our streets and sidewalks and neighborhoods, our hospitals, our police, our parks, our rents, our housing, our jobs, our sports teams, our arts and culture, our businesses, our politicians. We care about telling stories in plain language about real people: people helping other people and hurting other people. Powerful people failing to serve the rest of us. Powerless people getting screwed. Regular people trying to make it every day.”

In a few simple paragraphs, the board articulated all that is at stake for newspapers and the communities they serve. Though the authors acknowledged that “changes” were inbound, they refused to be counted out. “Vultures pick over dead animals. We’re alive and typing,” the editorial concluded.

The agony of a slow decline

Karl Merton Ferron has worked as a photographer and visual journalist for The Baltimore Sun for more than 37 years. He recalled interviewing for the job and telling the hiring manager, “If you get me, you’re getting one of the best photographers you’ll ever have. Just give me a chance.”

Ferron started as a "zonie,” one of the photographers assigned to satellite editions published in Howard and Anne Arundel counties. Back then, the photography staff numbered more than 20. Today, The Baltimore Sun employs just five, including Ferron, who mentioned each of his colleagues by name: Kenneth Lam, Kim Hairston, Amy Davis, Ulysses Muñoz. 

Over the course of his career covering local and statewide stories, he’s navigated the transition from hand-developed film to digital photography and now video. He was at the paper on a "Black Friday" when they called the entire photography staff in from the field, asking them to lay down their equipment and pick up a pink slip.

From his perspective, the plight of newspapers has been the story of slow decline. "We would never really hear how much money we were making, yet we were told we were always hurting. The days of getting decent salary raises were over. It went from 4% to 2% to 0%, stagnation, and now, cutbacks," he said.

During a heyday at the paper, the newsroom sent photographers not just around the city and state but across the country and oceans if it meant getting a story with an important or local context. Ferron recounted trips abroad to Indonesia to cover a tsunami; and Athens, Greece, where he reported on Michael Phelps Olympic experience. He was sent to New Orleans in the aftermath of Hurricane Katrina. Travel like that is hard to justify today, with austerity and few visual journalists covering what's happening right at home.

Ferron recalled feeling hopeful about a buyer who'd adopt a nonprofit model when it seemed inevitable that Tribune Publishing would be sold. There was an earnest attempt by billionaire Stewart Bainum Jr. to buy the Baltimore Sun from Alden, which fell through. Poynter’s Rick Edmonds discovered that the hotelier had begun placing job ads in early August, now seeking to staff “a high profile well-funded startup” in Charm City.

“We tempered our hope because there always seemed to be something to pour water on our fire. We were hopeful and quietly praying and sometimes talking with each other, saying, 'Please, let this happen.' When it fell through, and the alternative came, our bubble burst,” Ferron said.

Like so many others caught up in the acquisition's wake, Ferron is uncertain about the future and whether the newspaper's new owner can run a lean, profitable, and effective news organization.

“I have pride in our newsroom, and we all want the Baltimore Sun to succeed and grow, but we need a vision that will take us down that dark path. I hope he (Heath Freeman) has the answers. But often when people say they have the answer and don't share what the answer is, it should cause anyone pause," Ferron said.  He and his teammates were offered buyouts when the Tribune sale closed. Still, none of them took it. He admitted to considering it for "a second and a half."  Not only was it an inopportune time to be unemployed, but newspaper work — being a “camera operator,” which is his preferred nomenclature — is not just what he does, it’s who he is, he said.

Ferron said that he has confidence in the Baltimore-based upper management. "I trust them, and I believe in them. But, they have to make tough decisions that they don't want to make. I know they hate asking us to take a buyout. I know this. But it's hard enough to cover essential news, day to day and across the city, and it gets harder when these people are gone," he said.

With a 37-year catalog of work at the newspaper, it's marvelous to think of everything Ferron has seen and captured with his eye and a lens. His work is significant and award-winning. Recently, he's been documenting some critical issues for the city: jobs, reinventing the port, and expanding railways.

When asked about what it would mean if they cut his job and the role entirely, the Baltimore Sun’s “camera operator” couldn’t bring himself to speculate.

“It was difficult the last time we had some purging, and the time before that, and the time before that,” he said. “Many of us felt, where would we go if we decided to take the buyout or quit? What would we do?

“I've decided, for myself, to bite the bullet and work my butt off, to show my value and to put out good images that illustrate what is going on in our community. We're documentarians. We're historians, and we're still the paper of record for Maryland. So I'm not going to let any rumors about what might happen, what could happen, stop me from going out there every day and doing my best.”

By July 1, 2021, based on figures compiled by The NewsGuild, Rick Edmonds, media business analyst at the Poynter Institute, shared a glimpse into what some of the Tribune Publishing newsrooms looked like now: “Union newsroom staff at the Chicago Tribune went from 111 to 87 (minus 21.6%), The Virginian-Pilot and Daily Press from 46 to 38 (minus 17.4%) and The (Allentown) Morning Call from 32 to 25 ( minus 21.9%).”

In the waning days of July, Tribune Publishing shuttered The Bowie Blade-News, a Maryland paper founded in 1980. They shuttered the print edition by the end of July. The newspaper's former website directed traffic — with no real fanfare — to the Capital Gazette’s website, another Maryland title acquired through the Tribune deal. Before Alden's ownership, Tribune Publishing had consolidated offices, moving the Bowie newsroom to the Capital Gazette’s office. One of the Blade-News’ reporters, John McNamara, was among the five journalists slain by a gunman on June 28, 2018.

The story of a newspaper’s closure doesn’t end the day the newsroom goes dark. There are long-term, far-reaching repercussions for the communities they serve.

"It means that the traditional role of a community's or city's newspaper isn't fulfilled," Margaret Sullivan warned. "We don't have watchdog journalism. We have public officials who do whatever they want without scrutiny. We see municipal costs go up. We have people moving, more and more, into their tribal political corners because that's what happens when newspapers go away or when local news goes away.”

“A lot of bad things happen and are happening,” she added.” It’s part of the reason why misinformation spreads as much as it does.”

Sullivan spent three decades at the Buffalo News, working her way up from a summer internship to become the newspaper's editor. Lee Enterprises acquired the newspaper in 2020. In January 2020, Alden Global Capital purchased a 5.9% stock share in Lee Enterprises.

When a newspaper shutters, Sullivan reflected, “I feel it personally, very deeply.”

From the outside, looking in, looking around

Timothy Dwyer is the publisher of The Day, an independent trust-administered newspaper based in New London, Connecticut, founded in 1881.

Dwyer began his career in newspapers at The Boston Globe and spent 20 years at The Philadelphia Inquirer. He’s witnessed decades of challenges and consolidation, and he sees it as a "buyers' market" today, with corporate and hedge fund owners capitalizing on newspapers' profitable but weakened state.

"If you don't care about what newspapers do — produce news — if you don't care about the quality, then you can wring a profit out of it. So you get in cheaply and squeeze as much money out of it as you can. Some don't care if they squeeze so much money out of it (the newspaper) that it goes out of business. That may sound cynical, but that's the track record."

While The Day has a for-profit business model, it reinvests its profits in the communities it serves through philanthropic donations. “We want to make money, but we aren’t driven by greed,” the publisher explained.

Though The Day Trust, which governs the newspaper, affords certain protections from would-be buyers, Dwyer is still keenly observant about what's happening in the industry around him.

“I worry about the newspapers they acquire,” Dwyer said about hedge fund owners. "As a locally owned, independent publisher, we know how difficult the business model is. The one advantage we have is that a trust owns us. We donate profits to the community, so we're not driven by a high-profit margin. I think the big corporations and hedge funds are, and the easiest way to do that (make a profit) is to cut your labor force, to cut your newsroom. Now, at this time in our country, local news is essential."

 He’s also troubled by the prospect of what’s left behind when newspapers are no more.

"I am concerned about (news deserts)," Dwyer said. "One of the benefits of having a locally owned newspaper is that the people who work there live in the community, shop in the community. Our kids go to schools here. We buy our cars from local dealerships. So we're intimately involved with the community. I always preach: We support the community, and we need the community to support us. Once some corporation — with headquarters who-knows-where — [comes in] and buys the paper up, you lose that local flavor.”

Dwyer said he worries about the diminished newsrooms across the country and how news deserts drive people to unreliable sources of information and misinformation, like Facebook.

You’d be hard-pressed to find people at newspapers today who aren’t committed to journalism and newspapers as a medium, demonstrated by their perseverance despite professional uncertainty and perpetual change. Even fresh faces in the newsroom come into the role fully aware of the challenges.

"I've had a lot of friends who have taken buyouts or were laid off, and they ask me why I'm still doing this," Dwyer said. "I tell them that I think this is the most exciting time to be a journalist because the opportunities for us are so broad.

“I tell people who we interview for jobs: We’re a small company, but we can be as innovative as we can dream and afford to be. No one is going to tell us we can’t try this or try that,” he said.

Recently, The Day began to offer live coverage of local high school sports. In addition, the newsroom increasingly leverages video in its storytelling and has been exploring serialized content.

 "Twenty years ago, I never would have dreamed we could do these things, but you have to be willing to take a chance, and you have to believe in what you're doing and in the place [where] you’re working,” Dwyer concluded.

Emily Walsh was just appointed president of Observer Media Group, a family-owned and operated newspaper business based in Sarasota, Fla. Her grandfather was the vice president and publisher of 12 daily newspapers across the Midwest. Today, she’s charged with managing its newspaper and magazine titles, all free and supported exclusively by community advertising.

The past pandemic year has been particularly challenging. For example, one of the newspaper’s annual arts-and-entertainment supplements, which generated more than $1 million in revenue alone, was unpublishable thanks to COVID-19. A quarterly glossy magazine devoted to arts and entertainment, published — though with little actual A&E content — thanks to the ingenuity of the sales team and the generosity of local businesses that wanted to support the newspaper.

Walsh essentially grew up in this business. Every year, she gathers with other newspaper families at a conference founded by Inland and now hosted by America’s Newspapers. Years ago, it was a bustling event; in recent years, attendance has diminished as family-owned titles are absorbed into larger corporate entities.

Walsh appreciates that her company can be nimble and creative, free from the shadow of shareholders. She's a champion for local ownership and local staff, citing an unfortunate error that ran in a competitor paper owned by Gannett. Accompanying an op-ed by Sarasota’s mayor was a picture of an entirely different person, a woman who was definitively not the mayor, who is a man. The tag under the byline read, “Health & Fitness,” Walsh recalled.

 “Another sign of what happens when you don’t have local people leading or running your operations: People will lose trust in you,” she said.

Members of the Patterson family, who founded two of the Tribune titles now, in effect, owned by Alden Global Capital, retired to Sarasota. "No one knew they lived here. They were very modest people, who had no children," Walsh said. When the couple passed away, their estate bestowed some $300 million to a foundation that would benefit the city.

"We are fortunate and thankful to the Pattersons," Walsh said. “When the deal went down, I emailed the CEO of the Foundation and said, ‘I can hear the Pattersons’ hearts breaking in Heaven right now.”

Walsh knows what it’s like to consider a professional life after newspapers. She’s had other lucrative job offers. A local Realtor — their biggest advertiser — persistently tries to persuade her to get her license. “For sure, I would make a whole lot more money in real estate than in newspaper advertising right now, but it's about more than just the money for me. This is a passion. It has been ingrained in our family for so long that I will never leave this business, and I believe if you talk to other family-owned and operated newspapers, they share that sentiment, as well."

Not all newspapers are for sale.

Gretchen A. Peck is an independent journalist who has reported on publishing and journalism for more than two decades. She began her reporting career covering municipal government at a suburban Philadelphia daily and served as an editor-in-chief/editorial director for a magazine publisher. She has contributed to Editor & Publisher since 2010 and can be reached at gretchenapeck@gmail.com.

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