The hedge fund that owns the LB Press-Telegram offers to buy Tribune Publishing
Alden Global Capital, the Manhatten based hedge fund that has a reputation for buying local newspapers and gutting its staff to maximize profits, has offered to buy the rest of Tribune Publishing for a deal valued at $520 million.
Why it matters:
Vanity Fair once described Alden Global Capital as the "grim reaper of American newspapers," who buys local and regional newspapers and then bleeds them dry for every dime while recouping profits from advertising.
💸: Hedge funds and private equity firms use intense cost-cutting tactics like a leveraged buyout, a loan a company uses for the cost of acquisition, and then drops the loan's debt on the newspapers they just acquired. All the while, the firm charges consulting fees, cuts jobs, sell properties and has interest payments from the debt that was dumped on them.
The news industry, especially at the local level, has been hit hard by the Coronavirus pandemic, causing a revenue loss from print and digital advertising, forcing news companies to furlough workers, cuts salaries, and even close newsrooms.
Alden already owns the Long Beach Press-Telegram, The Orange County Register, and the LA Daily News.
📰: Alden, which is already Tribune's largest shareholder with a 32% stake, sent a letter to Tribune Publishing on Dec. 14 showing their interest to buy the rest of the company for $14.23 a share in an S.E.C filing.
The Wall Street Journal reported that Tribune gave Alden three seats on the Chicago Tribune's board in July to extent Alen's from gaining more stake in the company until 2021.
Besides the Chicago Tribune, the newspaper magnate owns the Baltimore Sun, New York Daily News, and the Orlando Sentinel.
Axios reported that Tribune offered their journalist a buyout in 2019, and earlier this year, they closed the headquarters of the New York Daily News.
The Denver Post staff famously wrote an op-ed saying, "Denver deserves a newspaper owner who supports its newsroom. If Alden isn't willing to do good journalism here, it should sell The Post to owners who will."