Deal includes selling The Baltimore Sun and several other papers to a nonprofit foundation;
Sale must be approved by two-thirds of remaining shareholders.
Alden Global Capital, the New York hedge fund known for draconian cost-cutting at newspapers in its MNG Enterprises chain, has reached a deal with board members at Tribune Publishing to acquire the publicly traded company and take it private.
Alden acquired Michael Ferro’s stake in Tribune Publishing in November 2019 and now controls three of the company’s seven board seats. The deal would value Tribune at around $630 million.
“Alden has a history of running newspapers into the ground,” said Jon Schleuss, president of The NewsGuild, which represents workers at Alden’s MNG newspaper chain as well as a number of Tribune papers. “This isn’t good for workers, the company, shareholders or the communities.”
The NewsGuild represents 600 employees at Tribune newspapers, and 450 employees at Alden-owned MNG Enterprises, which publishes The Denver Post, San Jose Mercury News, East Bay Times, St. Paul Pioneer Press, the Boston Herald and others.
Tribune publishes the Chicago Tribune, Orlando Sentinel, Hartford Courant, Baltimore Sun, New York Daily News and other daily papers.
Alden currently owns nearly a third of Triune’s stock. The potential purchase must still be approved by two-thirds of the remaining stockholders, the largest of whom is Dr. Patrick Soon-Shiong, billionaire surgeon and owner of the Los Angeles Times. Soon-Shiong has not commented publicly about Alden’s offer, nor has he indicated if he will sell. He owns roughly a quarter of Tribune’s stock.
Another large stockholder, Mason Slaine, holds 8 percent of Tribune’s stock. Slaine previously said he didn’t like an offer Alden made on New Year’s Eve of $14.25 per share, and has pushed for Tribune to sell its papers to local owners.
Under the purchase terms, Alden will now pay $17.25 a share. On Tuesday, Tribune shares closed at $15.97 and reached $17 in after-hours trading.
As part of the deal, Alden and Tribune have agreed to sell a cluster of papers to a local nonprofit foundation. The Sunlight for All Institute, formed by Maryland businessman Stewart Bainum, Jr., will purchase the Baltimore Sun, The (Annapolis) Capital Gazette, The Carroll County Times and several other regional publications.
“I salute Bainum’s effort,” Schleuss said. “We need more folks to step (up) and truly invest in truly local news that’s accountable to our communities.”
Like the Sun, other Tribune papers have pushed for local nonprofits or civic-minded philanthropists to buy their papers. In Allentown, Pennsylvania, for example, the Morning Call Guild has launched a “Save Our Morning Call” website.
“We knew this was coming but it still feels like a shock to the system,” Jennifer Sheehan, the Morning Call Guild’s vice chair, said after news broke Tuesday of the Tribune sale agreement. “Over and over, Alden buys newspapers, cuts them to the bone, bleeds them dry and leave the shell behind. And we fear this is our future.”
Federal inquiry requested
In an analysis, Nobel Capital Markets wrote that Alden’s new offer is “a price considered to be reasonable,” and noted that Tribune is mostly free of debt, has a “sizable and growing cash position” and has “substantial real estate assets that proved further opportunities for future monetization.”
Earlier this month, The NewsGuild-CWA requested a federal inquiry into the privately held Alden’s secretive offshore ownership structure.
In a Feb. 3 letter to newly confirmed Treasury Secretary Janet Yellen, NewsGuild President Jon Schleuss urged the interagency Committee on Foreign Investment in the United States, chaired by the Yellen, to review Alden’s proposed takeover of Tribune in light of the hedge fund’s increasing ownership by unnamed “non-U.S. persons.”
“Now more than ever, the U.S. public’s access to reliable, credible news sources is critical to the national security of the United States,” the letter states. Alden has long headquartered many of its investment funds in the Cayman Islands, an international tax secrecy haven, and its shares of both MNG and Tribune are held by shell companies there.
Twenty-three US senators and one state attorney general have sent letters to Alden executives inquiring about its offshore activities, its plans for Tribune papers and questioning Alden’s commitment to local journalism, with little to no response from the hedge fund.
Calling it a “dark day for Tribune’s storied newspapers,” media observer Dan Kennedy wrote that “Alden is the most avaricious of the chain newspaper owners, squeezing the life (and the journalism) out of its properties.” But he cheered the “good news” about the Baltimore Sun sale to a nonprofit.
Meanwhile, the NewsGuild says it will continue to keep a close eye on the transaction.
“Me, thousands of journalists and hundreds of lawmakers will be interested in looking at the details of the sale once it’s released,” Schleuss said.
Sheehan said the news, while difficult to hear, “doesn’t change our dedication to what we do, both as journalists and as union members.
“We are going to continue to fight for our newspaper, the essential work we provide for the Lehigh Valley and our role in democracy. It is too important.”