Vulture Capital,” AK Rockefeller

Here at NPQ, we have regularly tracked two stories regarding local journalism. On one hand, there is a growing trend of layoffs and a hollowing out of local news. Last March, Tom Stites noted in NPQ that “a quarter of all US newspapers have failed since 2004.” At the same time, Stites himself is part of a rising movement of nonprofit or, in Stites’ case, co-op forms of local journalism that are creating a new more civically minded form of journalism that provides communities with the information they need.

Which trend will prevail remains uncertain, but Alden Global Capital’s May 21st purchase of Tribune Publishing for $635 million ($17.25 a share) was not a good day for local journalism. As Katie Robinson of the New York Times observes, the sale “underscores the growing might of financial firms in a consolidating media industry. Investors, seeing opportunities to buy distressed assets at bargain prices, have swooped in over the past decade, with plans to make money by drastically cutting costs, laying off workers, combining operations, and selling off real estate holdings.” Alden is now the second-largest owner of newspapers nationally, trailing only Gannett.

Tribune Publishing owns the Chicago Tribune, but it also owns the Baltimore Sun; the South Florida Sun-Sentinel; the Orlando Sun-Sentinel; the New York Daily News; the Hartford Courant; the Virginian-Pilot in Norfolk; The Morning Call in Allentown, Pennsylvania; and the Daily Press in Newport News, Virginia, as well as various smaller publications. At the time of its sale, the company employed nearly 3,000 people.

Alden has a well-earned reputation for ruthlessly cutting newspaper staff. Back in 2018, the editorial staff of the Alden-owned Denver Post took the highly unusual step of denouncing the paper’s owners in a published editorial, writing, “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.”

Nationally, a 2020 study by Penelope Muse Abernathy, published by the University of North Carolina, estimated that Alden and Tribune Publishing combined own 207 publications, including 70 newspapers, with over five million readers. “In one six-year period, according to the NewsGuild union, Alden cut staff at guild-represented papers by an average of 75 percent,” reports David Folkenflik for National Public Radio.

Already, steps to strip cash from the business and lay off staff have begun. The Associated Press reports that Alden “wasted little time installing new leadership and saddling the newspaper chain with $278 million in debt it took on for the acquisition.” The new owners also are seeking to reduce staff levels by encouraging employees to accept a voluntary buyout. According to Keith Kelly of the New York Post, the buyout “provides eight weeks’ severance for all staffers with three years or less of service. It provides 12 weeks for staffers with four or more years and then one additional week’s pay for each year of service.”

And so, consolidation continues. Abernathy’s study calls attention to the long-term trend, writing that, “At the end of 2004, the largest 25 chains (as measured by number of papers, not circulation) owned only a fifth of the 8,900 papers and less than a third of the 1,472 dailies. Fifteen years later, the 25 largest chains own a third of the 6,700 surviving newspapers in the country and 70 percent of the 1,260 dailies.”

But while Tribune Publishing has become another statistic in the consolidation trend, it didn’t have to be. Unlike many cases, philanthropy had time to respond. This is because Alden first acquired a 32-percent share of the company in 2019 and its intentions to acquire the entire company were hardly a secret. Indeed, Vanity Fair published an article about the threat of acquisition in February 2020.

But philanthropy ultimately fell short. For a time, it appeared that Alden and Baltimore philanthropist and hotel owner Stewart Bainum Jr. had reached a deal wherein Alden would purchase Tribune Publishing, but divest itself of the Sun, enabling the Baltimore paper and affiliated local weeklies to come under nonprofit ownership. This deal, however, fell through as Alden insisted that $60 million in fees over five years be added to the $65 million purchase price. Bainum balked.

Bainum then sought out Swiss billionaire Hansjörg Wyss, who lives in Wyoming, to buy the entire company. Bainum offered to pay $100 million, with Wyss financing the rest. This would’ve made Wyss the owner of the Chicago Tribune, while the Maryland papers would have come under nonprofit ownership. This too fell through, in this case because Wyss felt the Chicago Tribune was a money-loser.

One last “Hail Mary” pass involved another billionaire, Dr. Patrick Soon-Shiong, who had purchased the Los Angeles Times from Tribune Publishing in 2018 and, as part of the deal, held enough stock in the company to block the sale. But he didn’t. Instead, he can expect to receive about $150 million in cash for his 8.7 million stock shares—close to a third of the $500 million it cost him to buy the Los Angeles Times. It’s worth noting that Soon-Shiong’s cash purchase of the L.A. Times from Tribune Publishing is why Tribune Publishing was debt-free and therefore financially attractive to Alden.

For his part, Bainum indicates he is evaluating different options for supporting local nonprofit newsrooms. Abernathy, now a visiting professor at Northwestern University, tells Robinson that while philanthropy failed to seize the strategic opportunity provided by the year-plus notice they had, the campaign did raise the visibility of the need for community journalism and “may lead to more successful interventions in the future.”  Writing in the Baltimore Sun, Sun reporter Christopher Dinsmore and Chicago Tribune reporter Robert Channick speculate that Bainum might opt to support a digital publication that competes against the Sun. If that occurs, it won’t be the first time.

Remember those Denver Post editorial writers? Two-and-a-half years ago, a group of them founded the Colorado Sun as a public benefit company—a for-profit company that is restricted by its social mission. Last month, aided by a local foundation, that company did its own acquisition, bringing 24 suburban papers under its umbrella.

Speaking with NPR, Colorado Sun editor-in-chief Larry Ryckman noted, “All too often these days, we all know who is first in line to buy newspapers, and that’s hedge funds or the occasional billionaire. We couldn’t count on a benevolent billionaire galloping up on a white horse.” Indeed, few can, which is why a more proactive strategy to intervene in such cases to back nonprofit news is needed.