Shareholders of Tribune Publishing, one of the country’s largest newspaper chains, voted Friday on a takeover bid by hedge fund Alden Global Capital. In a statement, Alden appeared to say the deal was approved, an assertion questioned by the union representing Tribune journalists.
Alden, which already owned nearly one-third of Tribune, stands to take full control of the Chicago Tribune, Baltimore Sun and other Tribune papers in a deal worth roughly $630 million. Through its Digital First Media chain, Alden also owns the Boston Herald, Denver Post and San Jose Mercury News.
Patrick Soon-Shiong, the owner of the Los Angeles Times and Tribune’s No. 2 shareholder, abstained from the vote. Union officials cast doubt on the outcome because of that.
They cited Tribune's proxy statement of April 20, which states that approval of the deal required the votes of at least two-thirds of shares not owned by Alden, and that an “abstain” vote counted the same as an “against” vote. Soon-Shiong, in a statement issued through a representative, said he “abstained from voting” and that he viewed Tribune as a “passive investment.”
“We’re digging into this question right now,” said Jon Schleuss, president of the NewsGuild journalists union.
The Chicago Tribune, citing unnamed Tribune officials, reported that Soon-Shiong's ballots were submitted without the “abstain” box checked, and so were counted as a “yes” vote on the Alden takeover, which was in accordance with the instructions on the ballot.
Representatives for Soon-Shiong, Alden, Tribune and the special committee of Tribune's board did not immediately reply to questions about the vote count.
If successful, Alden's deal would be the latest acquisition of a newspaper company by a financial firm. The collapse of print advertising as readers migrate to digital publications has rocked the traditional newspaper business. Publishers have shut down more than 2,000 papers over the past 15 years and half of newsroom jobs have disappeared. Investment firm owners are often criticized for valuing profits over the mission of local journalism, and Alden is no exception.
The deal had drawn opposition from many of the company’s journalists at papers in an unusual spate of employee activism.
They set up rallies, tried to find local buyers and begged for a rescue in their own newspapers. They had rooted for a higher bid from hotel mogul Stewart Bainum in the belief that it would be better for local journalism, although the bid never came to fruition. They lobbied Patrick Soon-Shiong, the owner of the Los Angeles Times and Tribune’s No. 2 shareholder, to vote no and stop the deal.
Alden became Tribune’s largest shareholder in 2019. The union representing Tribune’s journalists says the hedge fund’s cost cuts have already led to shrinking newsrooms and closed offices.
“The purchase of Tribune reaffirms our commitment to the newspaper industry and our focus on getting publications to a place where they can operate sustainably over the long term.” said Heath Freeman, president of Alden, in a statement.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Shareholders of Tribune Publishing, one of the country’s largest newspaper chains, will vote Friday on whether to be acquired by a hedge fund that already owns one-third of the company and favors aggressive cost-cutting to boost profits.
The $630 million bid by that hedge fund, Alden Global Capital, has drawn opposition from Tribune journalists at papers including the Chicago Tribune, the Baltimore Sun, the Hartford Courant and the New York Daily News. For more than a year, they have been trying to fend off Alden, whose reputation for squeezing out bigger profit margins is notable even in a shrinking industry characterized by cost cuts and aggressive layoffs.
In an unusual spate of employee activism, the journalists have set up rallies, tried to find local buyers and begged for a rescue in their own newspapers. They have rooted for a higher bid from hotel mogul Stewart Bainum in the belief that it would be better for local journalism and lobbied Patrick Soon-Shiong, the owner of the Los Angeles Times and Tribune’s No. 2 shareholder, to vote no and stop the deal. Soon-Shiong has said he hasn't made a decision yet. A spokeswoman for the billionaire this week declined an interview request.
Alden owns Digital First Media, one of the country’s largest newspaper chains. Its papers include the Boston Herald, the Denver Post and the San Jose Mercury News. It became Tribune’s largest shareholder in 2019 and has a 32% stake. The union representing Tribune's journalists says the hedge fund's cost cuts have already led to shrinking newsrooms and closed offices.
“Alden as top shareholder is an ongoing crisis, but Alden in full control will likely destroy Tribune publications,” wrote Gregory Pratt, head of the Chicago Tribune Guild and a Tribune reporter, in a plea to Soon-Shiong to reject the Alden deal. Representatives for Alden and Tribune did not respond to questions.
Tribune itself is no stranger to cost cuts and shrinking newsrooms. After emerging from bankruptcy in 2012, it split from its TV broadcasting arm in 2014 and since then has bought and sold papers including the Los Angeles Times (sold), the San Diego Union-Tribune (bought and then sold) and the New York Daily News (bought, then hit with layoffs that cut its editorial staff in half ). Its annual revenue has fallen by more than half since 2015, and by the end of 2020 its number of full- and part-time employees stood at 2,865 people, just 40% of its headcount five years earlier.
Financial firms view newspapers primarily as short-term investments, according to a 2020 report by the University of North Carolina’s journalism school. Private equity firms and hedge fund owners prioritize shareholder returns over journalism's civic mission, it found, leading other newspaper owners to adopt similar practices as print-ad revenue, previously key to the industry's financial health, collapsed. The result: round after round of layoffs, more than 2,000 papers shut down over 15 years and many surviving papers reduced to shells of their former selves.
The financial firms have played a significant role in consolidating the industry as online competition drew away readers' attention and ad dollars. Hedge fund Chatham Asset Management bought newspaper chain McClatchy in an auction last year following the company's bankruptcy, beating a bid from Alden. A newspaper company managed by private equity firm Fortress bought Gannett in 2019 with a high-interest loan from another private equity firm. The newspaper company, which retained the Gannett name and is publicly traded, has since ended the management arrangement with Fortress.
The battle for Tribune's fate accelerated in December, when Alden offered to buy all of the company. A special committee of Tribune's board recommends that shareholders accept the deal. Tribune CEO Terry Jimenez, who is on the board, has opposed the bid as too low.
An expected higher bid for the whole company from the hotel mogul Bainum never fully materialized. He has been unable to find a buyer for the Chicago Tribune, a key element in his plan to return the company's papers to local ownership. Hansjörg Wyss, a billionaire from Wyoming who expressed interest in owning the Chicago Tribune, joined Bainum's bid, then subsequently dropped out. He did not say why.
Prior to his bid for all of Tribune, Bainum struck a side deal to buy Baltimore Sun Media from Tribune for $65 million via a nonprofit. It's unclear what happens to the Sun should the Alden bid succeed on Friday. Messages left for Bainum through his hotel company and a family foundation were not returned.
Should the vote fail, Tribune's future would remain undecided. Alden could make another bid or abandon the deal; meanwhile, Bainum might keep trying to pull together investors to buy Tribune and then split it up among local owners. In the short term, Tribune would go on as it has, said Poynter media analyst Rick Edmonds.
An earlier version of this story incorrectly stated that Alden would gain control of the Los Angeles Times in a successful bid for Tribune. The newspaper is owned by Tribune’s No. 2 investor, Patrick Soon-Shiong, and is not part of the Alden deal.
Tali Arbel, The Associated Press