No time like now to re-ask the burning questions that swirl around Alden Global Capital, the secreter-than-secret hedge fund relentlessly pursuing newspaper companies: Who are these guys and what do they want?
Having slashed newsrooms at The Denver Post and its other longtime holdings by a third two years ago, Alden is now putting the squeeze on Tribune Publishing, where it has bought a third of the company and two seats on Tribune’s board. At the end of January, it took a position in Lee Enterprises, newly expanded after buying Warren Buffett’s 30-daily Berkshire Hathaway chain.
And let’s not forget that in early 2019, Alden’s MNG group mounted a hostile takeover bid for Gannett — driving the biggest newspaper group into a sale and merger with the more agreeable GateHouse Media.
The dominant narrative about Alden, promoted by the NewsGuild and picked up by others, is that it pillages and burns what it buys, leaving only a hollowed shell.
I am not suggesting a belated Valentine instead. Alden runs ultra-lean and is in it for the money. But there is a longer history than just the last couple of years. The fund is more horse trader than operator. And it is willing to swallow losing investments as it buys on the cheap, realizing some gains and the occasional big hit on those bets.
Neil Chase, who served a stint as executive editor of MNG’s Bay Area Group and left for the nonprofit CalMatters at the end of 2018, told me that casting Alden as the Darth Vader of local news “is giving them way too much credit. They aren’t destroying journalism. They just don’t care about journalism … And they don’t have an end game — they want to come out with more money than before. Buy or sell, they are good either way.”
As a result, according to Chase and current top editors I spoke with, Alden is a non-presence in its newsrooms, pushing neither a political nor an operating agenda. Those still there can pursue what stories they want, albeit with a much smaller staff than they once had and anxiety over what more cuts may be coming.
Sound like a newsroom near you?
Also, these sources say, after the draconian newsroom cuts of early 2018, staffing at its largest papers and groups has held roughly steady, decreasing some by attrition but with no more layoffs.
Since the company does not entertain questions, it’s a guess why. More reductions could be on the way later this year. Or Alden may have calculated that it has reached the minimum number of staffers necessary to put out a news report people will pay for, now that it is revving up a drive for paid digital subscriptions.
I asked Frederick Melo, a reporter at the St. Paul Pioneer Press, who attended a Poynter seminar on building trust earlier this month, for a take on working in an Alden newsroom. He offered a mixed assessment.
“It’s been tough,” he said. “There are days that are straight up demoralizing. We had 235 respected journalists — editors, copyeditors, photographers, reporters — when I got here in 2005, and there’s about 40 of us left now. The county sheriff blows his budget by $1 million and there’s no one available to send to the county board meeting. That’s ridiculous.
“There’s a few upsides. Our eight-story downtown office building (has been) … liquidated, which is what Alden does … but we landed in newer, more modern leased digs just outside downtown. There’s free parking, a cafeteria and free gym in the basement. But the fact we could go from eight floors to consolidate into one floor is sad …
“Personally, my role is more valuable than ever. Everyone’s is. It’s like working for a start-up. There’s no fat. We’re all essential, and there’s fewer rings to kiss if you want to cover a story outside your beat. No one ever says ‘Stay in your lane,’ at least not anymore … These days I’ve written movie reviews, arts stories, state legislative stories, business, you name it.”
The Denver Post was the nexus of outrage over an Alden-mandated cut when it lost nearly a third of a news staff of 100 in early 2018. There have not been reductions since, editor Lee Ann Colacioppo told me. And there are no inhibitions to doing “some good and important work.”
Among examples she cited, were ongoing coverage of developer-controlled “metro districts that set their own tax rates” and a photojournalist’s report in pictures, video and text on families living near massive interstate construction.
“Doing important, relevant work is mostly about the talent in your newsroom and your newsroom’s commitment to do that work,” Colacioppo emailed. “I’d put the commitment of this room up against that of any newsroom in the country.”
Frank Pine, executive editor of the Southern California group including the Orange County Register, said he has a dedicated team covering the affordable housing crisis — “the biggest story in California.” A recent piece found that 97% of cities and counties were failing to meet state requirements for new home construction, essentially by withholding building permits.
Another pair of reporters have tackled topics as diverse as inadequate screening of predatory teachers and cronyism at a water district. “This may seem like a small potatoes story,” Pine said, “but it’s an example of the kind of grass-roots accountability journalism communities need and expect from us.”
Alden has been buying up newspapers for at least a decade. I first wrote about Alden and its reclusive founder-owner Randall Smith in July 2011. He has famously taken “no comment” inaccessibility to the extreme of not even being photographed since the 1980s.
As former editor Chase suggests, Alden is willing to sell as well as buy, unloading a group of 11 papers to Gannett in 2011, The Berkshire (Massachusetts) Eagle and The Salt Lake Tribune to local investors, and the New Haven Register and other Connecticut papers to Hearst.
While the object is indisputably to make money, Alden does not necessarily have a Midas touch. One of several owners of The Philadelphia Inquirer, it and a partner fund sold at about half of what they had paid in 2012. As a buyer of distressed assets, Alden misfires completely with some investments as with its purchase of Fred’s, a discount store and pharmacy chain, and most recently, Payless shoe stores, which are being liquidated in bankruptcy.
In a lengthy takeout on the Payless debacle, The New York Times concluded that Alden applied its knowledge to strip out expenses but never demonstrated any aptitude for learning the discount shoe business.
But a few good hits can make up for the misses. Alden is not really on the hook to satisfy debt-holders as, for instance, McClatchy was for many years before filing for Chapter 11 bankruptcy Feb. 13.
It just needs to hold a place in the portfolios of institutional investors, some of whom are attracted by Smith’s success over a long career and want the diversity of a distressed asset fund among their holdings. According to a Securities and Exchange Commission filing last year, Alden Global has slightly more than $1 billion under management.
Back in its early years, Alden was a more conventional newspaper investor. It combined the old Journal Register group with Dean Singleton’s Media News as both emerged from bankruptcy. And it put flamboyant digital evangelist John Paton in charge.
Among Paton’s innovations was the so-called Project Thunderdome, a 75-person well-staffed national news effort based in New York City and run by a group of digital all-stars including Jim Brady, Robyn Tomlin, Mandy Jenkins and the late Steve Buttry. Eventually Thunderdome failed to meet financial targets and was dissolved in April 2014. Paton departed a year later.
I also picked up on a rare breach of Smith’s news blackout. He spoke to a New York investors club in 2012 and his presentation was picked up by a newsletter.
In that speech, Smith said that Gannett (then including many TV stations) was the most undervalued stock in America. Alden bought a large block and sold it a year or so later at a big gain.
Alden has been particularly bête noire for the News Guild, which has chapters at 20 of the Media News Group papers, most of them longstanding as opposed to recently organized. Besides picketing in Denver and at Alden’s New York headquarters, the Guild has employed investigative reporter Julie Reynolds, who has done dozens of stories — a number of them focused on Smith’s successor overseeing the papers, the even more tight-fisted Heath Freeman.
Freeman was a placekicker in his days at Duke University, one of three siblings to attend, and his family has endowed the campus Center for Jewish Life there. Given his impact on local news, the Guild and student protestors suggested Duke turn down a gift from Freeman. The university declined.
As reporter Melo suggested to me, there is a flavor of living on borrowed time in Alden newsrooms, even as editors and reporters are free to pursue stories they think most important to their communities.
With another round of discouraging financial reports on the way in coming weeks, and 2020 showing no respite for big print revenue losses, I fear that more newspaper operations may come to look more like Alden’s within another year or two.
Rick Edmonds is Poynter’s media business analyst. He can be reached at firstname.lastname@example.org.