May 21, 2021

Tribune Publishing said that hedge fund Alden Global Capital’s bid for the company, valued at $630 million, was approved Friday at a virtual shareholders meeting, as had been expected.

The merger of Tribune’s nine metros with Alden’s MediaNews Group and its roughly 60 dailies, to be completed by June 30, will create the nation’s second-largest newspaper chain after Gannett’s. Tribune’s outlets are in Chicago and various eastern states; MediaNews Group’s in Denver and California. That will give the combined company a national footprint.

A special meeting to consider the transaction convened at 10 a.m. Central time and adjourned 15 minutes later. However, there was some confusion for several hours about the result thanks to an unexpected vote and announcement by Dr. Patrick Soon-Shiong.

Soon-Shiong, the owner of the Los Angeles Times, has a 24% share of Tribune Publishing stock — second only to the 32% Alden had already accumulated. Rules for the shareholder vote required two-thirds approval by shareholders not affiliated with Alden. So a no vote from Soon-Shiong would cause the deal to fail, leaving Tribune Publishing an independent public company.

But instead of voting for or against, Soon-Shiong said in a statement issued through a spokesperson he “abstained from voting.” Voting rules in a proxy for the meeting indicated unambiguously that a vote to abstain would be counted as a vote against. But language on the ballot itself apparently said that unmarked ballots would be counted as a vote for the plan.

The spokesperson explained Soon-Shiong’s action as follows: “For the past several years, Tribune Publishing has been a passive investment, as he has remained focused on the leadership roles he holds across his companies. When he made the investment in 2016, he hoped it would be a pathway to local newspaper ownership in Southern California. In 2018, he and his family were proud to acquire the Los Angeles Times and San Diego Union-Tribune from Tribune Publishing, creating the California Times.

“Their focus is and will be on the continued rebuilding and revitalization of The Times and Union-Tribune. They remain honored to be entrusted with these storied news organizations and continue working to secure their longevity.”

In any case, Soon-Shiong will get between $150 million and $160 million in cash when the transaction closes — without going on record as approving the deal. I suspect that spin was intended.

Other players in the hotly contested takeover drama were also ready with comments. Alden has been slammed, especially by the NewsGuild, for making deep cuts at its existing properties.

By way of rebuttal, Heath Freeman, president of Alden, said through a spokeswoman, “Local newspaper brands and operations are the engines that power trusted local news in communities across the United States. 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.”

Maryland hotel chain executive Stewart Bainum Jr. first tried to acquire The Baltimore Sun in an agreement with Alden last December. When that fell through, he shifted strategy and tried unsuccessfully to assemble partners for a higher bid than Alden’s for the whole company.

Bainum’s statement hinted that he will renew pursuit of The Sun, or launch a nonprofit digital news startup in the city:

My family and I are deeply grateful to the journalists, readers, and civic-minded investors who teamed with us to help rescue, re-imagine and reinvigorate local journalism. While our effort to acquire the Tribune and its local newspapers has fallen short, the journey reaffirmed my belief that a better model for local news is both possible and necessary.

Today, my focus remains where it began: in the city of Baltimore and my home state of Maryland. I am busy evaluating various options, all in the pursuit of creating locally-supported, not-for-profit newsrooms that place stakeholders above shareholders and journalistic integrity above all.

Baltimore has a proud tradition of impactful journalism that resonates within its borders and far beyond, and I am excited to be working with those who are committed to writing its next chapter. In the days ahead, I expect to make an announcement that might just make some news on its own.

Lawsuits challenging the deal — from the NewsGuild and others — are likely, arguing that Tribune and its advisers greased the wheels for Alden’s victory at a lowball price undervaluing the company. At least four shareholder rights law firms have been soliciting plaintiffs.

However, with Alden’s offer on the table since Dec. 31, no one else came forward with a better one. That seems to confirm that the sector is deeply out of favor with investors so much so that only a hedge fund specializing in distressed assets would want to buy — even with a trophy property like the Chicago Tribune part of the deal.

Besides the Tribune and The Sun, Tribune Publishing has daily metros in Orlando, Fort Lauderdale, Norfolk, Newport News, New York City, Hartford and Allentown, Pennsylvania.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
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