May 20, 2021

Friday is election day for Tribune Publishing shareholders. They will vote at a virtual meeting on whether to accept a bid from hedge fund Alden Global Capital to buy the company for $17.25 a share in a transaction valued at $630 million.

There are no sure things in a hotly contested takeover like this one, but Alden, despite its reputation for milking papers for profit while slighting journalism and investments in the future, seems likely to prevail.

The market seems to think so. Tribune Publishing shares were trading at $17.25 in the early afternoon — exactly Alden’s price.

No other offer is on the table, and a rejection would send the stock price back down. (It traded around $12.50 a share before Alden’s bid.)

Maryland philanthropist Stewart Bainum Jr. had hoped to put together a higher bid of $18.50 a share, with plans to make The Baltimore Sun a nonprofit and keep it for himself while finding local buyers for the company’s other metros.

However after partner Hansjörg Wyss backed out, he and his consultants were unable to identify anyone in Chicago interested in buying the flagship Chicago Tribune.

An element of suspense is how Dr. Patrick Soon-Shiong, owner of the Los Angeles Times and holder of about 24% of Tribune Publishing stock, will vote. The voting rules are written so that a no vote from Soon-Shiong would kill the deal. He hasn’t said how he will vote or discussed his thinking.

With the Los Angeles Times rebuild consuming more cash and effort than expected, Soon-Shiong likely does not want to be double invested in the challenging newspaper industry. Though a yes vote will bring punishing cuts to the Tribune Publishing properties, he can plausibly say he is in the process of saving one fine paper but can’t take on rescuing more of the industry.

Soon-Shiong has ample energy and wealth (with a net worth of $15 billion by Bloomberg’s estimate). Lately he has demonstrated fresh commitment to his primary business interest — medicine and biotech. Last week he pledged $200 million to make COVID-19 vaccines available in his native South Africa.

The NewsGuild, with chapters at all but one Tribune paper, has waged a vigorous public relations campaign against Alden and the deal. In a letter to shareholders, it argued the bid undervalued the company.

That position received an unexpected ally when Tribune Publishing CEO Terry Jimenez, one of seven board members, indicated he will vote no. The company has strong growth and profit prospects for 2021 and beyond, he said, and therefore can keep operating as is.

Several shareholder suits challenging the sale have been filed and more may be in prospect. It is hard for me to gauge their chance of success.

Results are typically revealed the same day as the meeting. When Gannett shareholders voted for a merger with the GateHouse chain in November 2019, the final agreement was signed within five days. Alden could take control as soon as next week.

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

I asked guild president Jon Schleuss for a comment and he replied: “The NewsGuild is opposed to Alden’s attempt to take over Tribune Publishing. We’ve seen directly how devastating their cuts are — cutting 75% of staff in less than a decade in newsrooms where we represent workers.

“We also have pointed out why this takeover needs more scrutiny, based on Alden’s opaque finances. Many high-ranking politicians have also opposed the takeover. Regardless of tomorrow’s vote, thousands of our journalists will continue to hold Alden accountable for destroying great newsrooms across the country and look for sustainable alternatives to protect the watchdogs of our democracy.”

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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…
Rick Edmonds

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