April 29, 2021

With about 10 days left for Stewart Bainum Jr. to resubmit an offer for Tribune Publishing, the odds against that happening are lengthening.

Bainum continues “a Herculean effort” to find fellow investors, a source familiar with his thinking told me, but has hit a potential deal-killing wall: No one seems to want to buy the Chicago Tribune.

“Unless someone stands up” to purchase the Tribune once if an offer can be assembled, the source said, it now looks unlikely that Bainum will be able to make good on his ambition to save the chain from hedge fund Alden Global Capital.

Alden has a contract to buy Tribune Publishing for $630 million, approved by a special committee of its board and scheduled for a vote of shareholders at a virtual meeting May 21.

Bainum’s former partner, Swiss billionaire Hansjörg Wyss, had his eye on the Chicago Tribune, hoping to make it into a hybrid regional and national paper. Wyss withdrew April 16, nullifying a $680 million offer he and Bainum had made.

The Tribune is the largest and thus most expensive of Tribune Publishing’s nine metros. There are potential but not firm buyers for some of the others. Bainum’s biggest interest continues to be The Baltimore Sun in his home state of Maryland, the source said, and he does not want to try to assemble a company that could run the Chicago Tribune for the long run, too.

A source working with Tribune Publishing’s special board committee told me that a financed and firm offer might still cause the board to reconsider. But after Wyss withdrew, the committee cut off communication with Bainum and has declined to make its financials available to other potential buyers.

There is no formal deadline for a counterbid, but the source close to Bainum said that, practically, a deal would need to be completed by the end of next week if it is to be considered.

Alden has owned 32% of Tribune stock since fall 2019. When it bid for the rest of the company in December 2020, the fund cited a tentative agreement to sell the Sun to a nonprofit Bainum was setting up for $65 million.

That side agreement came apart when Alden demanded a multi-year contract to provide services that are currently shared by all papers in the chain. Bainum and his advisers thought the contract was too expensive and would tie their hands. So they backed out as they were putting together the bid with Wyss.

It is not clear whether the original deal for the Sun can be revived, restoring the paper to local ownership. The offer of $65 million was “a significant premium” over what an appraisal of the daily newspaper and its other Maryland holdings would be, Bainum’s associate told me, plus he shifted his focus the last several months to saving the whole company.

Bainum made his fortune in Choice Hotels, a publicly traded company that traces its roots to the Quality Courts motel chain in the 1940s. In his mid-70s, he remains chairman but has stepped away from day-to-day management. He and his wife have signed The Giving Pledge, an organization of billionaires who have agreed to give away at least half their wealth.

Other papers that will pass into Alden’s hands if the fund’s deal goes through include the Orlando Sentinel, the South Florida Sun-Sentinel, The Virginian-Pilot and Daily Press of Newport News in the Hampton Roads region of Virginia, the New York Daily News, The Hartford Courant and The Morning Call of Allentown, Pennsylvania.

Alden already owns 60 dailies that it operates in its MediaNews Group chain. It has earned a reputation for ruthless cost-cutting of newsrooms and the rest of the enterprise.

The NewsGuild has waged a long-running public relations campaign against Alden. Local Guild chapters have been attempting this year to identify potential buyers in their communities.

I emailed an Alden representative and leaders of the Guild effort seeking comment for this story but did not hear back.

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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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