On May 21, Tribune Publishing Co. confirmed that its shareholders approved a buyout offer by Alden Global Capital LLC. The vote gives Alden – an entity with a reputation for aggressive cost-cutting – control over the Chicago Tribune, the Baltimore Sun and the New York Daily News, along with a smattering of smaller papers. The $633 million deal adds nine more to the approximately 200 newspapers Alden has commandeered since its founding in 2007. University of Illinois Urbana-Champaign journalism professor Brant Houston, the Knight Chair in Investigative and Enterprise Reporting at Illinois, spoke with News Bureau editor Lois Yoksoulian about the recent transaction.
Who is Alden Global Capital LLC, and why is this move by the shareholders of Tribune Publishing Co. considered to be problematic by many journalists?
Alden Global Capital LLC is a hedge fund that has become the second-largest owner of daily newspapers in the United States. While Alden Capital says it is saving newspapers, it is regarded by journalists as a hedge fund that is harvesting newspapers. That is, getting all the profits possible out of the newsrooms by cutting staff through layoffs and buyouts, and selling the newsroom real estate while having no intention of investing in the newsrooms.
Alden has also been called a “vulture” fund because of the way it has cut costs to increase profit. In fact, Alden began offering buyouts to nonunion Tribune Publishing Co. employees within two days of the buyout.
How might Alden’s takeover affect the content of newspapers under the Tribune Publishing Co. umbrella?
As with Alden’s other purchases, we can expect newsroom staff to be severely cut, thus reducing coverage and the ability of the Tribune Publishing Co. newspapers to provide sufficient community and watchdog reporting. The purchase has been viewed as a nightmare for working journalists since it was proposed.
How is this different from a purchase by a wealthy individual, like Jeff Bezos’ purchase of The Washington Post, for example?
Jeff Bezos purchased The Washington Post in 2013 and improved its digital business strategy and content. He increased staff and improved the website and measurement of reader traffic. Bezos invested his own money when purchasing the Post.
Do you think there is a better business model that for-profit papers could be following that would prevent these types of takeovers at other newspapers?
The best alternative to a for-profit business model – other than wealthy individuals or hedge funds who believe in the future of newsrooms – is to become a nonprofit. More newspapers are converting to nonprofit status to avoid the pressure of stockholders and hedge funds to produce substantial profits. And startup newsrooms are mostly beginning as nonprofits.
The number of nonprofit newsrooms in the U.S. that have had to meet the transparency and independence standards of the Institute for Nonprofit News has increased from 25 to nearly 250 since 2009, and more are being developed and going online each month.