The New York Times, July 4, 2020 article: "Hedge Fund’s Run at Tribune Publishing ends With a New Board Seat" [Independence Day focus on evolving views of corporate "purpose"]

Source: The New York Times, July 4, 2020 article

Hedge Fund’s Run at Tribune Publishing ends With a New Board Seat

Journalists have been wary of Alden Global Capital, which is known for gutting newsrooms to eke out profits from struggling publications.

The Chicago Tribune Freedom Center, where the newspaper and others are printed. The newspaper’s parent company, Tribune Publishing, has been in negotiations with a shareholder, the hedge fund Alden Global Capital.Credit. Christopher Dilts/Bloomberg

By Marc Tracy

July 2, 2020

Alden Global Capital seemed in position this week to take control of Tribune Publishing, a move that would have enabled the New York hedge fund to merge the parent company of The Chicago Tribune and The Baltimore Sun with MediaNews Group, an Alden-owned newspaper chain, to create a new media giant.

Instead, after negotiations this week, Alden settled, for now, on something less ambitious: a Tribune Publishing board seat for one of its founders, Randall D. Smith, a onetime Bear Stearns partner who runs Alden with Heath Freeman.

As part of the deal that gives the investment firm more say in the company, Alden and Tribune Publishing extended a so-called standstill agreement, struck last year, that could prevent Alden from pursuing ownership of the Tribune chain for up to another year.

Alden’s designs on Tribune Publishing, a publicly traded company that owns nearly a dozen prominent metro dailies across the country, became clear in November, when it revealed that it had taken a 32-percent stake in the chain. That news led to an outcry from Tribune Publishing reporters, many of whom have denounced the hedge fund’s habit of slashing newsroom costs at its MediaNews Group papers.

At the close of this week’s negotiations, Alden agreed not to continue its pursuit until after the Tribune Publishing’s next annual shareholder meeting, which is scheduled to take place no later than June 15, 2021, according to a public filing Thursday.

The standstill agreement would no longer apply if some other entity acquired as much as 30 percent of Tribune Publishing or made an offer to buy the company, according to a public filing. If that were to happen, Alden would be free to pursue a deal for Tribune Publishing.

“Tribune Publishing will continue to focus on our long-term strategy to drive digital growth and invest in high-quality content while reducing legacy costs,” Philip G. Franklin, the chairman of Tribune’s board and not an Alden member, said in a statement.

Mr. Smith is the third executive from Alden or affiliated companies to join the Tribune Publishing board, which grew to seven seats, from six. The other Alden representatives are Dana Goldsmith Needleman and Christopher Minnetian.

Few newspapers have been immune to cost cuts since readers started getting their news from digital devices rather than printed pages. In that time, Alden has been aggressive in laying off newsroom employees in an effort to wring profits out of MediaNews Group, which operates roughly 200 publications.

Two years ago, journalists at The Denver Post, a MediaNews Group paper, blasted Alden in a special opinion section. “If Alden isn’t willing to do good journalism here, it should sell The Post to owners who will,” The Post's editorial board wrote in the lead editorial.

Journalists at Tribune Publishing papers believed they saw fresh evidence of Alden’s cut-to-the-bone style when the company offered buyouts in January. Then, in February, there was turnover: Terry Jimenez, the Tribune Publishing chief financial officer, replaced Timothy P. Knight as the company’s chief executive.

Weeks later, Mr. Jimenez announced a change in leadership at The Chicago Tribune: Bruce Dold, the publisher and editor in chief, was replaced by Colin McMahon, who had been Tribune Publishing’s chief content officer. Mr. Dold, a winner of a Pulitzer Prize, had worked at the paper for 42 years.

The coronavirus pandemic has hit the newspaper industry with a new challenge, now that struggling or shuttered businesses have reduced how much they spend on advertising. In response, Tribune Publishing imposed cuts, including three weeks of furloughs for some employees and permanent pay cuts for others.

After Alden became a significant part of the company at the end of last year, the NewsGuild union teamed with several Baltimore-area benefactors to push for local ownership of The Sun. Matthew D. Gallagher, the chief executive of the Goldseker Foundation in Baltimore, said his group had been “in contact” with Tribune Publishing, but he declined to comment further.

Journalists have also sought new ownership for other Tribune Publishing papers. Among those making the rounds were a pair of Chicago Tribune investigative reporters, who lobbied wealthy Chicagoans in an effort to keep Alden from taking control.

Those pushing for Tribune Publishing to sell its papers to local owners have found an ally in Mason Slaine, an investor who bought a roughly 7 percent stake of the company this spring.

“The newspapers should really be owned by the local communities,” Mr. Slaine, a former chief executive of Thomson Financial, said in an interview last month.

Mr. Slaine, who lives in Boca Raton, Fla., added that he had some interest in buying The Sun Sentinel of South Florida, a Tribune Publishing paper.

In 2018, Dr. Patrick Soon-Shiong, a billionaire medical entrepreneur, bought The Los Angeles Times, The San Diego Union-Tribune and other California papers from Tribune Publishing, then known as Tronc, for $500 million. Dr. Soon-Shiong is the second-largest shareholder in Tribune Publishing, with about a quarter of its shares.

Wall Street ownership of newspapers has become common, and Alden helped drive that trend since the Great Recession, when it started grabbing stakes in distressed media companies.

Last year, in a deal financed by the private equity firm Apollo Global Management, the newspaper chain Gannett was acquired by the parent company of GateHouse Media to form a giant that publishes more than 250 dailies. The resulting company, called Gannett, is controlled by another private equity fund, Fortress Investment Group, which is owned by the Japanese conglomerate SoftBank.

McClatchy, another chain, is likely to emerge from the bankruptcy it declared this year into the hands of its largest bondholder, the hedge fund Chatham Asset Management.

Alden itself recently disclosed a significant stake in the newspaper chain Lee Enterprises.

Tribune Publishing fell into bankruptcy a decade ago, shortly after it was bought by the Chicago billionaire Sam Zell. In 2016, the private equity firm Merrick Ventures became the largest shareholder in the company. Its chairman, Michael W. Ferro Jr., oversaw extensive job cuts before stepping down in 2018, after two women accused him of unwanted sexual advances.

Alden then made its move, acquiring approximately nine million Tribune Publishing shares held by Mr. Ferro and his company.

Marc Tracy covers print and digital media. He previously covered college sports.

A version of this article appears in print on July 4, 2020, Section B, Page 1 of the New York edition with the headline: Hedge Fund Delays Effort To Buy Tribune.