Alden Global Capital, a hedge fund known for cutting journalists at local papers to maximize profits, is buying out the remainder of Tribune Publishing, the parent company to the Chicago Tribune, New York Daily News and other local papers.
Driving the news: With the sale, the two companies also announced that The Baltimore Sun would be acquired by a nonprofit backed by a Maryland-based hotel billionaire.
Why it matters: The deal creates one of the largest local publishing giants in America. Alden already owns hundreds of papers through its majority ownership of MNG (MediaNews Group) Enterprises, known commonly as Digital First Media, which controls papers like the Denver Post and the Boston Herald.
Details: The deal gives Alden 68% of the shares it doesn't already own in the Tribune for roughly $431 million, per The Chicago Tribune — valuing the full company at $630 million.
- The share price from the merger is up slightly from when the two companies began negotiating last year, with interest in the takeover likely giving it a boost.
- As a part of the agreement, Alden agreed to sell the Baltimore Sun, The Capital Gazette in Annapolis, and a few other smaller papers, to a nonprofit called the Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., a former Maryland politician and hotel magnate.
- Bainum Jr. is a former Maryland politician and hotel magnate.
Yes, but: Given Alden's history, a takeover is expected to lead to a restructuring that could result in more local news jobs being cut.
- Tribune newsrooms have been bracing for this moment. Buyouts were offered to Chicago Tribune and Orlando Sentinel journalists in early January of last year, following Alden's increased stake in Tribune in 2019, as Axios reported.
Be smart: The full takeover has been a long time coming.
- Alden initially took a 25% stake in Tribune in late 2019 from Tribune's largest shareholder Michael Ferro in 2019. It later disclosed a bigger, 32%, stake.
- It increased its footprint at Tribune in recent months, negotiating for a third seat on Tribune's seven-person board.
- The negotiation for that board seat meant that Alden had to extend a deal that prevented the hedge fund from increasing its stake in the company, unless there was interest from an outside bidder, until 2021.
- Tribune has been pushing to offload assets, primarily real estate, to survive the financial headwinds driven by the pandemic.
The big picture: The Tribune takeover is the latest example of a storied local news company being gobbled up by a hedge fund amid a bleak time for local news.
- Tribune rival McClatchy, home to papers like the Miami Herald and The Sacramento Bee, was bought by a hedge fund last year as a result of a bankruptcy auction.
- A study released in 2018 by the University of North Carolina found that newspaper sales, closures and mergers via the seven largest paper investment owners have increased over the past five years. As Axios has previously noted, hedge funds or private equity groups based in big cities are typically responsible for the takeovers.
- Alden tried to buy out local media company Gannett in 2019, but failed, leaving the parent company to USA Today to merge with rival newspaper giant Gatehouse.
What to watch: The deal, which still requires shareholder approval, is expected to close in Q2 of this year. One of the Tribune's largest shareholders, who has said little publicly about the takeover bid is Patrick Soon-Shiong, who purchased the Los Angeles Times and the San Diego Union-Tribune from Tribune in 2018 for $500 million.