Controversial hedge fund wins bid for Tribune papers

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After the failure of an Eleventh-hour push to search out another purchaser, Tribune Publishing shareholders on Friday authorized the $633-million sale of the newspaper chain to the New York hedge fund, Alden International Capital.

Lengthy earlier than Alden’s proposed buy of Tribune Publishing was introduced in mid-February, native information proponents had been scrambling to recruit deep-pocketed buyers to purchase the 9 newspapers, together with the Chicago Tribune, New York Day by day Information and Orlando Sentinel. The hedge fund is understood for hollowing out newsrooms to spice up earnings.

Tribune Publishing union members held rallies and lobbied Dr. Patrick Quickly-Shiong, the second-largest Tribune shareholder and proprietor of the Los Angeles Instances, to assist finance the buyout — or use his shares to dam Alden’s bid for Tribune Publishing.

Quickly-Shiong abstained from Friday’s vote, successfully clearing the best way for the sale.

Alden provided $17.25 a share in money, making Quickly-Shiong’s Tribune stake value about $150 million.

“Native newspaper manufacturers and operations are the engines that energy trusted native information in communities throughout america,” stated Heath Freeman, president of Alden International Capital in a press release. “The acquisition of Tribune reaffirms our dedication to the newspaper trade and our deal with getting publications to a spot the place they will function sustainably over the long run.”

Alden already was the corporate’s largest shareholder. The deal required approval of holders of two-thirds of Tribune inventory not owned by Alden. If regulators approve the takeover, the hedge fund’s newspaper arm, MediaNews Group, will declare trophies within the nation’s largest media markets — New York, Los Angeles and Chicago. The agency already boasts greater than 70 dailies throughout the nation, together with the Orange County Register, Lengthy Seaside Press-Telegram and Los Angeles Day by day Information.

Finally, the last-ditch rescue effort was doomed by an absence of buyers to purchase the most important paper — the Chicago Tribune.

“It’s disappointing and unhappy {that a} main native investor or investor group hasn’t come ahead,” Tim Franklin, a former high-level editor on the Tribune and senior affiliate dean at Northwestern’s Medill College of Journalism close to Chicago, stated this week. “In some methods, it’s confounding. … Chicago is likely one of the monetary facilities within the U.S. — there may be some huge cash on this metropolis.”

A number of elements discouraged potential buyers, Franklin and different Chicago media veterans stated. Chief amongst them was a historical past of blood-letting at Tribune papers — weakening the product — and dim monetary prospects. Newspaper corporations have been dropping print advertisers and subscribers for greater than a decade, and gross sales of digital subscriptions haven’t come near changing the print income that has been misplaced.

“All of those publications grew to become overly reliant on print income — promoting and circulation — and that cash has simply dried up,” stated Chris Fusco, former govt editor of the Chicago Solar-Instances.

As well as, the overwhelming majority of internet marketing {dollars} move to Google and Fb as an alternative of reports publishers.

“Lots of people on the town view this as a really difficult enterprise, and it’s tough to see a path ahead,” stated Jim Kirk, writer and govt editor of Crain’s Enterprise in Chicago. (Kirk beforehand served as editor in chief of The Instances.) “There’s not an apparent enterprise mannequin for a metro of this measurement, besides maybe as a non-profit or a newish all-digital format.”

Tribune newsroom guilds stated in a press release: “Tribune Publishing shareholders voted to place revenue and greed over native information in our nation. Whereas we’re saddened by the flip of occasions, we all know that our work over the previous yr — to construct allies locally and to lift consciousness about Alden — just isn’t in useless.”

Billionaires have thrown a lifeline to struggling retailers.
Amazon founder Jeff Bezos’ acquired the Washington Put up in 2013, and financed a significant newsroom enlargement and the next yr; billionaire Glen Taylor, proprietor of the Minnesota Timberwolves, purchased the Minneapolis Star-Tribune.

Earlier this yr, Maryland resort magnate Stewart Bainum Jr. expressed curiosity in his hometown paper, the Baltimore Solar, which is a part of the Tribune chain. The Alternative Accommodations Worldwide Inc. chairman wished to purchase the Solar and the Annapolis Capital Gazette and switch them to a nonprofit group that might maintain alive these establishments.

Bainum recruited Swiss billionaire Hansjörg Wyss to affix his bid. Final month, the pair provided $681 million for Tribune Publishing, topping the Alden bid. Wyss, who has a house in Wyoming, wished to revive the Chicago Tribune as a beacon of the Midwest. However, after wanting on the monetary data, Wyss give up the hassle — leaving Bainum in want of a brand new accomplice simply weeks earlier than the bidding deadline.

“Wyss pulling out was a devastating blow,” Franklin stated. “Right here you had a classy businessman who kicked the tires, after which walked away. And it wasn’t simply the lack of capital — it additionally was the timing.”

As Bainum struggled to search out new buyers, Tribune guild members turned to Quickly-Shiong for assist in shopping for your complete firm or utilizing his shares to veto the Alden deal.

“Our newsroom continues to be in a position to do nice work, however it’s getting more durable on daily basis,” Greg Pratt, a political reporter and president of the Chicago Tribune Guild, wrote this week in an open letter to Quickly-Shiong. “We’re not asking you to purchase the corporate, although that might be nice. However we’re asking you to make use of your energy to cease Alden from consolidating its personal.”

Quickly-Shiong grew to become an investor in Tribune Publishing in 2016, paying about $15 a share, with an eye fixed towards buying the Los Angeles Instances. Two years later, he struck a deal to purchase The Instances and the San Diego Union-Tribune for $500 million, returning the papers to native management. He additionally stored his roughly 25% stake in Tribune Publishing.

However the biomedical entrepreneur has been centered on his organic expertise firm, ImmunityBio, which has been creating most cancers therapies and a COVID-19 vaccine. He didn’t need to tackle one other main publishing firm, this one with 3,000 staff and operations in seven states. Tribune Publishing’s working loss widened to $39 million for the yr, up from $5 million in 2019.

“For the previous a number of years, Tribune Publishing has been a passive funding, as he has remained centered on the management roles he holds throughout his corporations,” Hillary Manning, a spokesperson
for Quickly-Shiong, stated in a press release. “When he made the funding in 2016, he hoped it might be a pathway to native newspaper possession in Southern California. In 2018, he and his household have been proud to amass the Los Angeles Instances and San Diego Union-Tribune from Tribune Publishing, creating the California Instances. Their focus is and can be on the continued rebuilding and revitalization of The Instances and Union-Tribune. They continue to be honored to be entrusted with these storied information organizations and proceed working to safe their longevity.”

Dr. Patrick Soon-Shiong at his office in Culver City in March 2018. (Christina House / Los Angeles Times)

Dr. Patrick Quickly-Shiong, proprietor of the Los Angeles Instances.

(Christina home/Los Angeles Instances)

Since Quickly-Shiong and his spouse, Michele, acquired The Instances, they’ve replenished the newsroom with an unprecedented hiring spree and the operation has greater than doubled its digital-only subscriptions to just about 400,000. The household additionally employed a revered editor from ESPN, Kevin Merida, who will assume management of The Instances’ newsroom as govt editor subsequent month.

However turning round The Instances has been daunting. The paper continues to lose cash, a scenario worsened final yr amid a flight of advertisers because of the pandemic and stay-at-home orders.

Quickly-Shiong’s efforts even have been sophisticated by Tribune Publishing’s two-decade marketing campaign of consolidating enterprise operations in Chicago. As an alternative of getting groups in every market to deal with advert gross sales, human assets and pc expertise, assist providers have been centralized in Chicago, which enabled Tribune Publishing to slash overhead prices.

After the Quickly-Shiong takeover, The Instances needed to rent dozens of executives to hold out advert gross sales and different necessary enterprise features. It took two years for The Instances to completely unwind its operations from Tribune.

Any investor who wished to pluck a person title from the group would have the identical complications.

That’s not the case for Alden as a result of it already has centralized its operations.

Alden, which has amassed native newspapers for greater than a decade, has aggressively lower prices and laid off workers.

By way of its MediaNews Group, Alden owns a big portfolio of reports retailers in California, together with the San Bernardino Solar, Riverside Press-Enterprise, Torrance Day by day Breeze, Pasadena Star Information, the Whittier Day by day Information and the San Jose Mercury Information. Alden purchased its 32% stake in Tribune in 2019.

Journalists have chafed beneath Alden’s possession. Three years in the past, the editorial board at Alden’s flagship in Colorado, the Denver Put up, known as its house owners “vultures,” and lamented the lack of practically two-thirds of the workers. “Right here in Colorado, Alden has launched into a cynical technique of continually lowering the quantity and high quality of its choices, whereas steadily rising its subscription charges,” the board wrote.

Earlier this yr, Connecticut Legal professional Normal William Tong was so involved in regards to the Alden’s proposed take-over of Tribune’s Hartford Courant that he despatched a letter to Alden president Heath Freeman to demand details about its plan for the Tribune properties. (A spokesperson for Tong stated this week the overview was ongoing).

The sale caps greater than 15 years of turmoil for Tribune Publishing, which has struggled since Chicago actual property tycoon Sam Zell, who normal himself because the “grave dancer,” used staff’ inventory plans as a automobile to buy the chain. Inside a yr of that deal, the Nice Recession hit and Tribune plunged right into a protracted chapter continuing.

Then-ownership group, led by LA-based Oaktree Capital Administration, started promoting profitable property, together with the papers’ prime actual property equivalent to The Instances’ artwork deco headquarters in downtown L.A. and the 36-story, neo-Gothic Tribune Tower in Chicago. New buyers finally joined, together with tech entrepreneur Michael Ferro, who concocted an ill-conceived advertising marketing campaign to rebrand the corporate Tronc. Ferro, who finally confronted allegations of sexual misconduct and making anti-Semitic statements, finally bought his stake to Alden. Ferro denied the claims as unfounded.

Franklin stated the corporate’s turbulent historical past additionally in all probability dissuaded buyers.

“I feel there’s a little bit of exhaustion in regards to the scenario on the Tribune,” Franklin stated. “Main buyers like stability … and my sense is that people within the civic circles have concluded that this roller-coaster trip has been too wild with too many sharp turns. They simply determined to not get on.”

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