In the end, the hedge fund prevailed.
Tribune Publishing shareholders, whose titles include The Chicago Tribune, The Baltimore Sun and The New York Daily News, agreed on Friday to sell the company to Alden Global Capital, an investor with a reputation for cutting costs and jobs dismantle.
Alden’s offer, which already owns around 200 local newspapers, met with resistance: Journalists in Tribunes newspapers protested against the sale and publicly pleaded for another buyer. Stewart W. Bainum Jr., a Maryland hotel manager who had planned to buy The Baltimore Sun, offered a glimmer of hope when he showed up with a last-minute deal for the entire company. He was briefly supported by a Swiss billionaire.
However, the competing offer never came together in full, leaving Tribune shareholders a choice of approving or rejecting Alden’s offer. Tribune’s board of directors had recommended voting for the sale.
“The Tribune purchase confirms our commitment to the newspaper industry and our focus on getting publications to a place where they can function sustainably over the long term,” Alden president Heath Freeman said in a statement Friday to The Associated Press and the Chicago Tribune reported that the deal had been approved.
Friday’s vote had required the approval of two-thirds of the shares held by investors other than Alden, who hold a 32 percent stake in Tribune.
The company’s second largest shareholder, Dr. Patrick Soon-Shiong, who owns a 24 percent stake in Tribune, did not cast a vote, his spokeswoman said on Friday.
“Over the past few years, Tribune Publishing has been a passive investment as it has continued to focus on the leadership roles it holds in its companies,” said the spokeswoman for Dr. Soon-Shiong in a statement emailed.
Alden began buying news agencies more than a decade ago and owns the MediaNews Group, the second largest newspaper group in the country, with titles like The Denver Post and The Boston Herald. While buying a newspaper in an era of shrinking print runs and advertising sounds like a questionable investment, Alden has found a way to make a profit by laying off workers, cutting costs, and selling real estate.
“Alden’s playbook is pretty simple: buy cheap, cut deeper,” said Jim Friedlich, executive director of the Lenfest Institute for Journalism, a nonprofit journalism organization owned by The Philadelphia Inquirer. “There is little reason to believe that Alden will approach full ownership of Tribune any differently than the other news properties.”
The hedge fund’s first priority would be to consolidate Tribune’s operations with those of its other newspapers, which would result in job losses and cost savings, predicted Friedlich, who acted as unpaid advisor to Mr Bainum.
“This is the strategic logic of the acquisition and one would hope – but not expect – that the savings from these synergies will be reinvested in local journalism and digital transformation,” he said.
Tribune agreed in February to sell to Alden, which owned it for years, a deal worth approximately $ 630 million to Alden.
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Mr Bainum emerged as a potential savior in February when he announced that he would be creating a nonprofit to buy The Baltimore Sun and other Maryland newspapers from Alden once the Tribune purchase was completed. However, his business with Alden soon ran aground when negotiations about the works agreements that would come into effect when the papers were handed over stalled.
As a result, Mr. Bainum made a full-company offer on March 16, surpassing Alden with an offer that valued the company at approximately $ 680 million. He was joined by Hansjörg Wyss, a Swiss billionaire who lives in Wyoming and who had expressed an interest in the Chicago Tribune property. Mr. Bainum would have raised $ 100 million, Mr. Wyss funded the rest.
Tribune agreed to look into the offer from the couple, who started a company called Newslight, and said on April 5 that it would begin negotiations because it had decided the deal could result in a “superior proposal.” Part of the discussion involved access to Tribune’s finances.
Mr. Wyss took himself out of the equation less than two weeks later and left the listing after his staff reviewed the books. One reason for his decision, according to those knowledgeable, was that his plans to convert the Chicago newspaper into a competitive national daily would be nearly impossible to implement.
Mr. Bainum told Tribune on April 30 that he would increase the amount of money he would personally use to fund the fund from $ 100 million to $ 300 million as he sought like-minded investors to replace Mr. Wyss. In addition to the need to fund the remainder of his $ 380 million offer, Mr. Bainum’s offer was contingent on finding someone to take responsibility for The Chicago Tribune, according to three people aware of the discussions.
In a statement on Friday, Mr. Bainum thanked “the journalists, readers and civic investors” who had supported his mission.
“Although our efforts to acquire the Tribune and its local newspapers have failed, the trip confirmed my belief that a better model for local news is both possible and necessary,” he said.
Mr Bainum said he has continued to focus on Baltimore, reviewing various options for locally-supported nonprofit newsrooms and will announce this in the coming days.
“Baltimore has a proud tradition of impactful journalism that resonates within and beyond its borders, and I look forward to working with those who are committed to writing the next chapter,” he said.
