After failing to push 11 hours to find an alternative buyer, Tribune Publishing shareholders approved a $ 633 million sale of the newspaper chain to New York hedge fund Alden Global Capital on Friday.
Long before Alden’s takeover offer was announced in mid-February, local news advocates hired well-funded investors to buy nine newspapers, including the Chicago Tribune, New York Daily News, and Orlando Sentinel. I was struggling to recruit. Hedge funds are known for hollowing out newsrooms to increase profits.
Tribune Publishing union members rallied and lobbyed Dr. Patrick Sunsion, Shareholder and owner of the Los Angeles Times’ second-largest Tribune, assists in financing the acquisition or uses his shares to block Alden’s bid for Tribune Publishing.
Sunsion abstained from voting on Friday, effectively paving the way for sale.
Alden offered $ 17.25 in cash per share, and Sunsion’s Tribune shares were worth about $ 150 million.
“The brand and operation of local newspapers is the driving force behind reliable local news in communities across the United States. The acquisition of Tribune is a commitment and focus to the newspaper industry,” said Heath Freeman, president of Alden Global Capital, in a statement. Reaffirming. About delivering publications to a place where they can be operated sustainably over the long term. “
Alden was already the company’s largest shareholder. The transaction required the approval of two-thirds of Alden’s non-owned Tribune shares. If regulators approve the acquisition, the hedge fund’s newspaper division, Media News Group, will win trophies in New York, Los Angeles, and Chicago, the largest media markets in the United States. The company already owns more than 70 daily newspapers nationwide, including Orange County Register, Long Beach Press Telegram, and Los Angeles Daily News.
Ultimately, the final rescue effort was destined for a shortage of investors to buy the largest paper, the Chicago Tribune.
Tim Franklin, a former high-level editor of the Tribune and a senior associate Dean at Northwestern University’s Medical Journalism School near Chicago, said this week, “The major local investors and groups of investors haven’t come out before. It’s a shame and sad. ” “In a way, it’s confusing … Chicago is one of the financial centers in the United States — there’s a lot of money in this city.”
Franklin and other Chicago media veterans said several factors discouraged potential investors. Most important of these were the history of phlebotomy (weakening of products) and the dim economic outlook in the Tribune. Newspapers have lost print advertisers and subscribers for over a decade, and digital subscription sales haven’t replaced the lost revenue.
Chris Fusco, former editor-in-chief of the Chicago Sun-Times, said:
In addition, most of the online advertising costs go to Google and Facebook, not the news publishers.
“Many people in town see this as a very challenging business and it’s hard to find a way forward,” said Jim Kirk, Chicago’s Cranes Business publisher and editor-in-chief. (Kirk was formerly Editor-in-Chief of the Times.) “There is probably no clear business model for a metro of this size, except for nonprofits or the new all-digital format.”
The Tribunnews Room guild said in a statement: “Tribune Publishing shareholders have benefited our local news and voted greedily. We are saddened by the changes in the event, but our efforts over the past year have been to raise awareness about the community and Alden. — It ’s not in vain. ”
In recent years, millionaires have thrown lifelines at other struggling retailers.Amazon founder Jeff Bezos acquired The Washington Post in 2013 to fund a major expansion of the newsroom, and the following year Billionaire Glen Taylor, owner of Minnesota TimberwolvesI bought the Minneapolis Star Tribune. Sunsion acquired the Times in 2018.
Earlier this year, Maryland hotel mogul Stewart Bynum Jr. became interested in his hometown paper, The Baltimore Sun, which is part of the Tribune chain. The chairman of Choice Hotels International Inc. wanted to buy Sun and Annapolis Capital Gazette and transfer them to a non-profit organization that could survive.
Bainum has hired Swiss billionaire Hans Jürgwis to participate in his bid.Last month the pair offered $ 681 million for Tribune Publishing, surpassing Alden’s bid.. Wis, who has a home in Wyoming, wanted to restore the Chicago Tribune as a Midwestern Beacon. However, after looking at the company’s financial records, Wyss stopped working and needed a new partner in Bainum just weeks before the bidding deadline.
“Pulling out Wis was a devastating blow,” Franklin said. “There was a sophisticated businessman here who kicked the tires away, and it was not only a loss of capital, but also timing.”
As Bynum struggled to find a new investor, Tribune’s guild members turned to Sunsion to help buy the entire company or use his shares to refuse Alden’s trade.
“Our newsroom can still do a great job, but it’s getting harder every day,” wrote Greg Pratt, political reporter and president of the Chicago Tribune Guild, this week. In an open letter to Sunsion.. “That’s great, we’re not asking you to buy a company, but we’re asking you to use your power to stop Alden from integrating itself. I will. “
Soon-Shiong became an investor in Tribune Publishing in 2016 with a view to acquiring the Los Angeles Times, paying about $ 15 per share. Two years later, he signed a deal with the Times to buy the San Diego Union-Tribune for $ 500 million and returned the paperwork to local control. He also held an approximately 25% stake in Tribune Publishing.
But biomedical entrepreneurs Focused on his biological technology company, ImmunityBio has been developing cancer treatments and COVID-19 vaccines. He didn’t want to take on another major publisher. The publisher employs 3,000 people and operates in seven states. Tribune Publishing’s operating loss increased from $ 5 million in 2019 to $ 39 million annually.
“For the past few years, Tribune Publishing has been a passive investment and has continued to focus on the role of leadership throughout the company,” Sunsion spokesman Hillary Manning said in a statement. .. “When we made the investment in 2016, he wanted it to be the way to ownership of a local newspaper in Southern California. In 2018, he and his family went from Tribune Publishing to the Los Angeles Times. And acquired the San Diego Union-Tribune, California Times. Their focus has been on and will continue to be the continuous reconstruction and revitalization of the Times and Union-Tribune. They have been commissioned by these renowned newspapers to live long. We are honored to continue our efforts to ensure that. “
Since Soon-Shiong and his wife Michele acquired The Times, they have replenished newsrooms with unprecedented jobs, and their operations have more than doubled digital-only subscriptions to nearly 400,000. ..Family too Hired Kevin Merida, a respected editor from ESPNNext month, I will take over the management of the Times news room as editor-in-chief.
However, it was difficult to turn the Times around. Paper continues to lose money, but the situation worsened last year due to a pandemic and a surge in advertisers due to a stay-at-home order.
Soon-Shiong’s efforts are also complicated by Tribune Publishing’s 20-year campaign to consolidate its operations in Chicago. Instead of having a team to handle advertising sales, HR and computer technology in each market, we focused our support services on Chicago, which helped Tribune Publishing save money.
After the acquisition of Sunsion, the Times had to hire dozens of executives to perform advertising sales and other important business functions. It took two years for the Times to completely unleash its business from Tribune.
Investors who wanted to pull individual newspapers out of the group would have had the same headache.
That’s not the case because Alden has already centralized its operations.
Alden, which has been collecting local newspapers for over a decade, has aggressively cut costs and fired staff.
Through the MediaNews Group, Alden owns numerous news media in California, including San Bernardino Sun, Riverside Press-Enterprise, Torrance Daily Breeze, Pasadena Star News, Whittier Daily News, and San Jose Mercury News. Alden purchased a 32% stake in Tribune in 2019.
Journalists rubbed under Alden’s ownership. Three years ago, the editorial board of Alden’s flagship, The Denver Post, called the owner a “vulture” and lamented the loss of nearly two-thirds of its staff. “Here in Colorado, Alden has embarked on an ironic strategy of steadily increasing subscription rates while constantly reducing the quantity and quality of services it offers.” The board wrote..
Earlier this year, Connecticut Atty. General William Tong was so worried about Alden’s proposed acquisition of Tribune’s Hartford Courant. He sent a letter to President Heath Freeman Request information about the Tribune property plan. (A Tong spokesman said a review is underway this week).
The sale of Tribune Publishing, which has been struggling since Chicago real estate tycoon Sam Zell, who has made a name for himself as a “grave dancer,” used employee stock plans as a means of buying chains, has covered the turmoil for more than 15 years. ing. Within a year of the deal, the Great Depression struck and Tribune went into protracted bankruptcy proceedings.
The then-owning group, led by LA-based Oaktree Capital Management, began selling profitable assets, including key real estate in the following treatises: Times Art Deco headquarters in downtown Los Angeles.. And 36 stories, Chicago Neo Gothic Tribune Tower.. Eventually, new investors were added, including technology entrepreneur Michael Ferro. Michael Ferro has devised an unexpected marketing campaign to rebrand the company under the name Tronc. Ferro later faced allegations of sexual misconduct and ContrarySemitic statement, He denied it and eventually Sold his stock to Alden..
Franklin said the company’s turbulent history probably discouraged investors.
“I think I’m a little tired of the Tribune situation,” Franklin said. “Major investors like stability … and in my sense, people in the civilian world conclude that this roller coaster ride is too wild and has too many sharp turns. I just decided not to ride. “
This story was originally Los Angeles Times..