The hedge fund that wants to buy Tribune Publishing, which owns some of the country’s leading metropolitan newspapers, has one final hurdle to overcome.
Shareholders in the news company, whose headlines include The Chicago Tribune, The Baltimore Sun and The New York Daily News, will vote on Friday whether to approve the sale of the company to Alden Global Capital, a notorious investor for reducing costs and jobs. in the 200 or so newspapers he already owns.
Alden’s effort to buy Tribune met with resistance: Journalists from Tribune newspapers protested the sale and publicly pleaded for another buyer to intervene. A Maryland hotel executive who had planned to buy the Baltimore Sun offered a silver lining when he came out with a last – a company-wide offer in minutes. He was supported for a brief period by a Swiss billionaire.
But the competing offer was never fully closed, so the choice of Tribune shareholders is to approve or reject Alden’s offer. Tribune’s board of directors recommended voting for the sale.
The deal requires the approval of two-thirds of shareholders other than Alden, which owns a 32% stake in Tribune. Dr Patrick Soon-Shiong, a billionaire medical entrepreneur who owns the Los Angeles Times and a number of other California newspapers with his wife, Michele B. Chan, owns a 24% stake in Tribune, which means he alone could close the sale.
Dr Soon-Shiong has not publicly commented on how he intended to vote and again declined to do so on Thursday, but his ability to influence the outcome has not gone unnoticed. In an open letter posted to Medium this week, Gregory Pratt, the President of the Chicago Tribune Guild, begged Dr Soon-Shiong to vote “No” on Friday.
âAs the second shareholder of Tribune Publishing, you single-handedly can stop Alden from sealing the deal,â Mr. Pratt wrote. âWe’re not asking you to buy the business, although that would be great. But we ask you to use your power to prevent Alden from consolidating his. “
Alden started buying news outlets over a decade ago and owns MediaNews Group, the country’s second largest newspaper group, with titles such as The Denver Post and The Boston Herald. While buying a newspaper may seem like a questionable investment in an era of dwindling print circulation and advertising, Alden has found a way to make a profit by laying off workers, cutting costs and selling real estate.
âAlden’s playbook is pretty straightforward: buy low, cut deeper,â said Jim Friedlich, executive director of the Lenfest Institute for Journalism, a nonprofit journalism organization that owns The Philadelphia Inquirer. “There is little reason to believe that Alden will approach full ownership of Tribune any differently from other news sites.”
The hedge fund’s first priority would be to consolidate Tribune’s operations with those of its other newspapers, resulting in job losses and cost savings, predicted Friedlich, who served as an unpaid advisor to Stewart W. Bainum Jr., the Baltimore hotel mogul who made a last ditch effort to compete with Alden’s offer.
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“This is the strategic rationale of the acquisition, and one would hope – but not expect – that the savings from these synergies would be reinvested in local journalism and digital transformation,” he said.
Tribune, Alden Global Capital and Mr Bainum declined to comment ahead of the vote.
Tribune agreed in February to sell to Alden, who had claimed ownership for years, in a deal that valued Tribune at around $ 630 million.
While a sale to Alden now seems inevitable, the twists and turns of recent weeks had seemed to favor Tribune journalists.
Mr Bainum emerged as a potential savior in February, when he announced he would form a nonprofit to buy The Baltimore Sun and other Maryland newspapers from Alden once his Tribune purchase was completed. But his deal with Alden soon collapsed as negotiations stalled over the operating agreements that would be in effect when the papers were transferred.
So Mr. Bainum made a company-wide offer on March 16, outperforming Alden with an offer that valued the company at around $ 680 million. He was later joined by HansjÃ¶rg Wyss, a Swiss billionaire who lives in Wyoming and had expressed interest in owning the Chicago Tribune. Mr. Bainum reportedly put in $ 100 million, with Mr. Wyss funding the rest.
Tribune agreed to consider the offer from the pair, who formed a company called Newslight, saying on April 5 that they would enter into negotiations because they determined the deal could lead to a “superior proposition.” Part of the discussions focused on accessing Tribune’s finances.
Mr Wyss withdrew from the equation less than two weeks later, quitting the offer after his associates reviewed the books. Part of the reason for his decision, according to people familiar with the matter, was the realization that his plan to turn the Chicago newspaper into a competitive national daily would be nearly impossible to achieve.
Mr Bainum informed Tribune on April 30 that he would increase the amount of money he would spend personally on funding from $ 100 million to $ 300 million, as he sought like-minded investors to replace Mr. . Wyss. In addition to having to fund the balance of his offer, $ 380 million, Mr. Bainum’s offer was conditioned on finding someone to take charge of the Chicago Tribune, according to three people familiar with the discussions.
His effort seems to have failed.