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By Julie Reynolds Martinez
Art by Kirk Anderson
Late last month, the vulture hedge fund Alden Global Capital completed its slow, tortuous takeover of Tribune Publishing.
Hidden in the fine print was mention that the $350 million Alden needed to complete the deal could come from Tribune acquiring massive debt so that Alden could buy it, an arrangement I compare to taking out a loan to pay the hitman who’s targeting you.
As the dust quickly settled, Alden did indeed force the new Tribune to borrow $278 million, Securities and Exchange Commission documents show. As part of the merger, Alden’s primary newspaper chain, MediaNews Group, would lend $60 million to help the hedge fund complete the deal, in a six-year loan charging an astounding 13% interest.
This $60 million is cash being extracted, ATM-style, from the MNG newspapers that Alden has already stripped to the bone, and they include the Santa Cruz Sentinel and The Monterey Herald.
So where will this $60 million come from? It’s hard to imagine how Alden can slash costs any more and still call itself a publisher. Or still put out newspapers.
But first, some background.
Closing papers
On the rare occasions he’s made public statements, Alden’s president Heath Freeman has insisted his company has never shut down a daily newspaper. That’s a verbal sleight of hand at best and, in reality, a lie. Freeman first made this statement in an April 2020 response to Illinois senators Tammy Duckworth and Dick Durbin after they publicly questioned Alden’s plans for Tribune.
Freeman was careful to say “daily” newspapers, because he had already closed numerous weeklies, a number of them in the Bay Area. But Alden also shuttered the Oakland Tribune, “converting” the 142-year-old daily paper to a mere insert in its hybrid East Bay Times. Five other Bay Area dailies were likewise “folded in” to the Times.
Days after Freeman wrote that letter to Duckworth and Durbin, he closed two Minnesota weeklies. And this week, we learned that the Alden-owned International Falls Journal, a 111-year-old paper also in Minnesota, will close by the end of June.
“I would love our team to be remembered as the team that saved the newspaper business,” Freeman told the Washington Post last year without irony.
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Local newsroom losses
I’ve already reported that Alden has cut staff at its union papers across the country — which include The Herald — by more than three-quarters since 2012. One can assume the cuts have been even worse at the non-represented papers, such as the Sentinel — an informal survey I conducted with workers at many of those papers showed 80 percent reductions in staffing over the same time period.
And yes, newspapers everywhere are hurting — nationally, they’ve lost half their newsroom staff between 2008-2019, an average that includes Alden’s papers. But there’s no question Alden is gutting far more aggressively than its peers.
Now, given Alden’s latest $60 million “extraction,” it’s hard to see how our local dailies will survive.
The Herald and Sentinel are still valiantly producing local journalism with around five reporters budgeted for each newsroom, a Herald union rep told Voices. With 2 p.m. deadlines, forced by the closure of the papers’ printing plants to save money, the effort to provide readers with timely daily news is much more difficult for those journalists.
Compare this to online news startup Lookout Santa Cruz, which founder Ken Doctor says has 10 full-time reporters.
Doctor once told me, based on his insider knowledge at MNG, that Alden calculated it had around three years until subscribers got so fed up with diminishing coverage that the papers would stop being profitable. Then Alden would likely sell them or shut them down.
That was around — guess what? — three years ago.
Now, in a sudden reversal, it seems Alden will stick around for the foreseeable future. The pandemic threw a lifeline to local papers around the country as communities’ need for information surged, along with online subscriptions and digital advertising.
Last year, I obtained internal MNG reports showing the company was confident that this unexpected jump in online revenue would more than make up for print advertising losses, and it would happen in less than two years. The report even predicted MNG’s California papers would profit from wildfires, which would cause a similar rise in locals’ need for fast, accurate information.
Except the papers never see those profits. They’re meant for Freeman and a very small handful of fellow investors.
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The near future
So, getting back to that $60 million cash extraction, and the pressure it will put on local news operations:
I predict Alden will sell whatever local real estate it has left, which at one point included the Sentinel’s modest office on Encinal Street. The Herald has already moved to ever-smaller rented quarters on Garden Road, a facility that staff say so far remains unused as office space due to the COVID pandemic.
I also predict Alden will further slash local newsrooms. Some Alden papers, such as the Vallejo Times-Herald, have operated with — not making this up — one reporter.
Alden is sure to try this approach in communities like ours if it can get away with it. (The Salinas Californian, owned by Gannett, the only chain larger than Alden, is already there, with a photographer but no full-time writers at the moment.)
This is Alden’s modus operandum: it tests outrageous ideas (such as closing newspaper offices, pre-pandemic) in very small communities to see if they’ll fly. The no-office idea took off two years ago, and soon Alden was saving bucks in many cities by making employees work from their basements, garages and cars.
We can expect local reporters won’t be going back to actual buildings. Meanwhile, Herald staff say they are still not compensated for their extra costs maintaining home offices.
If our community doesn’t bother to complain, we can expect Alden will keep cutting in creative ways that decent folks could never imagine. But readers should take note that pressure does matter — the Sentinel did hire more staff after Lookout Santa Cruz’s robust reporting made its relative lack of reporters look shameful.
A call to local movers and shakers
MNG and Tribune employees remain hopeful they can find civic-minded owners or nonprofit foundations to buy at least a few of Alden’s papers. I’m told that one such group tried to buy the Herald a few years back, but those talks fizzled when Alden, true to its playbook, suddenly upped the price after it seemed like a deal was in place.
Yet it’s still possible our local newspapers could end up in more benevolent hands if the right billionaire, foundation or investor group steps up with the right price.
A few years ago, I visited one community, Pitchfield, Mass., where a partnership of four local men saved the Berkshire Eagle from the vultures. It can be done.
You might wonder why I, writing for a nonprofit news site, would care about saving what some might think of as our competitor. The truth is, we do not in any way replace the hometown paper of record. We are the colorful Sunday magazine to their daily black-and-white.
Robust daily newspapers do what no one else can do: they cover beats — schools, cities, commissions, industries and communities — day in, day out, relentlessly and deeply.
We can’t do that, and even the Monterey County Weekly can’t do that. Yes, I believe we add needed context, new voices and insight with our deep reporting on select topics, but we can’t fill that essential need to broadly cover a region and its myriad concerns.
At some point, Alden will eventually lose interest (i.e. its astronomic profit margins) in our two local papers of record. That’s when it will be up to local philanthropists or socially conscious investors to rescue these treasures we take for granted.
So, Monterey Bay Area: any takers?
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