The hedge fund looking to buy Tribune Publishing, the owner of some of the country’s major metropolitan newspapers, has one final hurdle to overcome.
Shareholders in the newspaper company, whose titles include The Chicago Tribune, The Baltimore Sun and The New York Daily News, will vote Friday on whether to sell the company to Alden Global Capital, an investor with a reputation for cutting costs and jobs to be dismantled, to be approved by the approximately 200 newspapers already owns it.
Alden’s efforts to buy Tribune met resistance: Journalists in Tribunes newspapers protested the sale and publicly pleaded for another buyer. A Maryland hotel manager planning to buy The Baltimore Sun offered a glimmer of hope when he showed up with one last-minute offer for the entire company. He was briefly supported by a Swiss billionaire.
However, since the competing offer was never fully completed, Tribune shareholders have the choice of approving or rejecting Alden’s offer. Tribune’s board of directors has recommended voting for the sale.
The transaction has to be approved by two-thirds of the shareholders, with the exception of Alden, who holds a 32 percent stake in Tribune. Dr. Patrick Soon-Shiong, a multi-billion dollar medical entrepreneur who owns the Los Angeles Times and a number of other California newspapers, has a 24 percent stake in Tribune with his wife, Michele B. Chan, which means he could sink the sale on his own.
Dr. Soon-Shiong has not publicly commented on how he plans to vote and declined again on Thursday, but his ability to influence the outcome has not gone unnoticed. In an open letter posted on Medium this week, Gregory Pratt, president of the Chicago Tribune Guild, asked Dr. Soon-Shiong to vote “no” on Friday.
“As the second largest shareholder in Tribune Publishing, you can single-handedly stop Alden from sealing the deal,” wrote Pratt. “We’re not asking you to buy the company, although that would be great. But we ask you to use your power to prevent Alden from consolidating his own. “
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 the unpaid advisor to Stewart W. Bainum Jr., the hotel magnate of Baltimore, who made one last attempt to compete with Alden’s offer.
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“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, Alden Global Capital and Mr Bainum declined to comment before the vote.
Tribune agreed in February to sell to Alden, which owned it for years, a deal worth approximately $ 630 million to Alden.
While a sale to Alden now seems inevitable, the twists and turns of the past few weeks seemed to favor Tribune reporters.
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.
His efforts seem to have fallen short.