On December 20, two Chicago Tribune journalists sent a letter to a hedge fund manager who holds the fate of their newspaper in his hands. “Press commentary about your media acquisitions has been relentlessly negative,” wrote the pair of veteran investigative reporters, David Jackson and Gary Marx, to the hedge-funder, Heath Freeman, president of Alden Global Capital. “Is there a counter-argument this coverage has not reflected, or evidence that has been overlooked or ignored?”
Alden, a New York City–based firm that has become the grim reaper of American newspapers, had recently increased its stake in Tribune Publishing to 32%—making it the largest shareholder of the perpetually embattled publisher—and gained two seats on Tribune’s board. As part of the deal, Alden agreed not to further increase its Tribune stake or attempt to gain control of the company until mid-2020. That effectively gave journalists at the Chicago Tribune and its sister titles, like the Baltimore Sun, the New York Daily News, and the Orlando Sentinel, until June 30 to try and stop the sky from falling.
The Tribune papers, a portfolio that included the Los Angeles Times until billionaire doctor and Tribune shareholder Patrick Soon-Shiong bought it two years ago, had been through so many years of hellish ownership—the disastrous reigns of Sam Zell and Michael Ferro—that Alden hadn’t even been on Tribune’s radar as a threat. But when Alden seized those two board seats in early December, journalists knew what was in store, because its reputation as a rapacious vulture fund was by then well-known. Founded in 2007, the firm, through its ownership of MediaNews Group, had spent the years of the long-running media crisis buying dozens of local and regional newspapers all around the country and painfully bleeding dollars out of them, from New York to New Jersey to California; Massachusetts to Pennsylvania to Ohio; from Dearborn, Michigan, to Denver, Colorado, to St. Paul, Minnesota. The Boston Herald? Alden. The Los Angeles Daily News? Alden. San Jose’s Mercury News, the Orange County Register, the Akron News-Reporter, the Reading Eagle, and the Trentonian? Alden, Alden, Alden, Alden, Alden.
In the journalism world, Alden didn’t really become a synonym for evil until 2018, when the Denver Post made national headlines for openly revolting against its hedge fund overlord. Prompted by yet another painful downsizing in the nine-time Pulitzer Prize–winning Post’s newsroom, which had already dwindled to under a hundred journlists, the fierce but futile uprising brought journalists out of their offices and into the streets. The ensuing publicity threw Alden’s draconian playbook into sharp relief: buy distressed newspapers on the cheap, cut the shit out of them, and reap the profits that can still be made from print advertising.
The Denver newsroom was hardly alone in its misery. In Northern California, a combined editorial staff of 16 regional newspapers had reportedly been slashed from 1,000 to a mere 150. Farther down the coast in Orange County, there were apparently now just four reporters covering a total of 34 cities throughout the region. Things looked even bleaker in the Philly suburbs, where a handful of papers that made $18 million for Alden in 2017 at a 30% profit margin, according to industry analyst Ken Doctor, complained of rats, mildew, fallen ceilings, and filthy bathrooms. In her Washington Post column, media critic Margaret Sullivan called Alden “one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism.”
So chilling is the Alden effect that the NewsGuild, a union for newspaper journalists, began paying an investigative reporter (and Alden refugee) named Julie Reynolds to cover the firm as a beat. “Under Alden’s tenure,” Reynolds wrote last year of her former employer, the Monterey Herald, in a Newsweek op-ed that Elizabeth Warren tweeted out, “layoffs and attrition accelerated at breakneck speed. Instead of a story a day, reporters scrambled to crank out two or three because there were fewer and fewer of us. The office supplies vanished, and we had to buy our own pens, calendars, and manila folders. Then the hot water in the bathrooms was turned off. The gutters were never repaired, and staff creatively arranged house plants to try to soak up the leaks.”
These were the types of horror stories that flashed through Marx’s and Jackson’s minds as they sent that letter to Freeman, the notoriously elusive Alden boss, a few days before Christmas. “This stripping of assets built the personal wealth of Alden investors but crippled news outlets that have been vital to American democracy,” the reporters wrote, continuing, “You have not spoken out publicly about your own moral values or your views on the role of a strong and independent press.”
They told Freeman about the legislative hearings, the hard-won reforms, and the various indictments that the Chicago Tribune’s coverage had achieved on behalf of the vulnerable. They described heartfelt letters from readers to illustrate the vital role of local journalism: one from a Chicagoan who believed his elderly aunt was being exploited by a caregiver; another from someone who’d supplied a tip about an allegedly corrupt government property sale; a third letter from the grateful family of an adopted orphan whose case the Tribune had spotlighted. Above all, Marx and Jackson begged Freeman for some face time—“to talk with us or with other newsroom leaders about your beliefs and business plans as you shape the future of Tribune Publishing.… We ask if we can host you for a meeting here in Chicago, go on our own dime to NYC or visit with you on the phone.”
The letter concluded, “We do not write this letter to advance a news story, or to save our own jobs. This is about the role of regional newsrooms and the Fourth Estate in American democracy. And it is about how you will be defined and remembered as a corporate steward -- it is about your legacy. We hope to hear from you.”
They never got a response.
By January 29, Alden’s MediaNews Group had bought up shares in yet another newspaper company, Lee Enterprises (the St. Louis Post-Dispatch, the Arizona Daily Star, the Wisconsin State Journal), which had reached a deal, announced that same day, to acquire, for $140 million in cash, the 31 newspapers owned by Warren Buffett’s Berkshire Hathaway (the Buffalo News, the Richmond Times-Dispatch, the Omaha World-Herald). In an SEC filing that must have sent shivers down the spines of journalists on both sides of the transaction, Freeman wrote that MNG intended to “engage in discussions with management…about certain operational and strategic matters, including, but not limited to the recently announced acquisition of Berkshire Hathaway’s newspaper operations.” Reynolds, the journalist who covers Alden for the NewsGuild, noted that “the New York vulture hedge fund” was “siphoning money from Alden’s highly profitable and understaffed papers to finance the stock purchase,” worth $9.2 million for a nearly 6% stake.
Alden isn’t the only hedge fund or private equity player that has muscled its way into the U.S. newspaper industry. Through the $1.2 billion merger of GateHouse and Gannett in November, Fortress Investment Group, owned by SoftBank, now manages the largest newspaper chain in the country, with a fleet of more than 260 dailies that includes prominent titles like USA Today, the Detroit Free Press, and the Record of northern New Jersey. (The merged company is now colloquially referred to as “New Gannett.”) That deal was financed by a $1.8 billion, five-year loan from Apollo Global Management, at a staggering 11.5% interest rate. The steep terms have led some Wall Street types to suspect that Apollo, which is simultaneously buying up dozens of local TV stations to compete with Sinclair and Fox, will end up as the owner of Gannett in the long run. A Gannett spokeswoman countered, “We intend to aggressively pay down our debt, and refinance within two years.”
The consolidated Gannett and GateHouse papers have themselves been no strangers to cullings over the years, and the merger prompted a fresh batch. There was a round of layoffs in December, and the CEO of Gannett Media Corp., Paul Bascobert, acknowledged that there would be more to come as they assess overlap and redundancies and such. Bascobert—who joined the company in August and reports to Mike Reed, whose salary as CEO of the umbrella entity Gannett Co., a publicly traded holding company, is paid by Fortress—wouldn’t comment on the scope or scale of the latest cuts. But he made the case that newsrooms are the last place Gannett wants to reduce staff. “Everything else is on the table first,” Bascobert told me. “Local journalism is what has built these amazing brands. It’s the last place we’d want to cut. But in some places where you do have duplicative coverage of, say, state capitals or regional sports teams, those are places where you have to ask the question, Do you need to have duplication there?”
For journalists, the pill might be less bitter if it weren’t for the lucrative management fees reaped by Fortress—about $100 million over the past five years—which took GateHouse through bankruptcy prior to the Gannett acquisition. Still, media analysts differentiate Gannett in that it actually invests in growth areas, such as events, digital marketing, and national digital advertising, while also throwing support behind investigative reporting projects. Sure, cash still has to flow to debt repayment and shareholder dividends, but it’s not as if Gannett is disinvesting. “I’m not sure they’re the most benevolent of owners,” said Rick Edmonds of the Poynter Institute, “but they’re at least somewhat more benevolent than Alden.” (Alden tried to buy Gannett last year, but the company’s shareholders rejected its overtures.)
Chatham Asset Management, meanwhile, which came under scrutiny last year for its majority ownership of the scandal-plagued National Enquirer, is the biggest holder of stock and debt in Sacramento’s McClatchy Company, whose two-dozen-plus titles include the Miami Herald, the Sacramento Bee, and the Kansas City Star. With McClatchy now struggling to fulfill its pension obligations and avoid going bankrupt, it would appear that Chatham, as its largest debt-holder, could end up in the driver’s seat of a restructured McClatchy—it’s not hard to imagine a scenario in which the New Jersey–based firm takes the company through a structured bankruptcy and emerges on the other side as its controlling investor. Theoretically, that could open the door to a merger of McClatchy and, say, either the Alden papers or Gannett. Indeed, newspaper analyst Ken Doctor told me the Gannett–GateHouse combo was merely “a prelude to more roll-up.” As he observed at the end of last year, “The impact is obvious. As America has moved from jokey indulgences in truthiness to a point where fact fights for its very life, it’s the bankers who are deciding what will be defined as news, and who and how many people will be employed to report it.”
I asked Doctor how it got to this point. Once upon a time, he explained, newspaper chains were predominantly owned by wealthy and powerful families—the Chandlers, the Medills, the Knights, the Newhouses (who continue to own Condé Nast, which owns Vanity Fair). Newspapers were a good investment, owing to a largely captive market of local advertising, and as they maintained their position as a highly lucrative industry into the ’70s, ’80s, and ’90s, these families turned to the public markets and bought even more newspapers. It was a high-margin business, about 80% dependent on advertising, and it grew steadily along with the national economy. It all worked out very well for a long time, until cracks began to show in the armor. For starters, as the internet took off in the late ’90s and early aughts, publishers began feeling the heat from digital ad disruption and new online competitors, a whole host of which had gained significant traction by the end of the decade. That’s when disaster struck. In 2009, the Great Recession obliterated nearly 20% of daily advertising revenue in a single year, according to Doctor, a wound from which the industry would never recover (with the exception of deeply resourced brands with massive national and international readerships, like the New York Times, the Wall Street Journal, and the Washington Post). Hence all of the bankruptcies, the closures, the widespread layoffs and buyouts, the inexorable tide of decline.
Many newspapers, of course, didn’t do themselves any favors. As one former newspaper editor put it, “The vultures of the world are coming along and taking advantage of a situation that was created for them. These papers have always looked at things and said, ‘We’ve gotta keep the revenue we’ve got.’ But that’s expensive revenue, and by spending all that money trying to keep it, they didn’t have any money to invest in the digital future. So when the time came to ask people to pay for content, it came at the same time when the content had been diminished. That kind of set the table.”
As these anachronistic creatures declined, a new sort of predator emerged to bleed them. The hedge fund calculation is simple. “If you reduce your expense base,” said Poynter’s Edmonds, “and you hold off on the kinds of investments that you’ll need to be in business 5 or 10 years from now, newspapers still make money. That’s sort of the estimation.” Or, as Doctor put it, “Financial players are just looking for profit maximization in the next few years. Even though it’s a lot less than it used to be, you can make a lot of money in the short term.”
Among the various financial players that are now pulling levers in the newspaper space, Alden holds the distinction of being the most repugnant to the journalism community. “Heath Freeman is the cartoon villain basically,” said Doctor, “tying the reporters and their communities on the railroad tracks and pulling the switch.”
A 2002 Duke graduate who was a Delta Sigma Phi brother and a field goal kicker for the Blue Devils, Freeman worked for the Peter J. Solomon Company, a boutique investment bank, before cofounding Alden Global Capital with elder hedge-funder Randall D. Smith. Freeman has described the company as “a $1.7 billion investment firm focused on opportunistic and distressed investing.” According to a 2016 feature story in Denver’s 5280 magazine, which refers to Alden’s newspaper portfolio by the trade name Digital First Media, “Heath Freeman has operated in pseudo secrecy, a major achievement considering he’s a despised figure in an industry whose mission is to uncover the truth. Few local journalists would know his face. He has never toured the Post newsroom, despite the fact that DFM is headquartered in the same building.… The few people willing to talk on background about Freeman describe him as aggressive and highly intelligent, ‘flinty-eyed and focused,’ and a man who has no real affinity for newspapers. Freeman is said to be the kind of person who makes a demand, listens to the counterpoint, and then reasserts his demand. He applies metrics to every decision, happily challenging the conventional wisdom of newspapering along the way: He has, for example, touted the cost benefits of using freelance writers rather than full-time staff. He’s asked why the Post needs photographers.”
In 2018, the NewsGuild tried to get Duke to return all the money Freeman had donated to the university over the years, and to remove him as advisory board chair for Jewish Life. (No dice.) He has alternately been called “the number one most-hated dude in the industry” and “the hedge fund asshole who is destroying journalism.” Research analyst Doug Arthur, meanwhile, has described Alden as “the ultimate cash flow mercenary. They want to find cash flow and bleed it to death.”
It’s also worth noting that Freeman and Alden are known for being hard to get in touch with and/or not responding to media requests. A communications firm that was working with Alden’s MediaNews Group last year told me it is “not currently engaged on this matter.” Messages sent through the form on MNG’s website went unreturned. There is no contact information—or any information at all, really—on Alden’s website.
Freeman is equally mysterious to journalists who work at Alden papers, many of whom have only learned about him via Julie Reynolds’s dispatches for the NewsGuild. In May of 2018, after Reynolds published details of Freeman’s $4.8 million East Hampton pad on Lake Montauk, a reporter named Evan Brandt from the Mercury in Pottstown, Pennsylvania, decided to pay him a visit. Brandt was with his wife and college-age son visiting his father and stepmother in nearby Sag Harbor when a light bulb flicked on in his head. He threw on his “#NewsMatters” T-shirt, made a makeshift cardboard placard with the slogan “INVEST IN US OR SELL US,” and made the roughly 20-minute drive to Freeman’s beachside abode. Standing at the foot of the driveway, he knew someone was home inside the cedar-shake manse because he could hear “Ants Marching” by Dave Matthews Band blaring from the deck. So Brandt, who had arrived with a notebook and some impromptu interview questions, did what any good reporter would do: He knocked on the door. A woman who appeared to be a housekeeper let him into the foyer, from which Brandt caught a glimpse of the semi-mythical Alden president walking across the second-floor balcony shirtless, with a small child in his arms. Freeman took one look at Brandt and his #NewsMatters shirt and signaled for the woman to show him back to the door.
“If you want to talk to him, you’re going to have to call to make an appointment,” she said, in Brandt’s recollection.
“Can I have the phone number?”
“I don’t know it.”
And that was that, although Brandt did at least get a photo of himself standing on the edge of the Freeman property. Speaking to me from his home in Pottstown, where he’s worked at the Mercury for more than two decades, through two separate bankruptcies, Brandt walked me through the past several years since Alden entered the picture at the Philadelphia-area newspaper group that the Mercury is a part of. Cuts to the newsroom, advertising, and circulation departments of these papers seemed to come slowly at first. Staffers grew accustomed to receiving buyout offers twice a year, and there were usually always enough takers. But eventually there came a point where those who remained had gone through so many downsizings that they stopped asking, “What else can they cut?” Because the answer to that question was, as Brandt put it, “There’s no bottom.” At the Mercury, the newsroom once had about 30 journalists. Today, according to Brandt, there are seven: a “content manager” (new jargon for “editor in chief”), a website editor, three sports guys, a business editor, and Brandt, who covers, well, everything else. (If the police reporter who recently resigned is replaced, that would bring the headcount back up to eight.)
“The winnowing has happened over the years,” said Brandt, who also serves as shop steward of the local NewsGuild chapter. “There’s not one moment that you can point to and say, ‘That’s when things really went downhill.’ That’s what makes it so insidious.” There are, of course, any number of smaller indignities to consider: having to work out of your attic because the newspaper headquarters got shut down so the company could sell them; not being permitted to expense a hotel room in Harrisburg after the annual newspaper competition wraps up in the wee hours. I asked Brandt, who is 55 and makes $46,000 a year, what’s stopping him from taking the company up on one of those buyouts. (The packages vary, but last year the New York Post pegged one such offer as 16 weeks of base pay for employees over 50.) “There isn’t anywhere I could go that could pay me as much,” he said. “I put down roots in this town, my son was raised in this town. If I were going to leave here, or when I leave here, it won’t be to become a newspaper reporter somewhere else. I’m gonna work here until they shut it down.”
In a letter to Gannett’s board of directors last year, when MediaNews Group, a 7.5% Gannett shareholder, was trying to buy Gannett, MNG’s chairman wrote, “When other people won’t step up, we do. We save newspapers and position them for a strong and profitable future so they can weather the secular decline. Take our last two acquisitions — The Orange County Register and The Boston Herald. Both papers were left for dead and put into bankruptcy by their former owners, which could have caused a liquidation and a loss of all the jobs. MNG stepped up and invested in them when others wouldn’t, saving many of those jobs and providing for new jobs. We improved operations and made them viable and profitable by providing them with new leadership, a seasoned executive team and a new strategy when others clearly had failed.” (A former Herald reporter described MNG’s strategy as “dehumanizing”; cuts at the Register and its sister papers have also run deep.) The boilerplate on MNG’s homepage reads: “Transforming the future of media.”
The company’s unionized papers in the staggeringly expensive California Bay Area are currently in the middle of contract negotiations that seem to be going nowhere. “They don’t wanna give us any fucking money,” said Thomas Peele, vice chair of the local NewsGuild unit and a Pulitzer Prize–winning reporter for the Bay Area News Group, which includes the Mercury News, the East Bay Times, and the Marin Independent Journal. “We’re asking for cost of living raises, we’re asking for more equity between the two units that put out our daily papers, we’re asking for some acknowledgment that we live in one of the most expensive places in the country, and they have basically said no. They don’t want to do anything that puts forward further expenses.” I asked Peele to describe, in an ideal world, what the future would hold. “The best outcome would be a local buyer who would put some money back into the papers,” he said. “This place pretty much gives Alden a 20% profit margin. If someone was willing to buy this place and put, say, 8% of that 20 back into it for a couple of years, that would be fine. But that feels like a fantasy.”
Neil Chase, who now runs a nonprofit news organization called CalMatters, was executive editor of the Mercury News and East Bay Times between 2016 and 2018. In that capacity he got to know a handful of MediaNews Group executives in the thin layer of management under Freeman. They didn’t seem like such bad people. Sometimes it felt like their hearts were in the right place. Some of them even seemed to really believe in the newspapers they had been tasked with running. But the more Chase grew accustomed to how the company operated, the more he realized that, at the end of the day, he wasn’t actually working for a media company. “I’d look at their faces and think, Okay, they’re not making the decisions,” he told me. “For me, and a lot of people in the company, you had to adjust your thinking from, This guy is like every media executive you’ve heard of who actually wants to be in the business and cares about the publications they run, to thinking, He’s someone who’s just an investor and simply cares about the money. This is somebody who, any day of the week, will buy or sell something based on what’s going to make the most money. Once you realize it’s all just about making money, the rest of it makes a little more sense. That helps you deal with it if you’re an executive who lives with it every day.”
None of that sounds particularly comforting to journalists at Tribune Publishing, who are in the middle of a round of buyouts that they fear will be followed by additional cuts if Alden gains more control. They were further unnerved by the announcement—described in a press release as “a natural transition as Tribune Publishing works to reduce its corporate and back-office costs and streamline its real estate footprint”—that CEO and board member Timothy Knight would leave the company at the end of February, having already stepped down from the board. He is succeeded by CFO Terry Jimenez, who has now become a board member as well. Nor were staffers thrilled to learn that David Dreier, someone seen as a strong supporter of journalism, would no longer serve as non-executive board chairman. Journalists at the company were trying to read between the lines of the shuffle and “figure out what it all means,” as one of them put it.
Throughout Tribune Publishing, insurrection is in the air. Last month Orlando Sentinel columnist Scott Maxwell published a defiant commentary inveighing against the latest buyout offers. At the Baltimore Sun, journalists have been reaching out to deep-pocketed individuals who have, in the past, expressed interest in buying the 183-year-old broadsheet.
And then there’s Marx and Jackson’s efforts at the Chicago Tribune. After that letter to Freeman didn’t get them anywhere, the two reporters took the audacious step of publishing an op-ed in the New York Times on January 19, a move that both garnered substantial public sympathy and functioned as a sort of desperate cry for help. “Unless Alden reverses course—perhaps in repentance for the avaricious destruction it has wrought in Denver and elsewhere,” they wrote, “we need a civic-minded local owner or group of owners. So do our Tribune Publishing colleagues. The alternative is a ghost version of the Chicago Tribune—a newspaper that can no longer carry out its essential watchdog mission.”
Marx and Jackson told me they had reached out to “at least 50 people,” sending emails, placing calls, and, in some cases, hand-delivering letters to “anybody who might be interested in either buying Tribune Publishing or buying the Chicago Tribune alone,” said Marx. As the New York Times reported, they also reached out to Patrick Soon-Shiong, who held on to his 25% of Tribune Publishing even after buying the Los Angeles Times. They urged him to either keep his stake or sell it to civic-minded investors, rather than allowing it to end up in Alden’s hands. “Our goal,” Marx told me, “is that we are trying to make sure everyone understands the urgency. Alden ownership really is a step that could lead to the end of the paper as we know it.”
Prominent Chicagoans I spoke with didn’t sound very optimistic about the prospect of finding a white knight. For one thing, a lot of the rich guys in town already got burned when they got behind Michael Ferro’s ill-fated takeovers of the Chicago Sun-Times and Chicago Tribune. “I don’t know that they’re gonna find someone who’s going to be willing to pony up the dollars,” one source said. “For somebody to really want to buy the Tribune, they’re gonna have to pay a huge premium for a paper that’s been significantly diminished.”
Another source said, “I know they’ve talked to the logical suspects and there’s been no interest.” That includes investor John Canning Jr., billionaire hedge fund philanthropist Ken Griffin, and members of the Pritzker and Crown families, according to sources. Marx and Jackson wouldn’t confirm whom they have or haven’t approached, but they said some potential saviors had expressed interest and were now going down the road of trying to figure out if they could make something happen. (One option being considered is trying to put together a group of investors who could possibly buy enough stock to take control of Tribune Publishing and then sell off individual assets, especially the Chicago Tribune and Baltimore Sun.) Meanwhile, there are other wealthy people out there who have already made a play for Tribune Publishing within the past couple of years. One of them is Jeremy Halbreich, a Dallas-based newspaper owner and former Sun-Times Media CEO. Another is Sargent McCormick, chair of the Chicago-based Harvester Trust and a descendant of the storied Medill–McCormick–Patterson clan that once lorded over the Tribune.
Marx and Jackson’s campaign may be quixotic, but it’s not naïve. They realize that what they’re trying to pull off is probably a long shot. “We’re very aware of the potential for failure,” said Jackson. “So we’re not doing this with any optimism, nor with any pessimism, frankly.” Whether they have a real shot at saving the Tribune, after all, is beside the point. “The odds are, we’re probably not gonna succeed,” said Marx. “But we still have hope that somebody, or a group of people, can step in. We’re clear-eyed about this, but we’re willing to go to the wall at this point to try and save the newsroom. We are willing to fight this to the end.”
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