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Hedge fund takeover of Tribune Publishing panned as blow to independent journalism

UPDATED: Wed., Feb. 17, 2021

The Chicago Tribune, which had former ties to owners of The Spokesman-Review, is part of a proposed sale to Alden Global Capital, a hedge fund that has acquired about 200 publications since 2007.  (Associated Press)
The Chicago Tribune, which had former ties to owners of The Spokesman-Review, is part of a proposed sale to Alden Global Capital, a hedge fund that has acquired about 200 publications since 2007. (Associated Press)
By Thomas Clouse The Spokesman-Review

The future of independent journalism suffered another blow Tuesday with the announced sale of Tribune Publishing to a hedge fund known for slashing the payrolls of newspapers it acquires, sources said.

The publisher of the Chicago Tribune, which had long-ago financial ties to the owners of The Spokesman-Review, agreed to be acquired Tuesday by Alden Global Capital in a deal valued at $630 million.

Launched in 2007, Alden owns about 200 publications through an operating company known as MediaNews Group. That company has acquired other large newspapers, including the Denver Post, San Jose Mercury News and St. Paul Pioneer Press.

In 2018, Alden announced it was cutting the Denver Post’s staff to about 70 in a newsroom that once employed 250.

”Welcome to the age of ghost newspapers,” said Benjamin Shors, the chair of the Department of Journalism and Media Production in Washington State University’s Edward R. Murrow College of Communication.

“We’re witnessing the destruction not only of legacy media outlets like the Chicago Tribune,” Shors said, “but the cracking of a critical pillar of American democracy.”

In addition to the Chicago Tribune, Tribune Publishing owns the Baltimore Sun; Hartford (Connecticut) Courant; Orlando (Florida) Sentinel; South Florida Sun Sentinel; New York Daily News; Capital Gazette in Annapolis, Maryland; The Morning Call in Allentown, Pennsylvania; Daily Press in Newport News, Virginia; and Virginian-Pilot in Norfolk, Virginia.

As part of the deal, Alden signed a nonbinding agreement to sell the Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., chairman of Choice Hotels International, a Rockville, Maryland-based hotel chain.

Tribune Publishing has historical ties to Spokane and a lineage of Cowles publishers that go back to the Civil War.

Current Cowles Co. President William “Stacey” Cowles’ great-grandfather, William Hutchinson Cowles, came to Spokane in 1891 after having worked as a reporter for the Chicago Tribune, according to a historical narrative written by Jim Kershner for History Link.

William H. Cowles, whose purchase of a rival newspaper formed The Spokesman-Review in 1893, was the son of the Chicago Tribune’s former business manager and treasurer, Alfred Cowles Sr. .

Alfred Cowles’ older brother, Edwin Cowles, served as the publisher of the Cleveland Plain Dealer during the Abraham Lincoln administration.

Alfred Cowles also held stock in the Cleveland newspaper and sold it to buy a stake in the Chicago Tribune, Stacey Cowles said.

Through the years, the Cowles family retained ownership of a substantial amount of Tribune Publishing stock before selling it in the early 1980s. Stacey Cowles’ uncle, James P. Cowles, served on the Tribune Publishing board from 1968 to 1993.

James Cowles declined to comment, but Stacey Cowles said he lamented the sale of Tribune Publishing to Alden.

“I’m generally sorry to see newspapers lose their independence,” Cowles said. “But, it’s kind of the way of the world. We know it’s a very tough business to be in these days. We sure haven’t found a good solution yet.”

Most newspapers across the country, including The Spokesman-Review, have slashed payrolls. Overall, newspaper revenue was cut in half between 2008 and 2018 because of a precipitous decline in print advertising, according to data from Pew Research.

The pandemic has exacerbated those stresses. Tribune’s chief financial officer said in November the company has been “aggressively” cutting costs during the pandemic, including furloughs, pay cuts and closing its newsrooms.

Shors, the associate WSU professor and a former Spokesman-Review reporter, said numerous studies have shown that the decline of local news leads to less civic engagement.

“Vulture capitalists. Media mercenaries. Pick a pejorative,” Shors said. “Alden’s slash-and-burn approach to newsrooms is unsustainable. You cannot – or should not – run newspapers to meet quarterly profit-and-loss statements.”

In an emailed statement to the Chicago Tribune on Tuesday, Alden said: “Our commitment to ensuring the sustainability of robust local journalism is well established and this is part of that effort.”

The deal, which the companies said should close in the second quarter, requires the approval of two-thirds of shareholders not affiliated with Alden and must pass regulatory scrutiny.

The proposed sale has been approved by the Tribune’s board. Three of the seven board seats are held by Alden representatives.

The deal’s success hinges on securing the votes of California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns about 24% of Tribune Publishing, and shareholder Mason Slaine, a former media executive who owns roughly 8%.

In 2018, Soon-Shiong bought the Los Angeles Times and San Diego Union-Tribune for $500 million from Tribune Publishing, then briefly called Tronc.

The Los Angeles Times has been grappling with its own issues since Soon-Shiong’s acquisition, including sharp revenue declines during the COVID-19 pandemic and the December resignation of Executive Editor Norman Pearlstine amid allegations of ethical lapses .

Jon Schleuss, president of the NewsGuild-Communication Workers of America, whose organization represents newsroom employees in Chicago, Baltimore, Hartford, Orlando and other cities, expressed concerns about the deal.

“Alden has a history of running newspapers into the ground,” Schleuss said. “This isn’t good for workers, the company, shareholders or the communities.”

At the same time, Schleuss praised Bainum’s effort to return the Baltimore Sun to local ownership.

“We need more folks to step and truly invest in truly local news that’s accountable to our communities,” Schleuss said.

The Chicago Tribune and Associated Press contributed to this report.

Thomas Clouse can be reached at tomc@spokesman.com or at (509) 953-0561.

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