Tribune Publishing sale draws challenger to Alden Global Capital

New York-based hedge fund Alden Global Capital is facing surprise competition in its attempt to acquire the owner of the Chicago Tribune and eight other major newspapers, two sources said Monday.

The sources, both with direct knowledge of the situation, said hotel executive Stewart Bainum Jr. is seeking partners for a bid that would top Alden’s price of $17.25 a share for Tribune Publishing. Bainum is the chairman of Choice Hotels International, based in Rockville, Md.

As part of Alden’s $630 million deal for Tribune, Bainum had struck a separate agreement to buy the Baltimore Sun, one of the company’s newspapers, for $65 million. He wanted the Sun for a nonprofit organization he controls so its ownership would remain in local hands.

Now, he is said to be seeking like-minded partners in Chicago and elsewhere who wish to get other pieces of Tribune Publishing. It’s not known if he has found investors interested in the Chicago Tribune. The paper has endured staff cuts and left its newsroom just off Michigan Avenue. During the pandemic, the company also has closed newsrooms elsewhere.

Those close to the Tribune sale, announced last month, said trouble has arisen over Alden’s insistence on onerous operating agreements governing the Sun and smaller Maryland newspapers during the change of ownership. They said Alden wanted terms that would substantially increase Bainum’s cost, so he decided he’d be better off forming a group to bid for the entire company.

“There was some well-deserved skepticism about Alden’s good-faith efforts to part with the Sun,” one person said. Another person familiar with the matter speculated Bainum doesn’t want the whole company and is maneuvering for a better deal for the Sun.

Alden, already one of the largest newspaper publishers, has received substantial criticism for its business practices, including deep cuts in expenses for newsgathering. Critics have said the hedge fund bleeds assets from its properties, such as real estate. Alden has said it preserves publications that, faced with advertising losses to social media giants, would otherwise close.

Tribune referred inquiries to an outside public-relations firm, which declined to comment. Alden and Bainum representatives did not respond to messages.

The sources said Bainum wants to invest $100 million alongside partners. They also said he has asked a special committee of Tribune’s board to release him from a nondisclosure agreement so he can recruit other investors.

The NewsGuild-CWA labor union, which represents newsroom workers at the several Tribune properties including the Chicago Tribune, has campaigned for civic-minded buyers to acquire its papers. “Local ownership is the way up and Alden is the way down,” said Gregory Pratt, Chicago Tribune City Hall reporter and president of its bargaining unit.

Alden owns 32% of Tribune and it acquisition of the entire company requires approval from owners of two-thirds of the remaining shares. That gives the second largest shareholder, Dr. Patrick Soon-Shiong, effective veto power over the sale because he owns nearly 25% of Tribune.

Soon-Shiong, owner of the Los Angeles Times, bought it from Tribune in his own effort to preserve local ownership. Sources describe him as sympathetic to those efforts with other company papers. Through a spokeswoman, he declined to comment.

Sources said a New York Times article about Bainum’s activities that appeared Sunday has prompted interest from wealthy people and family foundations in several cities. Efforts are said to be especially active around the Hartford Courant and the Morning Call in Allentown, Pa., besides Baltimore.

Tribune’s other publications include the New York Daily News; the Orlando Sentinel; the South Florida Sun-Sentinel; the Virginian-Pilot of Norfolk, Va.; and the Daily Press in Newport News, Va.

Shares of Tribune closed Monday at $17.28, up 1.4% for the day.