Alden Global Capital, the New York-based hedge fund that controls Tribune Publishing, wants the entire company.
Heath Freeman, Alden’s president, offered $14.25 per share for the roughly two-thirds of the company that Alden doesn’t already own. Tribune Publishing owns the Chicago Tribune and eight other major newspapers, including the New York Daily News and the Baltimore Sun.
The offer was made in a letter to Tribune Publishing’s board dated Dec. 14 and was reported Thursday in a filing with the Securities and Exchange Commission.
Freeman’s proposed price represents an 11% premium over where the shares closed Wednesday. On word of the offer, Tribune Publishing shares advanced more than 7% in trading Thursday to close at $13.70, after earlier hitting $14 per share.
There was no immediate comment from Tribune Publishing. The offer values the company at $520.6 million.
Alden said in its letter it was making a preliminary inquiry about a non-binding offer that it and unnamed affiliates can finance with cash. The letter, signed by Alden executive Randall Smith, said taking Tribune Publishing private “would be able to unlock significant strategic and financial value.”
Alden bought into Tribune Publishing in November 2019 and is known for aggressive cost-cutting that has reduced news coverage. Its takeover of the company has led to management changes and staff reductions at the Chicago Tribune, where there is a current buyout offer to further reduce the headcount.
Alden also owns about 200 publications, including dailies and weeklies, through a private company called Media News Group, formerly Digital First Media. Its assets include the Denver Post, The Mercury News of San Jose and the St. Paul Pioneer Press.
Acquiring Tribune Publishing would make Alden a stronger competitor against the nation’s largest newspaper owner, Gannett. Alden was rebuffed in an attempt to buy Gannett in 2019.
Both companies have responded to declines in advertising by slashing newsgathering expenses and consolidating production when possible. Alden has closed the physical newsrooms of some papers, and the Chicago Tribune reportedly has discussed a buyout of its lease in Prudential Plaza just off of Michigan Avenue.
The editorial staffs of several Tribune newspapers are represented by the NewsGuild-CWA labor union. Its president, Jon Schleuss, said, “Alden has made a fortune by destroying local news. They fashionshort-term business plans that cut newsrooms to the bone — destroying the watchdogs of our democracy. Our thousands of members will continue to fight hedge fund ownership of local news.”
Gregory Pratt, a Chicago Tribune City Hall reporter and president of the newsroom’s bargaining unit, took to Twitter to urge “Chicago’s civic-minded rich folks” to buy the paper. “Alden Global Capital won’t stop until it guts the newspaper and the city will be harmed by less journalism,” Pratt wrote.
Smith, who represents Alden on Tribune’s board, said in the letter the offer would be contingent on approval from owners of at least two-thirds of the shares not already in Alden’s hands.
He also said Alden has held discussions with an independent investor, Stewart Bainum Jr., who Smith said has expressed interest in certain Tribune Publishing assets. Smith said the offer is independent of anything Bainum does but that they may explore a joint bid for Tribune Publishing.
Bainum is the chairman of Choice Hotels International and a Democrat who formerly served in the Maryland legislature. A representative could not be reached for comment Thursday.
Separately, Tribune Publishing issued updated financial projections for 2021 and said it completed the $160 million sale of its BestReviews website to Nexstar Media Group.
Its financial outlook projected continued declines in revenue. It estimated 2021 revenue will be $675 million to $690 million versus a year-end 2020 estimate of $745 million. The money-losing company promised improvements in a metric it calls adjusted earnings before interest, taxes, depreciation and amortization, which excludes non-cash and extraordinary expenses.
Tribune Publishing CEO Terry Jimenez said, “As we continue to execute our digital subscription, advertising and content strategies, we expect to generate substantial year-over-year increases in Adjusted EBITDA next year and create a clear path for long-term strong performance.”