Tribune Publishing, owner of the Chicago Tribune, said Tuesday it will sell itself to New York-based hedge fund Alden Global Capital, known for scooping up newspapers and squeezing profits by slashing costs for journalism.
The agreement calls for Alden to pay $17.25 per share for Tribune Publishing. Alden, run by Heath Freeman and co-founder Randall Smith, a Tribune board member, already owns about 32% of the company.
The deal represents a 21% increase from Alden’s original offer of $14.25 per share, disclosed last week. It also represents a 35% increase from where Tribune shares traded on Dec. 30, 2020, the last day before Alden’s interest in taking over the company was disclosed. Tribune shares closed Tuesday at $15.97, up 2 cents for the day, but rose to almost $18 in after-hours trading.
Tribune board members approved the sale following the recommendation of a special committee formed to evaluate Alden’s offer. It’s expected to close in the second quarter of 2021 and requires approval of owners of at least two-thirds of Tribune shares not held by Alden.
Besides the Chicago Tribune, the company owns eight other major newspapers. The deal specifies that one, the Baltimore Sun, will be spun off to the Sunlight for All Institute, a public charity formed by Stewart Bainum Jr.Bainum is the chairman of Choice Hotels International and a Democrat who formerly served in the Maryland legislature.
Alden’s price values the entire company at about $630 million. The publicly traded company would become a private firm and its shares would no longer be available.
The board’s approval of the sale indicated that a key shareholder, Dr. Patrick Soon-Shiong, approved the terms. He owns about 24% of the company and separately runs the Los Angeles Times in a deal struck with former Tribune Publishing boss Michael Ferro Jr. Soon-Shiong could not be reached for comment.
The chairman of Tribune Publishing’s board, Philip Franklin, said in a prepared statement that the company has adapted to business difficulties and COVID-19. Franklin, a member of the board committee that vetted Alden’s offer, said, “These actions included strengthening the company’s financial position, driving digital growth and investing in high-quality content to better serve customers, employees and communities. This positioning enabled the special committee to negotiate a premium, all-cash price, which the committee concluded was superior to the available alternatives.”
Alden bought into Tribune Publishing in November 2019, buying most if its stake from Ferro for $13 a share. It is expected to combine its new holdings with those of its Media News Group, which owns about 200 publications, including dailies and weeklies, around the U.S.
Its assets include the Denver Post, The Mercury News of San Jose and the St. Paul Pioneer Press. At many papers, it has slashed staff and sold assets such as real estate, even closing physical newsrooms that may have been unused during the pandemic.
Under Alden’s influence, the Chicago Tribune has reduced its editorial staff via buyouts. There has been turnover in its top editorial ranks and the company is vacating offices in Prudential Plaza downtown, moving employees to the printing plant at 777 W. Chicago Ave. known as the Freedom Center.
Alden’s actions have drawn intense criticism in its various markets and congressional scrutiny of its business practices. The NewsGuild-CWA union, which represents editorial staffs at the Chicago Tribune and other company papers, also backed public campaigns to get civic-minded buyers to pry newspapers away from Alden but has had little success besides the arrangement in Baltimore.
The Alden purchase was “absolutely terrible news,” Chicago Tribune City Hall reporter Gregory Pratt tweeted Tuesday. Pratt, president of the Tribune’s NewsGuild unit, said the paper “needs local ownership with a civic conscience. We are now at the opposite extreme.”
NewsGuild President Jon Schleuss said, “Alden has a history of running newspapers into the ground. This isn’t good for workers, the company, shareholders or the communities. I salute Bainum’s effort. We need more folks to step up and truly invest in truly local news that’s accountable to our communities.” Schleuss said lawmakers will want to review details of the sale.
Tribune Publishing has a long-term lease on the Freedom Center. The lease is one asset that could be valuable to Alden. The presses there also produce the Chicago Sun-Times, and the Freedom Center is a candidate for a future mixed-used development. It was offered to Amazon in the city’s failed bid for the e-commerce giant’s regional headquarters.
If completed, the Tribune Publishing deal would make Alden a more formidable competitor to the nation’s largest newspaper chain, Gannett. Alden was rebuffed in an attempt to buy Gannett in 2019.
Tribune Publishing’s other newspapers include the New York Daily News, the Orlando Sentinel and the Hartford Courant.