Hedge Fund Alden Global Sees Victory With Tribune Media Sale
SCOTT SIMON, HOST:
After a roller coaster ride of a process, the newspapers of the Tribune Publishing Company have been sold. That includes the Chicago Tribune, the Baltimore Sun, New York Daily News and other metro newspapers up and down the East Coast. The new owner is Alden Capital, a hedge fund company that has slashed newsrooms at the hundred daily newspapers that it already owns. A rival bid fell short, in large part 'cause no one came forward who wanted to save the Chicago Tribune. NPR's David Folkenflik joins us.
David, thanks for being with us.
DAVID FOLKENFLIK, BYLINE: A pleasure, Scott.
SIMON: I guess I can't pretend to feel neutral about this. My feelings for Chicago and what the Tribune represents - and to hear that phrase, no one stepped forward to save the Chicago Tribune - why?
FOLKENFLIK: Well, it's a - it's the right question. A Swiss-born medical device entrepreneur billionaire named Hansjorg Wyss stepped forward for a hot moment. But he pulled back because he realized what he should have known from the outset, which is that there's no way to turn the Tribune into a national publication that could compete with the New York Times and the Wall Street Journal and the Washington Post. Now, here's the thing. Chicago is the hole in the doughnut because a Maryland philanthropist and hotel magnate named Stewart Bainum Jr. had stepped forward and said, I'll give 100,000,000 towards buying the whole thing and then spinning them off into a bunch of local owners as long as they're civic-minded as I am. He had found people lined up in Allentown, in Hartford, Conn., where Tribune newspapers owns one. So they thought they just needed another $100,000,000 from some backer who wanted the Chicago Tribune, and no one was there.
FOLKENFLIK: You know, a number of Tribune journalists had looked to Los Angeles Times owner Patrick Soon-Shiong, who has had a major minority stake in this company, to block the deal. He's focusing on really doing an amazing job, trying to infuse money into the Los Angeles Times, the San Diego Tribune. But he's not shown up as the hero in this saga. They're going to fend for themselves.
SIMON: There are a lot of rich people in Chicago. There are Fortune 500 companies, philanthropists. But what does this say about Chicago and its civic leaders?
FOLKENFLIK: Yeah, so there's a lot of money in Chicago. I was looking over, just as you were, Boeing, Walgreens, McDonald's, other major corporations and executives who have had a lot of money from there. They didn't do it. I think there's a couple of things going on, one of which is the Chicago Tribune has had a couple of people who did come forward. Sam Zell, the Chicago real estate magnate...
FOLKENFLIK: Mmm hmmm.
FOLKENFLIK: He loaded up the Tribune with about $13,000,000,000 of debt, and it ultimately went into bankruptcy. And Michael Ferro came through, a hugely wealthy tech entrepreneur, and he was essentially run out of town. His ideas were derided and proved fairly unworkable. And also, he got entangled in scandal over accusations that he had sexually harassed some female business associates. You know, in talking with folks who have been involved in Chicago, the philanthropic world as well, there's the concern that the Tribune, which has been kind of the voice of responsible Republicanism for Illinois, has not been embraced by the kind of Chicago's more progressive philanthropic community.
But folks in the MacArthur Foundation, which happens to support places like NPR - they didn't step forward. They're based in Chicago. You've got the McCormick Foundation. It didn't step forward. I think they look askance at this. They look at local news business and say, we're not sure. But I also think there was a failure of imagination to think of how many millions of people, ultimately how many tens of millions of people, could have been aided by thinking about this in a slightly more broad way. That is, the entire system could have been delivered to a place without the pressures that the new owners will almost certainly put those properties under.
SIMON: I got an email from a friend who works at the Trib (ph), who's not happy. And in speaking of Alden, he said, it's not as if they don't have a track record.
FOLKENFLIK: These papers, while greatly diminished from what each of them were at their heyday, are already operating about 10- to 13% profit margins. Alden has conveyed to Tribune officials they want those profits above - you know, notably above 20%. That's a huge difference. And they have instituted layer after layer of cuts, eviscerating some newsrooms, deeply damaging others. I've talked to journalists from coast to coast who have worked for Alden-owned newspapers who give me the same story time and again. And so I think there's a real fear that ultimately it won't just damage the ability of the Tribune papers to cover the news but that it could essentially fatally undermine it. It could unravel these things as anything more than famous brands.
SIMON: NPR media correspondent David Folkenflik, thanks so much.
FOLKENFLIK: You bet.
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