Private Equity Swallows Up Yet Another Newspaper Group

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One of the last newspaper chains not yet controlled by the private equity and hedge fund industry, Tribune Publishing, is being bought by Alden Global Capital. As the Prospect has reported, Alden is one of the absolute worst.

The private equity model is to acquire a newspaper property and strip it to the bone by cutting staff, selling real estate, getting rid of pension plans where possible, and extracting cash. Sometimes, the plan includes borrowing against the newspaper, pocketing the proceeds, and then sticking the debt on the newspaper’s balance sheet. Private equity owners are also notorious union-busters.

The newspaper business was in trouble due to declining ad revenue and internet competition well before the private equity gang came in to shoot the wounded. But even so, well-run locally owned newspapers were able to break even or turn a modest profit.

Of course, there has been so much bad management by traditional chains that there are few heroes in this saga. The Tribune Company is far from a role model. It had a disastrous period of ownership of the L.A. Times, which it mercifully sold in 2018, and a misadventure in digital journalism under the clunky name Tronc. The Tribune ownership has cut the New York Daily News staff in half.

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

Alden Global Capital now owns over 200 newspapers. There are several possible remedies for its brand of abusive, extractive ownership. The antitrust authorities could investigate and limit its chain ownership. Congress could get rid of the tax preference for debt-financed acquisitions and payment of special dividends when the operating company is running at a loss.

There are a handful of regional papers owned by local publishers with benign intentions. We need more of them.

One happy by-product of the Tribune sale: The Baltimore Sun is set to be acquired by a nonprofit formed by local businessman and philanthropist Stewart Bainum Jr., who plans to publish the Sun and its affiliates as a locally owned paper for the benefit of the community.

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