Alden Global Capital sets its sights on Midwest newspapers
Known for extreme cost-cutting measures, the New York City investment firm moves to acquire Lee Enterprises.
Alden Global Capital has become notorious for acquiring newspapers around the country and then implementing severe cost-cutting measures to maximize profits.
In its latest attempt to bolster its holdings, Alden made an unsolicited offer for Lee Enterprises, which is based in Davenport, Iowa. The hedge fund bid $24 per share, or about $141 million total, for Lee.
Lee owns the St. Louis Post-Dispatch and the Omaha World-Herald, among other newspapers.
Alden's many newspaper properties include the Chicago Tribune, where a quarter of the staff accepted buyouts and the remaining staff were moved out of the Tribune's downtown office to much smaller quarters, after Alden acquired it.
Lee has flatly refused Alden's offer and adopted a poison pill strategy by "selling new shares to current shareholders at a very cut price," according to Kavahn Mansouri of the Midwest Newsroom. In doing so, Lee is diluting the shares and decreasing Alden's ownership percentage.
A different private investment firm, Chatham Asset Management, acquired The McClatchy Co., the parent company of The Kansas City Star, last year. It remains to be seen how The Star, which had already shrunk considerably under McClatchy, will fare under Chatham.
"The initial signs are not too bad," says Jim Fitzpatrick, who worked as a reporter and editor at The Star for more than three decades and writes the JimmyCsays blog.
"They announced expanded Sunday and Wednesday editions, and then, in October, The Star announced the hiring of 11 new journalists," Fitzpatrick notes.
On the other hand, Jim Fitzpatrick observes, "The Star has lost so much ground locally and in terms of circulation, and its role in the community has diminished, that it's going to be very hard to come back."