Publisher Lee turns down takeover offer
Newspaper publisher Lee Enterprises has rejected a takeover offer from the Alden Global Capital hedge fund that is one of the largest newspaper owners in the country with a reputation for intense cost cuts and layoffs.
Lee said Thursday that its board unanimously rejected Alden’s offer to buy the company for $24 per share, or about $141 million, because it isn’t in the best interests of shareholders. Also Thursday, Lee reported a $5.3 million fiscal fourth-quarter profit this year, rebounding from a $1.3 million loss a year ago, as the number of digital-only subscribers at the company grew 65% to 402,000.
“The Alden proposal grossly undervalues Lee and fails to recognize the strength of our business today, as the fastest-growing digital subscription platform in local media, and our compelling future prospects,” Lee Chairman Mary Junck said.
But Ken Doctor, a longtime media analyst who now runs a local online journalism startup called Lookout Santa Cruz in California, said Alden isn’t likely to abandon its bid to acquire Lee because it believes it can extract profits from the company with the model it has used elsewhere that calls for selling off the real estate the chain owns and drastically cutting costs.
“What Alden has done — and it’s now pretty proven community to community — it’s harvesting the last profits out of the newspaper business and it is doing that unapologetically,” Doctor said.
Alden said last month when it made its offer that it already owned more than 6% of Lee’s stock. The New York-based hedge fund didn’t immediately respond to Lee’s announcement Thursday.
Steve Waldman, president of Report for America, an organization that places journalists in local newsrooms, including The Associated Press, said Alden’s approach to running newspapers takes a heavy toll on the communities they cover because of the newsroom cuts. Alden and other hedge funds already own half the daily newspaper circulation in the country, he said.
“When newspapers have their reporting staffs eviscerated, it means that governments aren’t held accountable, corruption goes up, waste goes up, voter turnout goes down, residents don’t have the basic information they need to solve the problems of their communities,” Waldman said.