Hedge fund Alden looks to add to Virginia portfolio

Hedge fund Alden Global Capital, one of the country’s largest newspaper owners with a reputation for intense cost cuts and layoffs, has offered to buy the local newspaper chain Lee Enterprises for about $141 million.

In a news release Monday, Alden said it sent Lee’s board a letter with the offer. It already owns 6% of Lee’s stock and is proposing to buy the rest for $24 a share. Alden says it does not foresee regulatory issues that could complicate a deal.

Lee’s papers in Virginia include the Richmond Times-Dispatch, Roanoke Times and Daily Progress of Charlottesville, among others. Alden already has two Virginia dailies, The Virginian-Pilot and Daily Press, acquired in its recent purchase of Tribune Publishing.

Lee stock jumped 22% to $22.59 Monday. The Iowa company’s spokesperson did not immediately reply to a request for comment. Lee’s papers include the St. Louis Post-Dispatch and the Buffalo News, along with dozens of smaller papers in more than two dozen states. The company had more than 5,000 full-time employees as of September 2020.

Alden scooped up the Tribune papers earlier this year in a deal that was bitterly contested by journalists and community leaders in Tribune’s markets, who sought, ultimately without success, to find local buyers for papers including the Baltimore Sun and Chicago Tribune. Alden also owns the Denver Post, Orange County Register and Boston Herald.

Alden has a reputation for slashing costs, including selling off newspapers’ real estate, that go even beyond the newspaper industry’s overall turn in that direction. The newspaper business has been consolidating as it struggles with a digital transition and shrinking revenues, and financial firms like Alden have taken an increasingly prominent role as owners. Newsroom jobs dropped nearly in half from 2004 to 2018, according to Pew Research, and the pandemic has exacerbated those stresses. About one-fourth of the country’s newspapers have closed in the past 15 years, according to research from the University of North Carolina.

Alden said Monday that its offer for Lee is a “reaffirmation of our substantial commitment to the newspaper industry and our desire to support local newspapers over the long term.”

But local-news advocates take a different view of Alden and other financial firms’ ownership of local papers. “What we have seen in the past, especially with Alden, is that it has led to cuts in reporting staffs, and worse and worse coverage of communities in many cases,” said Steve Waldman, president of Report for America, an organization that places journalists in local newsrooms, including Associated Press. “We should view this latest as a wake-up call. We just can’t keep accepting these mergers as if there’s nothing we can do about them.” Waldman called on the Justice Department to examine the deal for its impact on communities.

The Lee company significantly expanded in 2020 when it bought billionaire Warren Buffett’s newspaper chain from Buffett’s Berkshire Hathaway. At the time, Buffett said, “We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges.”

Buffett did not immediately respond to a request for comment Monday.

In a series of tweets Monday, the union for the Omaha World-Herald’s journalists decried a takeover by Alden, calling the hedge fund “awful” and “mercenaries” that gut newsroom staffs and raise subscription prices in an attempt to wring money out of papers.

“We would hope that Lee Enterprises, being a longtime newspaper company and holding control of print newspapers in Omaha and Lincoln, essentially most of the population of the state of Nebraska ... you’d hope they would resist the temptation to investors that wave a lot of money in their face and hold to the idea that solid local newspapers are important to communities,” said Jeremy Lipschultz, a professor at the University of Nebraska-Omaha.