N.Y. hedge fund aims to acquire publisher Gannett

A New York hedge fund known for gutting newsrooms is backing a hostile takeover bid for Gannett, the publisher of USA Today and 100 other newspapers. The unsolicited offer, worth over $1.3 billion, would create the largest newspaper company in the United States and further consolidate a struggling industry.

In an open letter to the Gannett board, MNG Enterprises, which is owned by hedge fund Alden Global Capital, offered Monday to pay $12 cash per Gannett share, a 23 percent premium on the company’s closing price Friday. Gannett shares were trading 19 percent higher around midday.

MNG said in its letter that Gannett, which owns the Detroit Free Press, the Tennessean in Nashville and other newspapers in nearly three dozen states, had “suffered from a series of value-destroying decisions made by an unfocused leadership team.”

Operating under the name Digital First Media, MNG owns around 200 publications, including the Denver Post and the San Jose Mercury News in California. It said it was Gannett’s largest shareholder, with a 7.5 percent stake.

Gannett, which is based in McLean, Va., said in a statement that its board would review the unsolicited proposal and that “no action needs to be taken” immediately.

Critics have described Alden as a “destroyer of newspapers” that is prone to “savage” layoffs and as “one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism.”

After it made deep cuts to the Denver Post newsroom, staff members openly revolted last year. The paper, which has won nine Pulitzer Prizes, published a series of articles critical of its owner. The lead editorial that accompanied the articles labeled Alden executives “vulture capitalists” and called for action.

Journalists at the Post said Alden had also meddled in editorial decisions. In April, Chuck Plunkett, the paper’s editorial page editor, resigned after saying that an Alden executive had refused to run an editorial that criticized steep cost reductions on the paper.

“It’s awful what’s going to happen,” Larry Ryckman, a former senior editor of the Post, said of Alden’s possible acquisition of Gannett. “For me, becoming owned by Digital First means only one thing — and that’s not good.”