Nearly 11 years ago — Januay 20, 2011 — longtime publishing executive Martin Langeveld wrote a particularly prescient piece for Nieman Lab, a think tank for journalists. On the surface, it was about a management change at a single newspaper chain, MediaNews Group. The man who’d built that company from scratch was a swashbuckling Texan named Dean Singleton.
In 2011, MediaNews, like every other American newspaper company, was struggling to recover from the 1-2 of the Internet and the Great Recession, and Singleton was being pushed out of power by investors.
But Martin was smart enough to see what was going on underneath. Not only was Singleton being bumped from the CEO’s office to a figurehead role; board members who’d supported him were also getting the boot — “replaced by new directors representing the stockholders group led by Alden Global Capital, a hedge fund firm which has acquired a large, though not controlling, stake. Several interim executive positions were also filled by people related to Alden or its parent, Smith Management LLC.”
Ah, Alden Global Capital. It’s now known far and wide as the news industry’s ever-more-engorged leech, a cost-cutting omnivore that makes every newsroom it touches worse, King Midas in reverse. But back then, the position Alden had built for itself in newspapers was little appreciated. Martin noted that Alden wasn’t just holding a stake in MediaNews — it owned parts of at least nine different newspaper companies, many of which were in some stage of the bankruptcy process. It was setting itself up for consolidation.
A few weeks later, Martin looked more deeply at the various hedge funds and other investment vehicles that owned pieces of the big newspaper companies and concluded that Alden was best positioned to roll up the industry — one whose biggest players at the time included MediaNews, Freedom Communications, Journal-Register Co., Tribune, the Washington Post Co., A.H. Belo, Gannett, Journal Communications, McClatchy, the New York Times Co., E. W. Scripps, Media General, GateHouse Media, Lee Enterprises, and News Corp.
Fast Forward to Today
Where are all those newspaper companies now?
Set aside, for a moment, the New York Times Co., the Washington Post Co., and News Corp — each of which owns a giant news brand that is fundamentally national and international, not local. They’re in a different business from everyone else. And let’s do the same for the former A. H. Belo, which has stripped itself down to a single paper, The Dallas Morning News. What about the rest?
- Freedom Communications: sold in 2016 to Alden
- Journal-Register Co.: rebranded to Digital First Media after being bought in 2011 by Alden
- Journal Communications: sold its newspapers to E. W. Scripps, which then spun them into a new company, which was then bought in 2016 by Gannett
- GateHouse Media: bought up lots of smaller chains until it could acquire and assume the brand identity of Gannett
- E. W. Scripps: bought Journal Communications’ newspapers, spun Journal’s and theirs into a new company, which was then bought in 2016 by Gannett
- Media General: sold its newspapers to Berkshire Hathaway, which then sold them in 2020 to Lee
- Tribune: sold in 2021 to Alden
- McClatchy: stayed stubbornly independent until going into bankruptcy in 2020 and being bought by hedge fund Chatham Asset Management
- MediaNews: still owned by Alden
- Lee Enterprises: bought Berkshire Hathaway’s Media General newspapers, still Lee
- Gannett: bought by GateHouse, which then took its brand and became Gannett
McClatchy is a special case; Alden tried to buy it out of bankruptcy, but Chatham was its largest creditor and thus had an inside track. (Reminder: Chatham likes to call this moment “late-stage media consolidation,” which means the consolidation has spread all throughout your lymph nodes and it’s time to settle your affairs.)
But other than McClatchy, all of these companies have been sorted into three buckets: two big ones, No. 1 Gannett and No. 2 Alden, and one smaller one, No. 2 Lee Enterprises.
So hey, what’s that I see in the headlines this Monday morning?
Shares of Lee Enterprises Inc. rose sharply Monday after hedge fund Alden Global Capital LLC offered to buy the newspaper publisher for about $141 million. Alden, which took Chicago-based newspaper chain Tribune Publishing private in May, said it made a proposal to buy Lee for $24 a share in cash, a 30% premium to Friday’s closing price for the Davenport, Iowa, company.
Alden, which already owns 6% of Lee through an affiliate, said it has the ability to fully finance the all-cash proposal, and that it doesn’t expect a deal would raise any material regulatory issues.
(Impressive, in a way, for Alden to make “Iranian hackers broke into our servers last year to test ‘how to create false news content’” only the second worst story about Lee Enterprises in the past few days.)
It was pretty clear this day would come. Lee is the biggest acquisition target left out there, with papers in 77 markets across 26 states — not to mention “nearly 350 weekly and specialty publications.” Adding it to its MediaNews/Digital First/Tribune menagerie should bring it close to Gannett in size, if not quite there.
Based on last year’s circulation numbers, a combined Alden+Lee would sell 7.627 million copies a day, behind only Gannett’s 8.596 million. They’d both be far ahead of the new No. 3, McClatchy, which is way back at 1.747 million.
You can read the offer letter Alden sent Lee’s board here. It hits the same notes that nocturnal Alden usually does in its rare visits to the sunlit world: “Alden Global Capital, LLC is a significant investor in American newspapers,” “committed to ensuring communities nationwide have access to robust, independently minded local journalism,” “a reaffirmation of our substantial commitment to the newspaper industry,” “scale is critical for newspapers to ensure necessary staffing and in order to thrive in this challenging environment,” blah, blah, blah.
At some previous companies that Alden has tried to acquire, there’s been resistance, from management, employee, or civic leaders, or all three. Remember, it tried to eat Gannett in 2019, but the company successfully fought back — thought that resistance pushed it into the arms of another suitor, GateHouse. Tribune reporters battled valiantly, if ultimately unsuccessfully, to keep Alden away.
But frankly, I’d be surprised if Lee put up much of a fight this time. Financing was a major question in the Gannett push; Alden is offering to pay cash here. The Tribune deal took place over in multiple stages over a longer period of time, giving opponents time to strategize; here, Alden says they want to have it all wrapped up “in approximately four weeks.”
And frankly, Tribune owned papers in big metros like New York, Chicago, Baltimore, Orlando, and South Florida, the sort of places where you can rev up some media attention. Lee’s biggest papers are in St. Louis, Omaha, Tulsa, and Buffalo. Its headquarters are in a suburban office park in Davenport, Iowa; Tribune Tower this ain’t. And, at least at this writing, Lee isn’t pushing back against Alden. It’s not commenting to media reporters, whereas Gannett was cranky from the jump.
There are still some other chains to be had, of course. Advance is still out there, should the Newhouses ever grow itchy. Hearst still has a few big metros, though newspapers are a declining part of their business. Ogden is Lee-like in a number of ways. And the newspaper business is still much more decentralized than many American industries, with hundreds of papers still owned as single units — in the lucky places, still by families with a connection to and investment in the community.
But it’s as clear as ever that Dean Singleton was thinking in the right direction back in the early 1990s. He thought there would be just three newspaper companies left standing, and he wanted MediaNews to be one of them. After this deal — and whatever aftershocks follow it, as the boards of smaller chains see themselves on the outside of a two-horse race — we’ll be left with Gannett, Alden Global Capital, and then everybody else.
And Gannett is selling — “confident that we will be able to execute on $100-125 million in additional asset sales this year” — while Alden is buying. With cash.
By Joshua Benton, reporting for Nieman Labs, which is part of a Harvard based journalism think tank. They offer their reporting under a Creative Commons license.
Do you have a story for The Advocate? Email editor@corvallisadvocate.com