Comment: Bad news gets worse as hedge fund moves on papers

If the Chicago Tribune is sold to Alden, its newsroom will face deep cuts to produce cash flow.

By Margaret Sullivan / The Washington Post

When Alden Global Capital announced Tuesday that it was positioned to buy the Chicago Tribune and several other major newspapers, its statement might have sounded promising.

But only if you knew nothing about how this hedge fund has sucked much of the life out of the newspapers it already owns in places like Denver and San Jose.

“Our commitment to ensuring the sustainability of robust local journalism is well established, and this is part of that effort,” the statement said.

The hedge fund’s record with newspapers is well established, but that’s about the only truth in that statement.

“To put an audacious lie like that in front of these communities and these journalists is further evidence of their unsuitability as owners,” said Ann Marie Lipinski, whose expertise on the subject is unquestionable. Not only is she the head of Harvard University’s Nieman Foundation for Journalism, but she also spent 30 years at the Chicago Tribune; a summer intern who became a Pulitzer Prize-winning investigative reporter and then, until 2008, the paper’s top editor.

Lipinski has particular expertise, but she’s far from alone in knowing how distressing this news is.

Those who know anything about local journalism in America are in general agreement: Being bought by Alden is the worst possible fate for the newspapers and the communities involved.

Here’s how the Morning Call in Allentown, Pa. — one of the papers about to come under Alden’s control — told its readers the news:

“Alden has a history of aggressive cost cuts to boost profits at the newspapers it owns through MediaNews Group, which counts The Denver Post, The Boston Herald and The Mercury News in San Jose, California.”

That is accurate, and a very restrained telling of the situation.

I’ve been covering Alden’s moves for years, in part for my book published last summer, “Ghosting the News: Local Journalism and the Crisis of American Democracy.”

When Alden comes in, it’s slash-and-burn time. Newsroom jobs — reporters, editors, photographers — are cut to the bone. Decisions are made not for long-term sustainability, not for service to the community, not for humane treatment of skilled and dedicated staff, but for next quarter’s profit-and-loss statement.

And so it was simply realistic when journalist and press-chronicler Joshua Benton wrote this on Twitter after hearing the news: “The lamps are going out all over America, we shall not see them lit again in our life-time.”

The Alden playbook is clear.

“They are the ultimate cash-flow mercenary,” industry analyst Doug Arthur told The Washington Post. “They want to find cash flow and bleed it to death.”

Sometimes that means selling off real estate. The Hartford Courant’s staff has been told that they will no longer return to a newspaper building, or even a newsroom. That’s increasingly common.

Almost always it means cutting staff, even if that means that the “product” — the paper’s reporting and editing — suffers badly, making it much less valuable to its customers, even the ones who very much wish to support the journalism.

I remember a conversation with a San Jose Mercury News subscriber a few years ago who told me that he hardly recognized his Alden-owned paper in its withered form and was struggling with the decision of whether to keep supporting it. It’s a dilemma that newspaper readers all over the country are dealing with, as private-equity firms swoop in to pick away at the remaining profits of a once robust industry, earning their ugly nickname: vulture capitalists.

Almost all newspapers are struggling these days because their lifeblood — print advertising — has declined drastically and readers have moved online. But they are still doing some of the most important journalism in their regions. They still matter immensely.

The few success stories are those papers lucky enough to have relatively enlightened and well-intentioned — often local — owners who understand the value of journalism. Among them: the Minneapolis Star-Tribune, the Boston Globe, the Los Angeles Times and the Philadelphia Inquirer.

The one potentially bright spot in this week’s announcement was that the Baltimore Sun, one of the Tribune papers, is likely to be sold a nonprofit formed by Stewart Bainum Jr., a Maryland hotel executive. Whether Bainum can make the difficult finances of a local newspaper work is unknown.

As for the Chicago Tribune, Lipinski told me Wednesday that — amid the pain of the Alden news — she had been thinking about an ad campaign she remembers from her time at the paper, which during her tenure boasted 700 newsroom staffers and a dozen foreign bureaus.

“It was this beautiful, romantic, sweeping view” of Chicago and the surrounding region, she recalled. The ad’s tag line: “A great city deserves a great newspaper.”

That reflected “a fundamental commitment that was not negotiable.”

In many — most — American cities, that commitment no longer exists. The negotiation is over, and the price tag is on the deal.

That’s very bad, and the worst is yet to come.

Margaret Sullivan is The Washington Post’s media columnist. Previously, she was the New York Times public editor, and the chief editor of the Buffalo News, her hometown paper.

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