Hedge fund Alden Global Capital, one of the nation’s largest newspaper owners with a reputation for drastic cost cuts and layoffs, has offered to buy local newspaper chain Lee Enterprises for about $141 million.
In a news release on Monday, Alden said he has sent a letter to Lee’s board with the proposal. It already owns 6% of Lee’s stock and is proposing to buy the rest for $24 a share. Alden says it doesn’t expect regulatory issues that could complicate a deal.
Lee’s stock jumped 22 percent to $22.59 on Monday. An Iowa company spokesperson did not immediately respond to a request for comment. Lee’s papers include the St. Louis Post-Dispatch and the Buffalo News, as well as dozens of smaller papers in more than two dozen states. The company had over 5,000 full-time employees as of September 2020.
Alden scuttled Tribune’s newspapers earlier this year in a deal that was strongly opposed by the Tribune company’s own journalists and community leaders in Tribune’s markets, who eventually went without success, including the Baltimore Sun and the Chicago Tribune. Seeked to find local buyers for papers. Alden also owns the Denver Post, the Orange County Register and the Boston Herald.
In addition to the Register, Alden owns the rest of Southern California News Group’s newspapers, including the Los Angeles Daily News, Riverside Press-Enterprise, Torrance Daily Breeze, Long Beach Press-Telegram, San Gabriel Valley Tribune, Pasadena Star-News, and the Los Angeles Daily News. Whittier Daily News, San Bernardino Sun, Inland Valley Daily Bulletin and Redlands Daily Facts.
Alden has a reputation for cost reduction, including selling off newspaper real estate, which goes well beyond the newspaper industry’s overall turn in that direction. The newspaper business is going strong 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 nearly halved from 2004 to 2018, according to Pew Research, and the pandemic has exacerbated those stresses. Nearly one-quarter of the nation’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 “reaffirms 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. “We have seen in the past, particularly with Alden, that it has cut reporting staff, and in many cases led to worse and worse coverage of communities,” said Report for America president Steve Waldman. Journalists in local newsrooms, including the Associated Press. “We should view this latest as a wake-up call. We cannot accept these mergers as if we cannot do anything about them.”
Waldman called on the Justice Department to investigate the deal for its impact on communities.
The Lee company expanded significantly in 2020 when it bought billionaire Warren Buffett’s newspaper chain from Buffett’s Berkshire Hathaway. At the time, Buffett said, “we had no interest in selling the group to anyone else for one simple reason: We believe Lee is in the best position to manage the industry’s challenges.”
Buffett did not immediately respond to a request for comment on Monday.
In a series of tweets on Monday, the Omaha World-Herald’s Association of Journalists denounced the acquisition by Alden, calling the hedge fund “terrible” and “mercenaries” who harass newsroom staff and scuttle the papers. Raise membership prices in an attempt to extort money. ,
“We would expect that Lee Enterprises, being a longtime newspaper company and controlling the print newspapers in Omaha and Lincoln, essentially made up most of the population of the state of Nebraska,” said Professor Jeremy Lipschultz of the University of Nebraska-Omaha, “Money on their face and hold the idea that solid local newspapers are important to communities.”
Josh Funk in Omaha, Nebraska contributed to this report.