[music]

Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning, everyone. We'll begin today with some news about the news, headline on the website Nieman Lab which follows developments in journalism, "The vulture is hungry again: Alden Global Capital wants to buy a few hundred more newspapers." The vulture is hungry again: Alden Global Capital wants to buy a few hundred more newspapers.

Attention New York listeners, Alden Global Capital already owns the Daily News and is laid off many reporters. Attention Chicago listeners, this is the infamous hedge fund that owns the Chicago Tribune, also a shell of its former self. Attention Boston listeners, this is your Boston Herald Owner. LA listeners, it's your LA Daily News. San Jose, it's your Mercury News. Denver listeners, hello, they own the Denver Post. Hello, Orlando, have you read your hedge fund Sentinel lately? Hello, Trenton readers of the Trentonian, you're all in this company that is often called a vulture fund, and so are many more.

It's apparently good for the Hedge Fund, but questionable at best for local journalism in America and therefore for democracy in America that this particular company and a few others like it are cornering the market on local news. Nieman Lab reminds us, by the way, that the specific fund in all capitals portfolio that usually buys the newspapers is called the Alden Global Distressed Opportunities Fund. Distressed opportunities indeed.

The Atlantic is on to them too. Maybe you Atlantic readers so the deep dive by the great report and McKay Coppins called A Secretive Hedge Fund Inside Alden Global Capital. McKay Coppins is a staff writer at The Atlantic and author of the book, The Wilderness about the battle over the future of the Republican Party. McKay, thanks for giving us some pre-Thanksgiving time today. Welcome back to WNYC.

Mckay Coppins: Thanks for having me on, Brian.

Brian: Your story begins with Alden Global Capital and the Chicago Tribune, what happened at the Chicago Tribune?

Mckay: Yes, Alden completed its takeover of the Chicago Tribune earlier this year after much protests from the journalists and union-represented journalists, in particular, Tribune Company-owned newspapers. The takeover was quickly followed by a dramatic gutting of the Chicago Tribune newsroom. In fact, it was just within days of the deal going through that Alden offered an aggressive round of buyouts to the newsroom, and they ended up losing a quarter of their staff virtually overnight.

You talk about a city like Chicago and a paper like the Chicago Tribune, you have to remember this was for a long time considered the paper of record in Chicago. This was a paper that at one point employed 700 journalists at nine bureaus throughout the world, won dozens of Pulitzer Prizes, endorsed Abraham Lincoln even. This is a storied iconic newspaper, had already been through several waves of layoffs and lots of mismanagement by other corporate owners.

I spent some time in Chicago this past summer talking to the journalists there and they said that they saw Alden is by far the worst owner they've ever had. In fact, one former Chicago Tribune reporter I talked to said, "It's not even accurate to call Alden Capital a vulture hedge fund," which is the term typically applied to funds like Alden because as he put it, "A vulture doesn't hold a wounded animal had underwater." What they're doing is predatory from the perspective of this reporter, and many others that I talked to.

Brian: You wrote, "The model is simple. Gut the staff, sell the real estate, jack up subscription prices." Mckay, if they're gutting the staff, and therefore the content, who's buying subscriptions for higher prices?

Mckay: Well, the rationale, at least according to industry insiders, and observers that I talked to is essentially that these newspapers are already high cash flow businesses, which is to say that they have a lot of loyal subscribers who have subscribed to them in many cases for years or even decades and are essentially continuing to auto-subscribe, auto resubscribe every year, out of a sense of brand loyalty, habits, and they may not even notice that they're paying higher prices for a worse product, or at least they won't notice for a few years.

Alden's calculus appears to be that within those few years, they can make enough money, that by the time the newspaper starts to shed subscribers and even shut down, they'll have made their money back, and then some and the investment will be deemed a success.

Brian: At the end of the day, if they start to shut down some of these story daily newspapers around America like you report they've shut down a bunch of weeklies, by the time they shut down the papers which they wouldn't care if they do theoretically if they're not making money from them, they will have made enough money to make the whole enterprise having been worth it.

Mckay: Yes, that's exactly right. That's the key that I think I had to understand as I was working on this piece, is that everybody thinks they know the story of local newspapers. Local newspapers have been struggling for the better part of the past couple of decades, and it's hard to pin the blame on any one entity, and that's true. I think the difference between past corporate owners and newspaper chains that had to do a lot of cost-cutting to stay above water and what Alden is doing is that Alden does not appear to care about the long-term sustainability of these newspapers as businesses.

I actually interviewed the president of Alden Capital, and I expected him to say all the right things. I expected him to go through the motions of saying, "These cuts are difficult and tragic, but we're trying to put these newspapers on track for a robust future. We really care about local journalism and all of that." He didn't really spend much time saying any of that. I think that's because the reality is, they don't need these newspapers to be long-term sustainable, viable businesses, all they need to do is extract enough cash out of the enterprises to make their money back, and then on their ledger, this will be considered a success.

Brian: I guess that's why people call it vulture capital. Just to be clear, when we talk about newspapers in this conversation, are we mostly talking about digital content, not print editions that get thrown on your doormat or that you buy at a newsstand?

Mckay: It's a combination of both. They own some of the most storied newspapers in the country now. With their takeover of the Tribune Company earlier this year, they own the Baltimore Sun, the Chicago Tribune, you mentioned the New York Daily News. Those still have print editions, but what worries me really when I look at this problem is not the eventual disappearance of a print newspaper. I know a lot of people like print newspapers, younger people don't really care about them, but to me, that's not what's getting lost in these communities.

What's getting lost is the bustling newsroom of experienced journalists who are covering these communities and holding the powerful to account when those newsrooms disappear, whether their work is appearing in print or online, and of course, as most of their work is being read online these days. When those newsrooms are gutted, there are downstream effects on these communities.

There's a huge body of research that shows that when a local newspaper disappears or is severely diminished, voter turnout drops, misinformation proliferates, there's even some evidence to suggest that city budgets get bigger because there's less accountability on the people who are putting those budgets together, and there's more corruption and dysfunction that follows. This is something that not just people in the media industry like you and me should care about, it's really something everyone should be keeping an eye on.

Brian: Listeners, if you work or worked for the Daily News, the Chicago Tribune, or any other newspaper acquired by Alden, or another financial firm, would you like to call up and help us report this story? What's been happening? Is there any alternative in the digital age, in the digital economy? 212-433-WNYC. 212-433-9692, or tweet @BrianLehrer for McKay Coppins from the Atlantic. I want to linger a little bit on the bigger economic environment for news organizations. You cite the stat that in the last 15 years, more than a quarter of American newspapers have gone out of business.

You do also address the underlying market dynamics that many of our listeners have heard about for a decade or more now, newspapers used to be funded largely by classified ads, and ads for stores and products, but websites like Craigslist captured the classifieds market, and websites like Google capture the shopping ads. That's not Alden Global capital's fault. To be fair to them, I guess, the Daily News made news back in 2018 when it laid off 100 people before this company was on the scene. Is this just the only way to run a newspaper anymore, and not just shut the doors even faster?

Mckay: Yes, this is the defense that Alden will make. Like I said, I talked to Heath Freeman, the president of Alden Capital. His case was basically, "Look, this is a secular decline, the entire newspaper business has been gradually hemorrhaging money, revenue, subscribers for the last 15 to 20 years. To pin all this blame on us is kind of absurd." I think he has a point there. It's also true that Alden is not the only newspaper operator in the country that has made really dramatic cuts and shrunken the footprint of the newspapers that they own.

Again, though, I think the difference is that you look at a company like Gannett, for example, which has caught a lot of flack in recent years for doing their own layoffs and budget cuts, and I think some of the criticism is deserved there. If you talk to people who are familiar with this industry, they'll say, there's a categorical difference between a company like Gannett, which is at its heart a newspaper company, and a company like Alden, which is a hedge fund. Gannett will make cuts and do layoffs, and do all these things that are sad to those of us in the journalism industry, but their ultimate goal is to make these newspapers viable for the future.

Like you said, it's a tough market out there for newspapers, and they're trying to make their newspapers succeed in that environment. There's no indication that Alden cares about whether their newspapers ultimately succeed in this environment. In fact, there were a few years back in 2012, '13, '14 when Alden's newspaper company, Media News Group, which then became Digital First Media experimented with trying to recreate their newspapers for a digital age. What they effectively found was that it was too expensive and too difficult and that there were easier ways to make money, and so they pivoted their business to essentially this flash and burn layoff, buy out, sell the real estate strategy, and that's what they've been doing ever since.

Brian: We're getting calls from all over the country on this. Let's start with Trisha in Clearwater, Florida. Trisha, you're on WNYC, thank you for calling in.

Trisha: Hi, I'm calling because I'm now as you said in Clearwater, and what is now the Tampa Bay Times, which used to be the St. Pete Times, and I believe is owned by the Poynter Institute is a wreck. The paper publishes twice a week, and that's it. There's very little value and most of the articles are coming out of the Washington Post or the AP. It looks like they're making most of their money through large-scale obituaries. It was a great paper, it was a leader. I'm curious if this is falling under that same buyout situation?

Brian: Trisha that's really interesting. McKay, I think we should say to our listeners, The Poynter Institute is, if I'm not mistaken, a non-profit that specializes in assessing the state of journalism. It's like a think tank about journalism. They own the Tampa Times?

Mckay: They do. They own the Tampa Bay Times, operate it. As far as I know, they still do. I think that the apparent decline in the view of at least this caller of the Tampa Bay Times speaks to those larger market forces. Poynter is not a hedge fund by any stretch, they're not even a for-profit entity. They're not in this to make money. They're trying to put out the best newspaper they can. From my perspective, I don't live in that market, and I can understand the frustration.

The Tampa Bay Times, though, still has investigative reporters, they're still winning prizes for their work. It's certainly, I'm sure, much smaller than it used to be like pretty much all newspapers these days. I believe that the people at Poynter are trying to find a model for the Tampa Bay Times that could make it continue to be a force in local journalism for years and decades to come. I don't have that confidence in hedge funds and financial firms necessarily like Alden.

Brian: Trisha, thank you very much. Let's go from Clearwater out to Los Angeles where Jason is calling in. Jason, you're on WNYC. Hello from New York.

Jason: Hello. I've been watching this with almost dread for the last number of years. I went to high school with Heath Freeman, who is the president of Alden. Unfortunately, this is like textbook for this man that I know, whose father paid millions of dollars to the Hill House at Duke to allow his entry into the school. I feel like the only thing that's really going to matter to Heath is his wallet. I read with trepidation that the Build Back Better Plan has some money in it for local news, which was exciting, but I wonder if there are guardrails to protect that money going directly into hedge funder's wallets as these local institutions are desperate for real money and attention.

Brian: Where did you go to high school, Jason?

Jason: Pingree School in Martinsville, New Jersey.

Brian: Thank you very much. There's a couple of parts--

Mckay: Can I first say, Jason, reach out to me, my email is out there on the internet. I'm on Twitter. I have a lot of questions for you if you went high school with Heath Freeman. Sorry, go ahead, Brian.

Brian: Well, I was going to ask you about Heath Freeman. I want to be fair to whatever individuals we're talking about who run Alden Global Capital management. I didn't know that we want to be getting into how allegedly he got into Duke or anything like that, but you do report on him and one other person as the prime actors in the way they're approaching the newspaper business and buying up hundreds of newspapers. Talk about his role in terms of what you can say journalistically.

Mckay: Yes, I do think it's important to understand, like I said, I can't confirm or I've never done any reporting on his time at Duke necessarily, but I do think it's important to understand Heath Freeman and Randall Smith, who are the co-founders of Alden to understand their worldview. You have to start with Randall Smith, who is now in his 70s, and in a semi-retirement. He is actually one of the pioneers of what we now call vulture capitalism. He came up in the banking world, the investment banking world financial world, in the 70s, and 80s, and 90s.

He started out as a guy who had a partner track at Bear Stearns and was on his path to making plenty of money doing that, but he had this big insight, which is that there was a lot of money to be made by essentially buying broken businesses or struggling businesses, and then steering them into bankruptcy and selling them off in pieces. He made a ton of money that way. He did it with a Dallas-based drilling company, a bankrupt aeronautical firm. He really was one of the first people to realize that this was an investment strategy that could make somebody a lot of money. He eventually took Heath Freeman under his wing, who's several decades younger than him. Heath Freeman went to Duke, played college football there, eventually started this firm with Randall Smith, and was elevated to be the president, and he's the one who's running day-to-day operations.

When I spoke to people who had worked with Heath Freeman or worked for him, they said that their sense of him was that he did not care about journalism one way or the other. He didn't visit his newspapers very often, but when he did, he would ask questions like, "What do all these people do?" People who worked for him can't recall ever seeing him read a newspaper.

There is a story that went around the company and around the newsrooms he owns that might be apocryphal, though nobody can say for sure, and some people certainly believe it, that when the Denver Post won a Pulitzer Prize, and Heath Freeman was informed of that, his first question was, "Does it come with any money?" There's a general sense among people who know Heath Freeman or have worked with him, who say effectively that he sees these newspapers as financial assets and nothing more. They're numbers to be moved around on a spreadsheet to maximize returns for his investors. As far as the journalism part of it, their ties to local communities, those are afterthoughts for him.

Brian: The other part of Jason in Los Angeles call was about money in President Biden's Build Back Better bill, a little bit of money being to support local journalism. Is that in there as far as you know? I guess people can debate whether that's a good thing, whether the government should be getting involved in funding people who cover the government, obviously, public broadcasting has dealt with that question for decades, maybe now it's going to accrue to others too.

McKay: Yes, I know that it is. I believe it's still in Build Back Better although the state of the legislation is constantly in flux. My understanding is it's there and it's essentially a tax credit for local news organizations that meet certain criteria. This is of a piece with a broader question that I had while reporting this story, which is there are all these initiatives and ideas being batted around to save local journalism. Another one is essentially compelling big tech platforms like Facebook and Google to share some of their ad revenue with local news outlets that whose content they're using to sell ads against.

This is something that's been happening in Europe and Australia. In the world of journalism, a lot of people have had their fingers crossed for years that eventually those platforms will be compelled to do the same thing here in the United States. Heath Freeman, when I talked to him was very animated about this idea and spoke very righteously about needing to demand that these platforms share their revenue with local news organizations and that frankly made me a little suspicious of it because what I realized is that, if that were to happen, some of that money would flow into underfunded newsrooms, but a lot of that money would flow into the pockets of Alden's investors.

This is the same question I have with the Build Back Better initiative, will that money end up paying for more reporters and editors and photographers on the ground and underserved communities, or will it end up as bonuses for all these executives or, yes. Anyway, that's a question that I have, not just about that, but a lot of [inaudible 00:22:08].

Brian: Just two quick follow-ups on that before we go to our next caller, one, to be fair to our own organization felt that was a controversy about public broadcasting over the decades. By this point, I think our news organization, in particular, is like 95% privately funded. There's hardly any government money in it at all. I don't know the exact number. If you're just joining us, listeners, McKay Coppins from the Atlantic is our guest.

He's written about a particular hedge fund, but also the idea that financial firms, in general, are buying up local newspapers, what is left of them around the country, and gutting them selling the real estate and then even with that jacking up subscription prices. Here is a Dr. Bowden [unintelligible 00:22:59] in Richmond, Virginia. You're on WNYC doctor. Hello?

Dr. Bowden: Hello. Yes. I'm an MD-MPH, and I have a strong interest in urban health care planning.

Brian: MDMT just to translate it means you're a doctor in MD, and you also have a master's in public health, which means you're not just interested in your own patients, you're interested in public health policy. So go ahead.

Bowden: Right. Specifically in Brooklyn healthcare, if you look at New York State, New York State is amazingly 47th out of 50th in terms of having the worst hospitals in the country. If you look at Brooklyn, Brooklyn has the worst agglomeration of hospitals in the country. Hospitals that are ranked F or D and this has been a problem since the 60s and 70s. One of the reasons I attributed that is that Brooklyn could be a city in its own right and it was at one time, but it has no local newspaper. It has no local television station. It really has no local media to keep these places in line. If you look at the COVID pandemic, New York City had the worst outbreak of any major city in the world.

Brian: You're saying even in New York, where there was relatively a lot of media, if there was more hyper-local media focused on Brooklyn, there'd be more reporting about the hospitals there. I take your point and I'm going to take one more call and it's Brittany and Manhattan connected in some way to the New York Daily News owned by Alden Capital Management. Hi, Brittany.

Brittany: Yes. Hi. How are you? That's me, I'm Brittany [unintelligible 00:24:43]. I'm a street reporter for the New York Daily News, so I am indeed very connected on the ground reporting today and we were on the ground reporting throughout the entire pandemic. Some of the only people out on the streets in every borough personally. Alden's ownership has impacted us greatly and the work that we continue to do every day as we find ourselves quite short-staffed at the moment.

Brian: How do you compensate? How do you make decisions? How do your editors make decisions about what to cover and not to cover?

Brittany: It's hard. Often we're the only people who care about certain communities, NYCHA certain neighborhoods where there are really few resources. It's really every day evaluating what stories we have and what resources, we have few people with cars. We have few people who speak different languages. We just try to do what we can, but a lot of people work overtime. A lot of people will take calls and work on their weekends just because we care.

Brian: Brittany, thank you for caring, and thank you for calling in. McKay, that was brave.

McKay: Yes. I have to say that it's a huge credit to journalists like Brittany at all the newspapers across the country that they have continued to speak up, not anonymously, not with the protection of certain background conditions. A lot of them are taking to social media, talking to reporters like me. It's a credit to them, but it's also, I think, inherent to what they see as their job. They are truth-tellers, journalists see themselves as people who are trying to let their communities know what's happening, and what's happening to these newspapers should be of enormous import to people in these communities.

I just want to say before our conversation ends that, you noted this at the top, that Alden is currently making a bid to buy Lee Enterprises, which is one of the last remaining independent newspaper chains in the country. It has hundreds of newspapers, I think north of 70 dailies in places like St. Louis and Omaha and Tucson, Arizona. I imagine if past is precedent that a lot of the journalists in those newsrooms, especially ones who are protected by unions are going to speak up and try to prevent that sale from going through.

We saw this happen with the Tribune company earlier this year, where a lot of Tribune journalists made an effort to prevent Alden's purchase of their company from taking place. They tried to make noise and they've launched their own campaign and they wrote editorials and they held rallies and they just didn't get enough support from the people in their communities. That's what they will say. I am curious to see if they get more support from their communities, these Lee Enterprise reporters, in the months to come because Alden if they are successful at buying these newspapers will be positioned to become one of, if not eventually the largest newspaper operator in the country.

Brian: What's the role of non-profit journalism at this point, a lot of listeners to this show will know that during our pledge [unintelligible 00:28:19] and things like that, we talk about how we are striving to be a news organization or the news organization of record for New York City because the papers like the Daily News are shrinking and disappearing and we raise money from listeners. We raised money from foundations, we raised money from sponsorship. That seems to be where journalism's economic model is moving outside of the market and to nonprofits.

Somebody just tweeted and I didn't know this before, but you tell me if you know this, it says Chicago's Sun-Times is folding into the local NPR radio news station there just as we acquired Gothamist from the private sector when its owner was going to put it out of business for the staff trying to unionize. Where does the non-profit sector fit in?

McKay: Yes, the Sun-Times deals is really interesting in a very recent development I think actually was announced just after my story came out. Nonprofit journalism is increasingly the model that people who care about this stuff are looking to. I actually reported in my story on a really interesting initiative in Baltimore. The Baltimore Sun was recently bought by Alden, a lot of people in that city fear that their paper of record will be gutted. There's a guy named Stewart Bainum there who's a local philanthropist and hotel magnate who has announced he is going to build what he hopes will be a new publication of record from the ground up for Baltimore called the Baltimore Banner. It'll be nonprofit, digital-only, subscription, and donation-supported.

What makes his initiative interesting is that he said he spent a lot of time studying a lot of these local non-profit journalism models and thinks that they do tremendous work, but that they're essentially still underfunded, they're not big enough. He's going to start with a commitment of $50 million a year to fund a newsroom with 50 journalists in Baltimore. That'll make it roughly the size or approaching the size of the Baltimore Sun. He hopes that if it works out this is a model that can be replicated across the country.

Brian: McKay Coppins, Atlantic magazine staff writer. His article is called the secretive hedge fund inside Alden-- Wait, a secretive-- Give me your full title because it has to do with newspapers, not just the secret--

McKay: Yes, a secretive hedge fund is gutting America's newsroom. Inside Alden Global Capital is the subtitle. You can find it online and on the cover of the November issue of The Atlantic.

Brian: McKay, thanks a lot.

McKay: Thank you.

Copyright © 2021 New York Public Radio. All rights reserved. Visit our website terms of use at www.wnyc.org for further information.

New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.