Alden Global Capital, a New York-based hedge fund that this year became the second largest newspaper publisher in the United States, has made an offer to purchase Lee Enterprises, the media company that owns 75 daily newspapers, including the St. Louis Post-Dispatch.
Dennis Swibold, a professor of journalism at the University of Montana and author of a book on the history of newspaper ownership in the state, said in Lee, Alden must think it can find some loose change somewhere.
"They see savings," Swibold said. "They wouldn't be making this offer if they didn't see cuts."
Alden, which has amassed around 200 publications through a series of acquisitions of large, financially struggling legacy newspaper chains, is making an all-cash offer to buy Lee at $24 a share, a healthy premium, for a total of $141 million. Lee stock was trading at around $18.50 by the end of last week, but since climbed to $23.40 a share by Monday afternoon.
"We believe that as a private company and part of our successful nationwide platforms, Lee would be in a stronger position to maximize its resources and realize strategic value that enhances its operations and supports its employees in their important work serving local communities," Alden wrote to Lee's board of directors in a letter Monday. "Our interest in Lee is a reaffirmation of our substantial commitment to the newspaper industry and our desire to support local newspapers over the long term."
However, Alden's track record seems to suggest otherwise. The firm has a history of purchasing newspapers to cut costs wherever possible and squeeze whatever profit is left out of a struggling medium in a struggling industry — often, this comes in the form of layoffs, selling off buildings, increased subscription prices and diminished coverage of local stories. It made one of its biggest moves this year, purchasing Tribune Publishing, which operated the Chicago Tribune, the New York Daily News and other large legacy papers.
As recently covered in the Atlantic, whatever profits Alden makes generally aren't reinvested in news, but are put in other areas. Its purchase of the Chicago Tribune meant buyouts for around a quarter of the newsroom. At the Denver Post, under Alden subsidiary Digital First Media, the editorial staff was reduced by two-thirds and its downtown newsroom leased out. Last year, Alden managing director Heath Freeman told the Washington Post he wanted his firm to be remembered for saving the industry — though the Post reported he "told friends the pragmatic truth is that newspapers need to be cut to be saved."
It's likely Alden, which first bought a 6 percent stake in Lee last year, is making a similar play here, Swibold said. Alden said it could close a deal in approximately four weeks.
"I remember when they bought almost 6 percent of Lee, this is one of the things that instantly popped on my radar screen as something that could happen," Swibold said. "Their history is one of ruthless efficiency. They have really taken a lot of the papers they've bought and purchased and put them through an incredibly intense stress test to find savings."
In its letter to Lee's board, Alden noted "back office operations and legacy public company functions" in the news business "remain bloated."
There's no guarantee Lee's stakeholders take the offer, though Alden has proven to be persistent — in 2019, it attempted an (ultimately unsuccessful) hostile takeover of Gannett, itself a newspaper company known for making cuts.
Lee did not return a request for comment.
Swibold acknowledged Lee has made its fair share of cuts and asset sales, but has generally tried to stay in the black. Still, the news industry has faced significant decline and consolidation, and hedge funds have often come in to fill the void left by collapsing legacy companies.
"It's really hard for public companies," he said, "when they're faced with these kind of offers and their stockholders see a way out."
For most of its history, the Post-Dispatch was owned by the Pulitzer family. In 2005, Lee purchased Pulitzer Inc. in a cash deal valued at $1.46 billion.
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