An investment firm with a reputation of buying and gutting newspapers has just bought a stake in Lee Enterprises, which is purchasing The Buffalo News in a deal scheduled to close in March.
What’s more, the firm, MNG Enterprises, is reportedly trying to engineer discussions about a mega-merger of newspaper chains, including Lee, Tribune Publishing, and possibly the McClatchy Co.
In my column Wednesday, I said Lee’s purchase of The News was bad news that could have been worse. If MNG Enterprises, doing business as Digital First Media and MediaNews Group, gets its hands on The News through Lee, well, that would be a worst-case scenario.
Those companies and their owner, Alden Global Capital, are regarded as the Darth Vader of newspaper owners, dubbed by critics as “vulture capitalists.”
Nieman Labs, one of the nation’s leading journalism think tanks, weighed in today with a story headlined Alden Global Capital has sunk its claws into yet another newspaper company: Lee. Alden, the story said, “wants to pressure Lee to cut costs to increase margins (and its share price), and it wants to talk about what other “efficiencies” might be found in various M&A possibilities. It’s alarming that just $9.23 million is all it takes to get that seat at the table.”
The Denver Post is one of the newspapers Alden has manhandled. Journalists there were so outraged by staff cuts that some of them formed a rival non-profit news organization. The prospect of Alden purchasing a controlling interest in the Chicago Tribune has prompted two of the paper’s reporters to appeal for a local funder to step forward to buy the paper.
In a piece published Jan. 19 in The New York Times they wrote:
Alden’s strategy of acquiring struggling local newsrooms and stripping them of assets has built the personal wealth of the hedge fund’s investors. But Alden has imposed draconian staff cuts that decimated The Denver Post and other once-proud newspapers that have been vital to their communities and to American democracy…
Unless Alden reverses course — perhaps in repentance for the avaricious destruction it has wrought in Denver and elsewhere — we need a civic-minded local owner or group of owners.
In the wake of Lee’s acquisition of 31 papers owned by BH Holdings, held by Buffett’s Berkshire Hathaway, MNG Enterprises purchased 3.4 million shares worth a 5.9 percent stake in the company.
In a filing Wednesday with the Securities and Exchange Commission, MNG said it plans on talking with Lee about “the recently announced acquisition of Berkshire Hathaway’s newspaper operations.” Later in the day, the online news site Tech News published a story headlined “Alden is trying to combine Lee, BH, Tribune and possibly McClatchy,” the BH referring to Berkshire Hathaway.
Now, that brief story is not the final word, but it is concerning. Consider what The Washington Post reported a year ago.
At the dozen Digital First publications represented by the NewsGuild, the number of union jobs has declined nearly 70 percent, from 1,552 in 2012 to 487 in 2018. University of North Carolina researchers found, based on 12 newspapers, that Digital First has cut staff at a rate more than twice the national average during that time.
In March 2018, Margaret Sullivan, media columnist for The Washington Post, described Alden as “one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism.”
Alden is on the prowl to expand its empire, which now includes some 50 daily newspapers, including The Denver Post, San Jose Mercury News and Detroit News. It made an unsuccessful bid last year to purchase the mammoth Gannett newspaper chain, which later merged with another large chain, GateHouse Media.
Lee will have 81 dailies once it absorbs the 31 papers it is acquiring from Buffet’s BH Holdings. The News, St. Louis Post-Dispatch and Omaha World-Herald will be its largest newspapers.
Among the dailies Tribune Publishing owns are Chicago Tribune, New York Daily News, Baltimore Sun and Orlando Sentinel.
McClatchy’s holdings include The Miami Herald, Charlotte Observer and Kansas City Star.
Put some or all of them altogether and you’d have a very large chain.
Consolidation is rampant in the newspaper industry, in response to the industry’s declining profitability.
“The whole local news ecosystem is in a state of disruption, chaos and decline,” said Sullivan, the Post’s media columnist and former editor of The Buffalo News.
While she noted “significant staff cuts,” Sullivan said The News has otherwise “been somewhat protected” from “very extreme trends” playing out in many other cities, including “very deep staff cuts, publishing only a few days a week, cutting back on home delivery.”
“That hasn’t happened under Buffett’s ownership, but now that that’s changing, it’s upsetting and more than a little scary about what might happen next.”
All this is not to say Alden is going to sweep in and gut The News. But there are wheels in motion that we need to pay attention to.
The News, for all its faults, is an important community institution that needs to be preserved – indeed, strengthened. That’s not the business Alden is in. I’m not sure it’s the business Lee is in, either.
Margaret Sullivan is right: this is more than a little scary.
by Jim Heaney, editor of Investigative Post