Shareholders of Tribune Publishing, one of the country's largest newspaper chains, voted Friday on a takeover bid by hedge fund Alden Global Capital. In a statement, Alden appeared to say the deal was approved, an assertion questioned by the union representing Tribune journalists.
Alden, which already owned nearly one-third of Tribune, stands to take full control of the Chicago Tribune, Baltimore Sun and other Tribune papers in a deal worth roughly $630 million. Through its Digital First Media chain, Alden also owns the Boston Herald, Denver Post and San Jose Mercury News.
Union officials cast doubt on the outcome because Patrick Soon-Shiong, the owner of the Los Angeles Times and Tribune's No. 2 shareholder, abstained from the vote.
They cited Tribune's proxy statement of April 20, which states that approval of the deal required the votes of at least two-thirds of shares not owned by Alden, and that an "abstain" vote counted the same as an "against" vote. Soon-Shiong, in a statement issued through a representative, said he "abstained from voting" and that he viewed Tribune as a "passive investment."
"We're digging into this question right now," said Jon Schleuss, president of the NewsGuild journalists union.
The Chicago Tribune, citing unnamed Tribune officials, reported that Soon-Shiong's ballots were submitted without the "abstain" box checked, and so were counted as a "yes" vote on the Alden takeover, which was in accordance with the instructions on the ballot.
Representatives for Soon-Shiong, Alden, Tribune and the special committee of Tribune's board did not immediately reply to questions about the vote count.
The Alden bid would be the latest major acquisition of a newspaper company by an investment firm. The collapse of print advertising as readers migrated to digital publications has rocked the traditional newspaper business. Publishers have shut down more than 2,000 papers over the past 15 years and half of newsroom jobs have disappeared. Investment firm owners are often criticized for valuing profits over the mission of local journalism, and Alden is no exception.
The deal had drawn opposition from many of the company's journalists at papers in an unusual spate of employee activism.
They set up rallies, tried to find local buyers and begged for a rescue in their own newspapers. They had rooted for a higher bid from hotel mogul Stewart Bainum in the belief that it would be better for local journalism, although the bid never came to fruition. They lobbied Soon-Shiong, the owner of the Los Angeles Times, to vote no and stop the deal.
Alden became Tribune's largest shareholder in 2019. The union representing Tribune's journalists says the hedge fund's cost cuts have already led to shrinking newsrooms and closed offices.
"The purchase of Tribune reaffirms our commitment to the newspaper industry and our focus on getting publications to a place where they can operate sustainably over the long term," said Heath Freeman, president of Alden, in a statement.
A 2020 report from the University of North Carolina's journalism school said the combination of Alden and Tribune would be the country's second-largest newspaper publisher by circulation, behind Gannett.
Tribune itself is no stranger to cost cuts and shrinking newsrooms. After emerging from bankruptcy in 2012, it split from its TV broadcasting arm in 2014 and since then has bought and sold papers including the Los Angeles Times (sold), the San Diego Union-Tribune (bought and then sold) and the New York Daily News (bought, then hit with layoffs that cut its editorial staff in half ). Its annual revenue has fallen by more than half since 2015, and by the end of 2020 its number of full- and part-time employees stood at 2,865 people, just 40% of its headcount five years earlier.
Investment firms have played a significant role in consolidating the industry as online competition drew away readers' attention and ad dollars. Hedge fund Chatham Asset Management bought newspaper chain McClatchy in an auction last year following the company's bankruptcy, beating a bid from Alden. A newspaper company managed by private equity firm Fortress bought Gannett in 2019 with a high-interest loan from another private equity firm. The newspaper company, which retained the Gannett name and is publicly traded, has since ended the management arrangement with Fortress.
An expected higher bid for the whole company from the hotel mogul Bainum never fully materialized. He has been unable to find a buyer for the Chicago Tribune, a key element in his plan to return the company's papers to local ownership. Hansjorg Wyss, a billionaire from Wyoming who expressed interest in owning the Chicago Tribune, joined Bainum's bid, then subsequently dropped out. He did not say why.
Prior to his bid for all of Tribune, Bainum struck a side deal to buy Baltimore Sun Media from Tribune for $65 million via a nonprofit. It's unclear what happens to the Sun should the Alden bid succeed on Friday. In a statement, Bainum said that while his efforts to buy Tribune have "fallen short," his focus now is on Baltimore and Maryland, where he is "evaluating various options" to create nonprofit newsrooms.