Tribune Publishing proposes $630-million sale to hedge fund Alden Global Capital
Chicago-based Tribune Publishing on Tuesday announced a proposed sale to hedge fund Alden Global Capital in a deal valued at $630 million.
Already the largest shareholder of Tribune Publishing with a 31.6% stake, Alden Global Capital is aiming to consolidate ownership of such storied newspapers as the Chicago Tribune, New York Daily News, Hartford Courant, Virginian-Pilot, Orlando Sentinel and South Florida Sun-Sentinel.
The Los Angeles Times and San Diego Union-Tribune were part of Tribune Publishing until 2018, when Los Angeles biotech entrepreneur Dr. Patrick Soon-Shiong and his wife, Michele, rescued the two papers in a $500-million deal. The Soon-Shiong family purchase returned The Times to local control after more than a decade of upheaval, and steep cost-cutting, while under Tribune Publishing‘s stewardship.
Soon-Shiong retained his stake in Tribune Publishing and currently is the company’s second-largest shareholder with 24%. He acquired his initial interest in Tribune Publishing at $15 a share in 2016.
Alden Global Capital’s proposed takeover of Tribune hinges on receiving Soon-Shiong’s support as well as the approval of another large Tribune shareholder, Mason Slaine, who owns about 8% of the company. Holders of two-thirds of Tribune common stock not owned by Alden must approve the sale.
Soon-Shiong declined to comment Tuesday evening, saying he wanted to review details of the deal.
Alden Global Capital is one of the nation’s largest publishers, with a major presence in California. It has the majority stake in MediaNews Group, which owns the Orange County Register, Los Angeles Daily News, Long Beach Press-Telegram, Riverside Press-Enterprise, San Bernardino Sun and the San Jose Mercury News. Its other papers include the Denver Post and the St. Paul Pioneer Press.
The firm has a reputation for persistent cost-cutting and layoffs of hundreds of journalists. Alden Global Capital gained notoriety in 2018 when a revolt in Denver resulted in opinion editors publishing a plea to readers: “Editorial: As vultures circle, The Denver Post must be saved.”
The beleaguered newspaper industry has been gripped by consolidations and hedge fund takeovers in recent years. The moves reflect flagging fortunes of newspapers, which have witnessed a dramatic migration of readers and advertisers to tech giants, including Google and Facebook. The last year was particularly brutal for the newspaper industry as coronavirus stay-at-home orders further decimated advertising spending.
“Our commitment to ensuring the sustainability of robust local journalism is well established and this is part of that effort,” Alden Global Capital said in a statement Tuesday.
The hedge fund first announced its intentions in a Dec. 14 letter, by offering Tribune shareholders $14.25 a share for the stock that the firm doesn’t already own — valuing the deal at $520.6 million. Negotiators representing Tribune Publishing’s board have spent the last six weeks negotiating more favorable terms.
The deal announced Tuesday offers $17.25 per share in cash for the shares the company doesn’t already own. That represents a 21% increase from the December offer, and a 35% premium to the closing price of Tribune‘s common stock as of Dec. 30, 2020, when Alden Capital’s interest became known. Tribune’s board approved the sale.
Tribune Publishing hasn’t set a date for its shareholder vote. The deal also must clear a federal antitrust review.
Tribune Publishing has suffered since the 2007 leveraged buyout by real estate mogul Sam Zell. Saddled with nearly $13 billion in debt, the company plunged into bankruptcy, only to emerge in 2012 with private equity funds in control.
Among other things, Tribune sold off its most valuable real estate holdings, including the iconic Tribune Tower in Chicago and The Times’ historic headquarters in downtown Los Angeles. The private equity firms divided the company into two parts and entrepreneur Michael Ferro gained a majority stake in the publishing side of the business. Ferro sold his stake to Alden Global Capital.
Among the Tribune papers, only the Baltimore Sun won’t be included in the deal. The company said it would separately be purchased by the Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., who is chairman of Choice Hotels International.