Sunday reading: what vulture capitalism does to the newspaper industry


A few weeks ago, we wrote on Weekly Style, Richmond’s alternative weekly, which is declining after nearly four decades in business.

“The newspaper belongs to Alden Global Capital, a cannibalistic hedge fund known for emptying publications from his portfolio by gutting staff and selling real estate, ”wrote journalist Leigh Tauss in early September.

This week for Atlantic, writer McKay Coppins takes a close look at Alden Global Capital, its origins, business model, and the grim future of any hapless newsroom that finds itself grappling with the hedge fund talons, including the once big, trailblazer and award winner. of the Pulitzer Prize publications such as the Chicago Tribune, that Alden acquired in May, and the Baltimore Sun, former employer of director David Simon, where he worked the police beat that inspired him to create the HBO series Thread.

Founded and led by Randall Smith, “a Palm Beach recluse septuagenarian” donor Trump and his protégé, Heath Freeman, a fratty walk-on placekicker during a winless season for Duke’s football team in the early years 2000, Alden now controls nearly 200 newspapers across the country. Smith, who does not give interviews and is rarely photographed, is nearly impossible to find. He divests himself of his assets every few years so that he doesn’t end up on any list of the richest people in the world, Coppins reports, but Coppins doesn’t speak to him for the story. from Alden alternate site gives nothing and its list of investors is strictly confidential. But Freeman gives an interview to Coppins, and the takeaway from Coppins is that he “underestimated how little the founders of Alden cared about their position in the world of journalism.”

“The profits generated by Alden’s newspapers were not used to rebuild the newsrooms,” concludes Coppins. “Instead, the money was used to finance the other hedge fund companies.”

Of the history :

Since buying their first newspapers ten years ago, no one has been more mercenary or less interested in claiming to care about the long-term health of their publications. Researchers at the University of North Carolina found that Alden-owned newspapers cut staff twice as fast as their competitors; It was no coincidence that circulation also fell faster, according to Ken Doctor, a news industry analyst who examined data from some of the newspapers. It might sound like a losing formula, but these newspapers don’t have to grow into sustainable businesses for Smith and Freeman to make money.

Through aggressive cost cuts, Alden can profitably run his newspapers for years to come while producing an increasingly less good product, indifferent to the subscribers he alienates. “It’s the pettiness and elegance of the capitalist market brought to newspapers,” Doctor told me. So far, Alden has limited its closures primarily to weekly newspapers, but the doctor says it is only a matter of time before the company begins to shut down its dailies as well.

This investment strategy is not without social consequences. When a local newspaper goes missing, research shows it tends to match declining voter turnout, increased polarization, and a general erosion of civic engagement. Disinformation proliferates. City budgets are skyrocketing, along with corruption and dysfunction. The consequences can also influence national policy; a Politico analysis found that Donald Trump performed best in the 2016 election in places with limited access to local news.

Learn about Alden’s origins, the future of its newsrooms, and how some journalists desperately hang on – and how others try to push back – in Coppins’ long article in its entirety. here.

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