This is part two in a two-part series. Read part one here.
In their halcyon days through the 20th Century, newspaper owners pumped money into their assets and were so vested in their communities they were called kingmakers and barons.
Today, the country’s second largest newspaper operator and The San Diego Union-Tribune’s new owner — New York-based Alden Global Capital — is called a vulture and a vampire.
Analysts warn that those who value the Union-Tribune’s role as the paper of record on their neighborhoods, local government and public corruption, should take note of how Alden runs newspapers.
“This is a really critical moment where the community needs to know what's at stake,” said investigative reporter Julie Reynolds who has written about Alden for Columbia Journalism Review and The Nation. “It's not just a bunch of journalists whining about their jobs. This is about the community’s right to information.”
Newspapers started downsizing in 2005 because of lost ad revenue, dwindling market share and poor circulation in the internet age. The turning point came during the Great Recession.
“Google and Facebook were starting to take money from it and what happened then was that 19% of the revenue of the daily newspaper industry vanished in the Great Recession and has never come back,” said Ken Doctor, a news business analyst. “Alden really entered the news business after that recession. Today, Alden is pretty much the buyer of last resort.”
Doctor and others who study Alden say it has cemented a practice of gobbling up once-storied newspapers across the nation, cutting staff to skeletal numbers and leaving local news coverage a mere hint of its former glory.
“It is a joker-esque mentality of complete chaos and destruction and the very unwinding of our democratic way of life,” said Jon Schleuss, president of the NewsGuild CWA, a union that represents reporters working in Alden newsrooms. “We have lost tens of thousands of journalists in a decade. The trajectory is not changing. We're the only industry mentioned in the Constitution. So we’re kind of an essential part of having a functioning democracy.”
'Bleed things out'
Billionaire Patrick Soon-Shiong, owner of the Los Angeles Times, sold the Union-Tribune to Alden subsidiary MediaNews Group in July for an undisclosed amount.
MediaNews immediately offered Union-Tribune employees buyouts this summer. It’s unclear how many took them.
Alden did not respond to calls and emails seeking an interview on its plans for the Union-Tribune. But MediaNews told reporters there may be layoffs to “offset the slowdown in revenues as economic headwinds continue to impact the media industry,” according to an email sent by a company executive.
Schleuss said that tracks with the Alden playbook.
“When they acquire a newspaper, they will say 'We invest in newsrooms and we believe that they're essential for our democracy,’” Schleuss said. “And then they immediately turn around and offer buyouts to workers.”
He said the buyouts are followed by layoffs and coverage consolidation. KPBS confirmed this approach through interviews with current and former journalists at The Press-Enterprise in Riverside County and The Orange County Register. In the past, multiple reporters would cover a major city. Under Alden, a single journalist will cover four or five big cities. The same applies to school districts and police departments.
Schleuss said Alden is known for extracting every bit of a newspapers’ assets. It often sells the newsroom as real estate and pushes reporters to work from home, shifting the cost of running a newsroom, including electricity, air conditioning, and Wi-Fi to news reporters.
“They will just try to cut as many things that they can and not pay for supplies like pens and notebooks or computers,” Schleuss said. “They just kind of bleed things out as much as they can to get a quick payout.”
Subscribers also typically see the cost of their much thinner newspapers rise.
It’s tough to know exactly how profitable Alden’s cost-cutting approach has been for the investment firm because it is privately held. But there are hints. In 2017, Doctor obtained Alden’s then newspaper owner subsidiary Digital First Media’s financial documents from sources within the company showing it made $159 million. The 17% profit margin was nearly double that of the New York Times’ margin that year.
“This shocked people within the newspaper industry because the prevailing thinking is they must not be making any money,” Doctor said. “But if you cut enough and you maintain your sources of revenue, which is advertising and circulation, you're still making money.”
Not just newspapers
Alden also forces debt on its newspapers and takes money from the outlets to invest in its other assets.
The Associated Press reported in 2021 that Alden’s newspaper chain MediaNews Group took on $278 million in debt in its purchase of Tribune, which owned the Chicago Tribune, the Baltimore Sun and the Hartford Courant.
And Alden has admitted in a court filing that it used money from its news subsidiary to buy interest in Fred’s Pharmacy, which ended up in bankruptcy.
Journalists have uncovered additional ways Alden manipulates the finances of newspapers and other businesses.
The Washington Post reported that the Labor Department found in 2019 that Alden mismanaged its newspaper employees’ pension funds by putting $294 million of that money into the firm’s own funds.
The New York Times published an extensive piece on Alden’s role in driving Payless ShoeSource into bankruptcy in 2019.
Reynolds reported for the Columbia Journalism Review that Alden has duplicated its newspaper management strategy with its mobile home park holdings.
She said after an Alden-affiliated company bought parks in Virginia, rents rose up to 60%, basic maintenance was ignored, sewage at some of the properties backed up and park managers rarely answered the phone.
Reynolds began reporting on Alden after she saw how the firm’s downsizing of her former employer — the then Monterey County Herald — shrunk local news coverage.
“We journalists are very loath to investigate our own industry, but if this was any other industry that was affecting so many lives, we would have been all over it,” Reynolds said. “And so I just felt a responsibility to tackle this topic.”
Once Alden took over, Reynolds said the reporting staff dwindled through buyouts and layoffs, as did local news coverage. She said the paper stopped covering most school board, city council, county supervisor, and planning commission meetings, due to cutbacks and also because Alden shut down its printing press and began using a facility five hours away, which changed evening deadlines to 2 p.m.
“This is the internet age,” Reynolds said. “You don't want to read stories two days later in your daily newspaper. It was just insane. And so the newspaper just diminished and diminished. We even took `county’ out of the masthead because we didn’t cover the county anymore.”
As newspapers continue to be consolidated by hedge funds and private equity firms, Schleuss said he’s pushing Congress for regulation to stop the bleeding.
“I was just on Capitol Hill meeting with different members of Congress, both Republicans and Democrats alike, and in every single one of those meetings I talked about Alden Global Capital and how it's destroying this newsroom and that newsroom,” he said.
