When newsrooms fight their owners

The Denver Post's editorial board has made no secret of what it thinks about its hedge fund owners."As vulture...

Posted: Apr 30, 2018 2:53 PM
Updated: Apr 30, 2018 2:53 PM

The Denver Post's editorial board has made no secret of what it thinks about its hedge fund owners.

"As vultures circle," the newspaper "must be saved," the board wrote earlier this month. The Post had just been ordered to cut dozens of staff even though its parent company, Digital First Media, is profitable, according to the editorial.

The board argued that the problem could be at Alden Global Capital, the New York-based hedge fund that owns most of Digital First and its dozens of newspapers.

"Denver deserves a newspaper owner who supports its newsroom," the editorial board wrote. "If Alden isn't willing to do good journalism here, it should sell The Post to owners who will."

The idea has fans. Denver Mayor Michael Hancock told CNN earlier this week that he'd "love" to see The Post sold to "responsible owners," while Gov. John Hickenlooper recently told Rolling Stone that he supported a sale. Several prospective investors in Colorado are also starting to hash out their own purchase plan.

But buying the paper would not be a simple task.

Who is Alden Global Capital?

The Post, like many local and regional newspapers, is part of a newspaper chain. But the case is particularly remarkable because of who controls it.

Alden Global Capital, a fund known for buying distressed properties, has been investing in newspapers for the last decade, including its subsidiary, Digital First. Although the newspaper industry has notoriously struggled in recent years, critics say the company cuts deeper than most of its rivals.

"They do have a reputation for being pretty much the worst of the worst," said Dan Kennedy, an associate journalism professor at Northeastern University. He added that Digital First is known for its "relentless focus on the bottom line."

Alden has also been criticized for exacerbating problems at Digital First by diverting money from the division into other investments. Court filings that detailed such measures were published last month by the website #NewsMatters, a project of a labor union that organizes workers in some Digital First newsrooms.

Eventually, they're going to drive us to the point where there's nothing left to cut," said Kieran Nicholson, a staff writer at The Post who is also the chairman of the newsroom unit of the Denver Newspaper Guild. "We don't want to go there."

Past precedent

Sometimes newsroom revolts can have an impact on management and ownership - or at least, it appears that way.

The Los Angeles Times voted earlier this year to unionize, a decision that created enormous tension with its parent company, Tronc. The guild frequently published articles that were critical of the business and its plans for the newspaper.

The high-profile spat drew national headlines, and Tronc, which also owns the Chicago Tribune and other newspapers, eventually sold The Times to a Los Angeles billionaire for $500 million. That deal is still pending.

"There is this sense around here that we dodged the biggest bullet in the world," said Matt Pearce, a Times reporter and one of the vice chairs of the paper's guild. He said the ability for staffers to feel comfortable speaking up about their jobs without fear of retaliation "had an enormous impact."

"The reason that we're talking about The Denver Post right now is that they have performed this act of civil disobedience," Pearce added. "We have not been telling the story of our industry, which is that it's being plundered."

Would Alden sell?

It's not clear that Alden would be willing to part with The Post. Alden and Digital First did not respond to requests for comment. But even if Alden was open to the idea of a sale, experts say it would need the right incentive.

"A financial seller isn't going to sell at a fire-sale price," said Julie Bergman, the vice president of the newspaper group at the media advisory firm Grimes, McGovern & Associates. "So it is going to take fair market value, or perhaps even slightly more."

Bergman said there are logistical complications to consider, too. Dozens of publications comprise Digital First, so its papers probably share some staff or services. That could make The Post tough to spin off on its own.

Alden's Digital First has given up papers before, including the Salt Lake Tribune in Utah and the Berkshire Eagle in Massachusetts.

"There are circumstances under which they can be persuaded to sell," Kennedy said, though he noted that the company is also buying papers, too. It recently picked up the Boston Herald.

Would-be buyers

The prospect of a sale has already attracted interest, though, either for The Post or a piece of it.

The media agency Grasslands, for example, says it has talked to leadership at The Post about possibly buying its marijuana news website, The Cannabist, if the paper decides to sell the site. Grasslands founder Ricardo Baca led the website's launch in 2013.

Like other departments at The Post, staff at The Cannabist has dwindled. Its editor, Alex Pasquariello, told CNNMoney on Friday that he was being let go.

Other outsiders are hoping to take over the flagship publication. Earlier this month, a civics group called Together for Colorado Springs said its members would pledge at least $10 million toward a purchase.

Interest has only grown since then, said John Weiss, who leads the group. Weiss also owns several publications, including the Colorado Springs Independent and the Colorado Springs Business Journal.

"We've been concerned about The Post for a while," Weiss said. "We believe in newspapers. We're actually in acquisition mode."

The group has not yet approached Alden or finalized a bid, and Weiss said his team will take the next couple of months to look at its options. They've already been talking with others interested in an investment, including a team of digital media venture capitalists and a civics and journalism group with ties to Denver.

"We want to approach them from a position of strength," Weiss said of Alden. He estimated that buying and remaking the newspaper would cost around $100 million.

If Weiss is successful, it's not yet clear how the new company would operate. He said the group has looked at several choices, including operating it as a nonprofit or selling shares to local investors.

And if The Post can't be bought? Weiss hasn't ruled out creating a brand new publication for Colorado.

"We are looking at every option," he said. "The only thing we are committed to is that this will be a first-class print and digital operation."

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