The notorious Alden newspaper chain wants to buy the News’ parent company. A sale would further diminish the paper.
The past decade have been tough times for The Buffalo News.
Declining circulation. Smaller profits. Deep cuts in the newsroom staff, resulting in less local news coverage.
Things may soon become much more difficult.
Alden Global Capital, regarded as the Darth Vader of newspaper chains, has made an offer to buy Lee Enterprises, whose holdings include The News. Alden announced its intentions last week and Lee responded as you would expect to what is clearly a hostile takeover attempt.
No matter, the vultures are circling.
Chains in general are bad for daily newspapers. Alden is the worst of them.
“Every paper they have purchased has suffered,” said Ken Doctor, a leading newspaper industry analyst.
The Atlantic, in its cover story for its November issue, put it this way: “The model is simple: gut the staff, sell the real estate, jack up subscription prices, and wring out as much cash as possible.”
It’s happened time and time again. Alden owns 207 newspapers — including the Chicago Tribune, New York Daily News, Denver Post, San Jose Mercury News and Orlando Sentinel, where I cut my teeth as a reporter — which makes it the nation’s second-largest chain. Adding Lee’s 170 properties would make it that much more of a player, trailing only Gannett and its 613 newspapers.
Alden slashes newsroom staffs after it buys a paper. Here’s how The Atlantic described what happened to the Chicago Tribune when Alden took ownership in May.
The new owners did not fly to Chicago to address the staff, nor did they bother with paeans to the vital civic role of journalism. Instead, they gutted the place.
Two days after the deal was finalized, Alden announced an aggressive round of buyouts. In the ensuing exodus, the paper lost the Metro columnist who had championed the occupants of a troubled public-housing complex, and the editor who maintained a homicide database that the police couldn’t manipulate, and the photographer who had produced beautiful portraits of the state’s undocumented immigrants, and the investigative reporter who’d helped expose the governor’s offshore shell companies. When it was over, a quarter of the newsroom was gone.
The story was much the same out west when Alden bought the Orange County Register outside Los Angeles and cut the newsroom staff of 180 by two-thirds in the first two years of its ownership.
Doctor, in a May 2018 edition of his Newsonomics, told of a conversation he had with one Register staff member, who told him:
Orange County is the sixth most-populous county in the U.S. with 3.2 million people, more than 21 states and an economy larger than Greece or Portugal. We now have just four reporters covering its 34 cities, whereas we used to have 28 weekly sections to cover news and city councils etc. in those cities. Other reporters, from courts to crime to business, have been told to avoid O.C. stories and instead look for regional stories that can run across the chain because we are so thinly staffed. We have no healthcare reporter and no education reporter anymore.
The Post in Denver serves as a poster child of Alden ownership. Its newsroom of 300 is now about 60. Its editor resigned over the cuts in 2016, its editorial page editor in 2018, after Alden squashed an editorial that criticized Alden’s ownership, that declared:
Denver deserves a newspaper owner who supports its newsroom … If Alden isn’t willing to do good journalism here, it should sell the Post to owners who will.
No matter. Alden still owns the Post and is wringing millions of dollars a year in profits out of it.
Alden’s management has been bad for journalism and the communities their newspapers purport to serve. But profitable for Alden.
Doctor, perhaps the newspaper industry’s leading analyst when he recently stepped aside to start a digital news operation in Santa Cruz, CA, reported in 2018 that Alden’s newspapers enjoyed a 17 percent profit margin. The other major newspaper publishers at the time posted profit margins under 10 percent. That figure is about 5 percent for businesses as a whole.
Doctor told me in a phone interview last week that Alden is not a patient investor. It seeks to recoup its investment quickly.
“They get more than the purchase price in three years,” he said. “It means pretty quick cutting.”
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What does this portend for The News if Alden buys Lee Enterprises?
Cuts seem inevitable. A newsroom of more than 200 back in the day has already been cut to 83. Both Doctor and Rick Edmunds, media business analyst for the Poynter Institute, said to expect further cuts if Alden buys The News.
Experienced, higher-paid reporters will be targeted. In their place will be less-experienced, lower-paid journalists.
Likewise, a sale of The News building and its 450-car parking lot is highly likely.
That’s partly because “one of Alden’s specialties is selling real estate,” Edmunds said. Moreover, The News property is prime real estate, located a stone’s throw from Canalside and the growing number of developments in the Inner Harbor. One real estate broker active in the downtown market told me the building and parking lot would fetch “upwards of 25 million dollars.”
While the printing plant may or may not stay put, office operations, including sales and editorial, would relocate to smaller quarters. Doctor said Alden would “push remote work as the standard.”
Alden is likely to leave management in place, provided they’re willing to do things Alden’s way. The company, Edmunds said, doesn’t have a “deep bench.”
Said Doctor: “They don’t care as long as they make their numbers.”
Added Edmunds: “Once they’ve made their cuts, they leave their editors and reporters alone. They don’t have an agenda, aside from making money.”
The quality of newspapers suffers when Alden moves in.
“You have a smaller report, and less of a local report,” Edmunds said. “It’s bad news.”
The prospect of a takeover by Alden has rank-and-file journalists at The News “really worried,” said Sandy Tan, president of the Buffalo Newspaper Guild.
The union has gone on record opposed to the sale, which she said “would all be for the worst.”
For what it’s worth, Lee’s board of directors has signaled its opposition, as well, but in more subtle terms. After Alden announced its purchase offer, Lee’s board took steps to forestall a quick purchase. It also acted coolly to a move by Alden to nominate three of its people to open seats on the board.
Shareholders have rights that trump the wishes of the board and they may very well agree to a sale, particularly if Alden sweetens its offer. Time will tell.
What’s playing out is a sad reality in the newspaper business. The business model is broken. There will be no return to the good old days of fat profits and large newsrooms. More likely is the continuing suffocation of the business.
Again, The Atlantic:
It’s easy to romanticize past eras of journalism. The families that used to own the bulk of America’s local newspapers – the Bonfilses of Denver, the Chandlers of Los Angeles [and the Butlers and Connors of Buffalo] – were never perfect stewards. They could be vain, bumbling, even corrupt. At their worst, they used their papers to maintain oppressive social hierarchies. But most of them also had a stake in the communities their papers served, which meant that, if nothing else, their egos were wrapped up in putting out a respectable product.
The 21st century has seen many of these generational owners flee the industry, to devastating effect. In the past 15 years, more than a quarter of American newspapers have gone out of business. Those that have survived are smaller, weaker, and more vulnerable to acquisition. Today, half of all daily newspapers in the U.S. are controlled by financial firms.
Alden’s style of ownership, indeed that of most of the major chains owned investment groups, will hasten the demise of newspapers, as their interests begin and end with milking what profits remain to be gotten from a struggling industry.
It’s bad for communities, and certainly bad for our democracy. Not that the Aldens of the world care.