Hedge funds gobble local news
A Manhattan-based hedge fund on Tuesday agreed to buy local newspaper giant Tribune, representing the latest blow to the local news industry, which is already struggling to survive the pandemic — let alone the internet era.
Why it matters: The deal means that some of the country's most historic local newspapers, from the Chicago Tribune to New York Daily News, will be in the hands of an investment firm known for cutting journalists at local papers to maximize profits.
- The acquisition will also create one of the largest local publishing giants in America.
- Alden Global Capital already owns hundreds of local papers through its majority ownership of MNG (MediaNews Group) Enterprises, which controls papers like the Denver Post and the Boston Herald.
- As a part of the agreement, Alden agreed to sell Baltimore Sun, The Capital Gazette in Annapolis, and a few other smaller papers, to a Maryland-based nonprofit.
The big picture: The rollup of big newspapers chains like Tribune has killed thousands of local newspaper jobs over the past few years. Research shows those jobs aren't usually being replaced, leading to thousands of local news deserts across the country.
- Tribune rival McClatchy, home to papers like the Miami Herald and The Sacramento Bee, was bought by a hedge fund last year as a result of a bankruptcy auction.
- Alden tried to buy out local media giant Gannett, parent company to USA Today, in 2019. It failed, leaving the Gannett to merge with rival newspaper giant Gatehouse.
- Axios reported on Tuesday both of those newspaper giants are now teaming up together to try to sell more ads.
What to watch: Americans trust local news more than any other type of news. But without a sustainable business model for local, newspaper companies are getting gobbled up for close to nothing.
- Alden purchased the remaining shares of Tribune Publishing Tuesday, valuing the entire company for $630 million. McClatchy and its 30 titles sold last year for $312 million.
- By comparison, the buzzy new audio app Clubhouse, which launched in September, is valued at $1 billion.
Go deeper: Big city papers face headwinds