Apr 4, 2021 - Economy

Billionaires push to derail hedge fund takeover of local newspapers

Illustration of an open newspaper with a dollar sign cut out of the pages

Illustration: Annelise Capossela/Axios

Two unlikely billionaires may be close to derailing a massive newspaper deal that would've likely resulted in the loss of hundreds of local journalism jobs across the country.

Driving the news: Maryland hotel magnate Stewart Bainum and Swiss billionaire Hansjörg Wyss have reportedly agreed to put up more than $600 million of their own money to help finance a roughly $680 million bid for Tribune Publishing, the parent to many of America's most iconic newspapers.

  • The billionaires' bid, according to the Wall Street Journal, can now be recommended for consideration by Tribune's board to its shareholders over a cheaper bid from private equity giant Alden Global Capital.
  • In February, Alden said it would buy out the remainder of Tribune Publishing, the parent company to the Chicago Tribune, New York Daily News and other local papers, in a deal valuing Tribune at roughly $630 million.
  • On Sunday, the Journal reported that Bainum and Wyss were able to secure the financing for their bid after originally proposing to put up $200 million of their own dollars. Alden will have four days to come up with a higher bid, or else risk losing the deal, per the Journal.

Be smart: Alden Global Capital is a hedge fund known for cutting journalists at local papers to maximize profits. It has spent years positioning itself as Tribune's presumed buyer, by incrementally increasing its stake in the publicly traded company.

  • The Journal reported that public pleas from Chicago Tribune journalists to save the paper from Alden’s anticipated destruction is what inspired Wyss to make the bid.
  • Last weekend, the New York Times' reported that Wyss was joining Bainum Jr. in his bid for the Tribune papers, with plans to own Chicago Tribune.
  • Bainum Jr. originally said he would buy the Baltimore Sun, the Capital Gazette in Annapolis, and a few other smaller Maryland papers from Tribune for a reported $65 million to spin the news group into a nonprofit.
  • The Journal reports that Bainum Jr. is still planning to spin the Maryland-based papers into nonprofits and out of the control of private trusts.

Between the lines: Other wealthy individuals are apparently eyeing ways to help save their local papers from Alden’s potential takeover.

  • Last week, the Journal reported that a Florida investor named Mason Slaine, who is a minority investor in Tribune, was willing to put up $100 million in the bid for the Tribune being led by Bainum.
  • The WSJ noted Sunday that Slaine is not included in the new bid submitted to Tribune's Board from Bainum and Wyss.
  • Slaine was reportedly eyeing ownership of Tribune's two Florida papers, the Orlando Sentinel and the Sun Sentinel in Fort Lauderdale.
  • Last weekend, the Morning Call, a paper representing Lehigh Valley, Pennsylvania, that's owned by Tribune Publishing, reported that a Manhattan investor was the mystery bidder behind a $30 million–$40 million offer for the paper.

Go deeper: Billionaires scoop up news outlets as new form of philanthropy.

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