The $630 Million Buyout
On Tuesday, Tribune Publishing announced it is selling the remainder of its shares to the hedge fund business. The hedge fund business already owned 32% of the newspaper company but will now buy out the remaining 68% of shares at a deal valued at $630 million. The newspaper company shareholders have already approved the deal.
Philip Franklin, chair and member of the special committee for the newspaper company, said, “Over the past year, the Company has taken a number of actions to adapt to an ever-changing business and industry environment, including the impact of COVID-19.” He added, “These actions included strengthening the Company’s financial position, driving digital growth and investing in high-quality content to better serve customers, employees and communities. This positioning enabled the special committee to negotiate a premium, all-cash price, which the committee concluded was superior to the available alternatives.”
The deal between the hedge fund business and newspaper company creates one of the largest publishing giants in America, as the hedge fund business already owns hundreds of smaller newspapers through its majority ownership of MediaNews Group. Consequently, the business has become notorious for cutting journalists to maximize its profits.
As part of the Alden Capital and Tribune deal, the hedge fund business has agreed to sell the Baltimore Sun, The Capital Gazette in Annapolis, and some other small newspapers to nonprofit public charity Sunlight for All Institute.
The news of the hedge fund business taking over the newspaper company comes a year after McClatchy sold its shares to a hedge fund to avoid bankruptcy.
The Newspaper Industry
Newspapers were once the only public news source and became imperative to everyday life. Since the turn of the century, however, there has been a transition away from printed newspapers due to the rising influence of the internet. The New York Times reported that between 2004 and 2019, roughly a quarter of weekly newspapers were shut down, and 50% of newspaper jobs were eliminated.
With news access now available at one’s fingertips, whenever and wherever, newspapers have struggled to adjust to the changing climate. The circulation of daily newspapers was 60 million in 2000, and that number has decreased by more than half to 28.6 million in 2018. Additionally, the US newspaper market size was valued at $27.84 billion in 2016 and is expected to only be worth $17.07 billion by 2025. Unfortunately, newspaper revenues, employment, and circulation continue to decline in the industry.
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.