The move to hedge fund ownership is part of a growing trend in the news industry, much to the chagrin of media advocates who have argued that financial firms do not make good directors of a founded business largely on empowering the powerful.
Chatham is a major investor in Postmedia, the publisher of Canadian newspapers including The National Post, The Montreal Gazette and The Ottawa Citizen. He is also the main owner of American Media Inc., the parent company of supermarket tabloid The National Enquirer.
Chatham is led by Chicago-based Anthony Melchiorre, who worked on Wall Street at Goldman Sachs and Morgan Stanley, where he led his Junk Bond division. He established his hedge fund in Chatham, NJ, in 2002. The company often takes on debts from distressed companies that still have good cash flow. American Media and McClatchy fit this profile.
McClatchy’s problems date back to 2006, when he bought his biggest rival, Knight Ridder, then the second largest newspaper chain in the United States, for $ 4.5 billion, plus the assumption of a debt of 2 billions of dollars. Shortly after the merger until the end of 2018, McClatchy’s workforce grew from more than 15,000 full-time employees to around 3,300, according to public documents.
McClatchy President Kevin S. McClatchy, the great great great grandson of its founder, said that the company’s failure to meet its retirement obligations had put it bankrupt. The $ 1.4 billion pension plan, created 75 years ago, was to provide cash for more than 24,000 current and future retirees.
Like other hedge funds, Chatham has benefited from investing in distressed companies. It took McClatchy’s financial interest shortly after the chain’s financial problems began.
Alden Global Capital, a New York hedge fund that has become a force in the information industry, had also expressed interest in the McClatchy acquisition during recent bankruptcy court hearings. It controls around 200 points of sale through its newspaper chain, MediaNews Group. With a strategy that led to deep layoffs at The Denver Post and other MediaNews group publications, Alden managed to make a profit from a company that seemed to have gone beyond its peak.