Six weeks ago, it looked like hedge fund boss Heath Freeman was losing his grip on Tribune Publishing Co.
Mr. Freeman, chairman of Alden Global Capital LLC, is on track to become the leader of America’s second-largest newspaper company, following the company’s takeover of Tribune. Shareholders voted on Friday to approve a sale to Alden, which previously held around 32% of the company’s capital.
Mr. Freeman, who co-founded Alden in 2007 at the age of 26 alongside his mentor, investor Randall Smith, pushed a strategy of consolidation and cost reduction in the group’s newspapers. As a major shareholder of Tribune, Alden backed cuts to the company last year – amid a pandemic advertising slowdown – that slashed total payrolls by a third and closed about half of its press offices, with no declared plans to open new ones.
Journalists and media watchdogs say such cuts have gutted local media and precipitated the industry’s demise. Mr Freeman said he was saving newspapers by keeping them financially viable.
“From Alden’s perspective, it’s about managing the decline, and if they hadn’t made those cuts, Tribune would have gone bankrupt,” said Mason Slaine, a minority shareholder of Tribune who voted against. the Alden accord. Mr. Slaine expressed at one point his interest in purchasing certain Tribune papers.
The Tribune deal, which will make Alden’s news portfolio the second in circulation in the United States behind only Gannett Co.
, almost escaped Mr. Freeman. Alden struck a deal in February to acquire the rest of the company in a transaction valued at $ 635 million. The hedge fund has agreed to part with the Baltimore Sun in a side deal with Maryland hotel mogul Stewart Bainum, president of Choice Hotels International Inc.
But that arrangement fell apart, and a frustrated Mr Bainum decided to make his own company-wide $ 680 million offer in March. It seemed at the time that Mr. Freeman might have overplayed his hand. Ultimately, however, funding for Mr Bainum’s bid failed, pushing Alden back to pole position.
Mr. Freeman was not available for comment. “The purchase of Tribune reaffirms our commitment to the newspaper industry and our focus on getting publications to a place where they can function in a sustainable manner over the long term,” he said in a statement after. approval of the agreement.
In an interview last year, Freeman argued that the austere cuts adopted in his newspapers reflected a more realistic understanding of the direction of the industry and which Alden-owned publishers are better positioned for the pandemic crisis. “We were prepared for a real step backwards in terms of recession because we were honest about what was needed going forward,” he said. “The numbers don’t lie.”
Mr. Freeman was working as an analyst for a specialist consulting firm when Mr. Smith hired him. Mr. Smith was a longtime distressed asset investor for nearly 40 years at the helm of Mr. Freeman. The two had once lived close to each other in New Jersey and their families knew each other.
People who know the men claim that Mr. Smith was a major influence on Mr. Freeman, whose parents died in his early twenties. “He’s a great guy, a great mentor,” Freeman said of Mr. Smith in last year’s interview.
While Mr. Freeman is Alden’s most public-facing figure, Mr. Smith is a key broker behind the scenes and was heavily involved in securing the deal with Tribune, people familiar with the situation.
Mr. Freeman’s father, Brian, had worked in the Treasury Department during the Carter administration. Later, as an investment banker, he advised the unions of Trans World Airlines when famous activist investor Carl Icahn took over the company.
The eldest, Mr. Freeman, committed suicide in the fall of 2001. Heath Freeman was 21 years old. Her mother died a few years later. “Their untimely death taught me how the world works at a very young age,” said Freeman. “It made me tend to be more realistic.”
A graduate of Duke University, Mr. Freeman was a soccer player for the soccer team, which was 3-30 while he was there. His alma mater and his sports are key parts of his identity, people who know him say. In 2014, he spent $ 120,000 to purchase the game jersey worn by basketball star Duke Christian Laettner when he landed a winning shot in 1992 to send the Blue Devils to the NCAA Final Four.
“Not many people have worked as hard as he is,” Brent Garber, the starting kicker when Mr. Freeman was on the team, said in an interview last year. “For a guy who was a walk-on for three years, he had an incredible work ethic.
Mr. Freeman is passionate about food and co-founded City of Saints Coffee Roasters, a small, upscale coffeehouse chain, one of which was featured on an episode of the Showtime series “Billions”.
When it comes to managing Alden’s investments, Freeman shows little nostalgia and makes decisions based solely on the numbers, say people who have worked with him.
Newspaper industry figures looked grim even before the pandemic. Annual advertising revenue fell 70%, or $ 34 billion, between 2005 and 2018, according to estimates from the Pew Research Center. More than 1,800 newspapers closed between 2004 and 2018, according to a study from the University of North Carolina.
Alden believes that some newspaper groups have not effectively managed their core printing businesses. In 2019, when Alden’s news group made an unsolicited and unsuccessful offer for Gannett, it argued that the publisher overspent on digital acquisitions.
Mr Freeman sees digital growth opportunities for local news outlets, including subscriptions and licensing of stories to tech giants like Facebook Inc.
and alphabet Inc. of
Google. News Corp,
the parent company of the Wall Street Journal, has entered into such agreements with Facebook and Google.
Between 2008 and 2019, the newspaper industry lost 51% of its newsroom jobs, according to the Pew Research Center. Alden’s newspaper chain cut staff by 76% at its 11 unionized newspapers between 2012 and last year, according to the News Guild, a union that represents newspaper employees. The Tribune newspapers have been as successful as any. Some Tribune journalists, opposed to an Alden takeover, have sought an alternative buyer.
Alden lobbied for high profit margins in his newspapers. In 2017, Alden’s MediaNews group posted a 17% profit margin in 2017, according to a person familiar with the matter, well above The New York Times. Co.
s margin, which was less than 1% that year, and Gannett at 1.7%, according to government filings. Alden declined to comment on the profitability of the news group.
Alden said he intended to make Tribune private. Industry watchers say they expect it to merge the company with MediaNews Group and achieve further cost cuts. Alden could also use the more than $ 200 million in cash on the Tribune’s books to pay off debt.
“That would be the industrial logic behind the deal,” said Jim Friedlich, unpaid adviser to Mr. Bainum and executive director of the Lenfest Institute for Journalism, the nonprofit foundation that owns the Philadelphia Inquirer. “Alden’s strategy has always been to take money out of these companies.”
Write to Lukas I. Alpert à [email protected] and Cara Lombardo at [email protected]
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