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A deal that would reshape the U.S. newspaper industry ran into complications barely a month after a deal was struck, according to three people with knowledge of the matter. As a result, New York hedge fund Alden Global Capital may have to fend off a new suitor for Tribune Publishing, the chain that owns major metropolitan dailies across the country, including The Chicago Tribune, The Daily News and The Baltimore Sun. , the people mentioned.
On February 16, Tribune Publishing’s largest shareholder Alden, with a 32% stake, struck a deal to buy the rest of the chain in a deal that valued the company at $ 630 million. In the deal, Alden would own all of Tribune Publishing’s newspapers – then sell The Sun and two small Maryland newspapers for $ 65 million to a nonprofit controlled by the Maryland hotel mogul. Stewart W. Bainum Jr.
In recent days, Mr Bainum and Alden have found themselves at odds over the details of operating agreements that would be in effect when Maryland newspapers move from owner to owner, people said. In response, Mr. Bainum took a preliminary step to bid for all of Tribune Publishing, the people said.
Mr Bainum has asked the special committee of Tribune Publishing, a group of three independent board members, for permission to be released from a nondisclosure agreement barring him from discussing the deal, so that he can can search for partners for a new offer. , people said.
A spokeswoman for Mr Bainum said he had no comment. Through a spokesperson, Tribune Publishing’s special committee declined to comment. A spokesperson for Alden made no comment.
Alden has been investing in the newspaper business for over a decade. It owns some 60 dailies, including The Denver Post and The San Jose Mercury News, through a subsidiary, MediaNews Group. Its deal to acquire the remainder of Tribune Publishing would make it an even bigger force in the news media industry, by some measures the second-largest newspaper company after Gannett, the company that publishes one-fifth of all newspapers. Americans, including USA Today.
Journalists criticized Alden for drastically cutting the costs of his newspapers, often by firing journalists and reducing his local media coverage. Over the past year, reporters from several Tribune newspapers have run public campaigns urging local benefactors to buy the newspapers that employ them so that they do not fall under the control of the hedge fund. Alden argues that it is the rare company that keeps local newspapers from going bankrupt.
The Alden-Tribune deal requires the approval of shareholders who own approximately two-thirds of the non-Alden-owned shares of Tribune Publishing. The largest holder of these shares, with an aggregate stake of nearly 25%, is Patrick Soon-Shiong, the biotech billionaire who owns the Los Angeles Times with his wife, Michele B. Chan. Dr Soon-Shiong, who owns enough Tribune Publishing to veto the deal himself, declined to comment on the deal between Alden and Tribune. He declined to comment on Mr Bainum’s plan on Sunday.
If Mr Bainum succeeds in making a deal to buy Tribune, he will likely seek local owners for his other newspapers, which also include The Hartford Courant, The Orlando Sentinel and The South Florida Sun Sentinel, the people said.
Two of the people said Mr Bainum, who resides in a Maryland suburb of Washington, was willing to come up with $ 100 million for an offer and then seek additional investment from other people. Since 1997, Mr. Bainum has served as President of Choice Hotels, a multi-billion dollar state-owned company that owns the Comfort Inn, Quality Inn and MainStay Suites brands, a spin-off from his father’s business.
Alden has applied for full ownership of Tribune Publishing since 2019, when she revealed that she had bought her 32% stake. Last year, he failed to come to an agreement to buy the rest of the company with an offer valuing the total company at $ 520 million.
Tribune announced last month that it had $ 99 million in cash at the end of 2020. It also announced in December the sale of a majority-owned subsidiary for $ 160 million.
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