Hedge fund Alden Global Capital offered Monday to buy newspaper chain Lee Enterprises for about $141 million, much to the chagrin of local-news advocates, the Associated Press reported.
Lee Enterprises owns small, local papers in more than two dozen states, including the St. Louis Post-Dispatch and the Omaha World-Herald.
Alden is one of the country's largest newspaper owners, having bought Tribune Publishing earlier this year. AP reported that Alden has a reputation for cutting costs, layoffs and selling newspapers' real estate.
In the Monday news release, Alden, which already owns 6 percent of Lee's stock, offered to buy the rest of it for $24 a share. The company said its offer is a "reaffirmation of our substantial commitment to the newspaper industry and our desire to support local newspapers over the long term."
However, local newspaper advocates think differently. Steve Waldman, president of Report for America, an organization that puts journalists in local newsrooms, including AP, asked the Justice Department to look over the deal's impact on local communities. He told AP the purchase offer is a "wake-up call."
"What we have seen in the past, especially with Alden, is that it has led to cuts in reporting staffs, and worse and worse coverage of communities in many cases," Waldman said. "We just can't keep accepting these mergers as if there's nothing we can do about them."
For more reporting from the Associated Press, see below.
Lee stock jumped 22 percent to $22.59 Monday. The Iowa company's spokesperson did not immediately reply to a request for comment. The company had more than 5,000 full-time employees as of September of 2020.
Alden scooped up the Tribune papers earlier this year in a deal that was bitterly contested by the Tribune company's own journalists and community leaders in Tribune's markets, who sought, ultimately without success, to find local buyers for papers including the Baltimore Sun and Chicago Tribune. Alden also owns the Denver Post, Orange County Register and Boston Herald.
Alden has a reputation for slashing costs that go even beyond the newspaper industry's overall turn in that direction. The newspaper business has been consolidating as it struggles with a digital transition and shrinking revenues, and financial firms like Alden have taken an increasingly prominent role as owners.
Newsroom jobs dropped nearly in half from 2004 to 2018, according to Pew Research, and the pandemic has exacerbated those stresses. About one-fourth of the country's newspapers have closed in the past 15 years, according to research from the University of North Carolina.
The Lee company significantly expanded in 2020 when it bought billionaire Warren Buffett's newspaper chain from Buffett's Berkshire Hathaway. At the time, Buffett said, "We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry's challenges."
Buffett did not immediately respond to a request for comment Monday.
In a series of tweets Monday, the union for the Omaha World-Herald's journalists decried a takeover by Alden, calling the hedge fund "awful" and "mercenaries" that gut newsroom staffs and raise subscription prices in an attempt to wring money out of papers.
"We would hope that Lee Enterprises, being a longtime newspaper company and holding control of print newspapers in Omaha and Lincoln, essentially most of the population of the state of Nebraska...you'd hope they would resist the temptation to investors that wave a lot of money in their face and hold to the idea that solid local newspapers are important to communities," said Jeremy Lipschultz, a professor at the University of Nebraska-Omaha.
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