In November 2021, a hedge fund known for buying and gutting newsrooms attempted to take over Lee Enterprises, the owner of seven Wisconsin newspapers, according to the Washington Post.
New York hedge fund Alden Global Capital spent months trying to acquire Midwest news organization Lee Enterprises, former Madison mayor Dave Cieslewicz argued in an Isthmus editorial. Alden’s initial bid in November 2021 drastically undervalued the media company and was rejected, Cieslewicz said.
AGC attacked Lee Enterprises in a statement Jan. 27. It claimed Lee had poor leadership and business strategies because of its push-back against the hedge fund.
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The statement also announced AGC’s plan to propose two AGC representatives as candidates for Lee Enterprise’s Board of Directors. These representatives were to run against two long-tenured board members picked by Lee.
“Lee’s disappointing results and 2022 guidance continue to demonstrate the need for a new strategy and new leadership that prioritizes readers and local journalism,” the statement said. “We urge stockholders not to be misled by [Lee’s] misleading and disparaging rhetoric about our intentions for Lee.”
In an earlier statement, Lee Enterprises asked its shareholders to vote against Alden representatives. The statement said the hedge fund does not have Lee Enterprise’s best interests in mind.
The 2022 Annual Meeting and board member election will take place March 10, 2022, according to Lee Enterprise’s statement.
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Alden Global Capital has a reputation as a secretive corporation concerned mainly with generating shareholder profit, according to the Atlantic.
Alden appears to be looking to generate shareholder profit by dramatically cutting costs, Chair in Journalism Ethics at the University of Wisconsin Kathleen Bartzen Culver said.
“It looks like their bet here is that — local news is dying, we’re going to come in, and we’re going to dramatically flash costs, so we cab ring out whatever remaining profit there is,” Culver said.
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Lee Enterprises owns seven Wisconsin local newspapers, according to the company website. These include the Wisconsin State Journal, La Crosse Tribune and Kenosha News — three of Wisconsin’s top five most circulated newspapers, according to FullIntell.com data.
Lee Enterprises is one of the last independent news organizations in America, where newspaper ownership is disappearing to financial firms, according to the Washington Post.
Half of American daily newspapers are owned by finance and investment groups, according to the Financial Times. Following the 2008 financial crisis, investment groups took over newspaper ownership from wealthy families, according to the Financial Times.
“We do not want to see further consolidation in media and we don’t want to see our local papers gutted even more by hedge funds,” Wisconsin State Senator Kelda Roys said.
In November 2021, Alden Global Capital made a bid to acquire Lee Enterprises, according to the Washington Post. The bid was for $24/share, the Washington Post wrote.
Major Lee Enterprises shareholder Harris Kupperman expressed his opposition to the acquisition in a letter to Lee Enterprise’s Board of Directors.
“Alden’s proposed purchase price is clearly insufficient and opportunistic, grossly undervaluing the business,” Kupperman wrote.
In December 2021, Lee Enterprises’ board of directors unanimously rejected Alden’s bid, according to the Washington Post. Lee said the proposal did not represent the company’s full value and does not represent the best interests of the company and shareholders.
Lee called Alden a “vulture hedge fund” in a statement released in January.
This claim came after Alden acquired the historic Chicago Tribune in May 2021, according to the Atlantic. This takeover led to the loss of many reporters and to the inability to keep up with its basic responsibilities, according to the Atlantic.
The Chicago Tribune was finally financially stable and generating excitement in its staff after years of mismanagement and declining revenue, according to the Atlantic. That is until Alden took over.
In the months after the acquisition, budget cuts made by AGC prevented the paper from sending a reporter to Springfield to cover an Illinois senate scandal, according to the Atlantic. And when Chicago suffered a brutal summer crime wave, the paper had no one on the night shift to listen to the police scanner, according to the Atlantic.
Wisconsin local news will likely have a similarly grim fate if the acquisition goes through, Culver said.
“If Alden does take over Lee, [newspaper readers will] see a diminishment of local news,” she said. “They’re going to see a loss of reporting and editing labor, and it’s not gonna be good for those communities.”
Some journalists are advocating for a new style of journalism, Culver said.
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The Wisconsin State Journal’s expensive subscription price is an issue these advocates are looking to solve, Culver said. High prices disincentivize readers from continuing their subscriptions.
Non-profit news organizations were experimenting with new forms of local news that don’t involve a publicly-traded company, Culver said.
“If [the state journal] is going to be eaten up by vulture capitalists and spit out, then we have to look at alternatives within communities,” Culver said.
