In November 2021, the New York hedge fund Alden Global Capital, also known as AGC, placed a bid to buy Lee Enterprises — the company that owns seven Wisconsin newspapers, including the Wisconsin State Journal in Madison. The bid undervalued the company and was rejected. Despite this, AGC pressed forward with takeover efforts.
January 27, AGC issued a harsh public statement about Lee Enterprises and its business practices in an attempt to convince stockholders to side with the hedge fund. At this time, they also announced their proposal for two AGC representatives to run for Lee Enterprises’ Board of Directors.
March 10, these candidates were defeated by Lee Enterprises’s picks, who were approved for three-year contracts. Though AGC has a couple other options for pursuing a takeover, such as increasing their bid or continuing to seek support from other board members, Poynter predicts that their candidates’ failures to earn seats on the board will keep Lee Enterprises safe from acquisition for at least another year, when the next board election will take place.
Despite this reprieve, the impacts of AGC’s threats could be felt by states all over the country, as Lee Enterprises owns local newspapers in “77 markets and communities,” according to their website.
AGC has a history of acquiring local newspapers and this reputation has led it to be known as a “vulture capitalist” company within the industry. Organizations like these aim to buy firms that are financially vulnerable, before subsequently making large cuts to the company, sacrificing employees and dropping old business practices in order to turn a profit.
In May 2021, AGC closed a deal to buy Tribune Publishing — the owner of many major American newspapers, including the Chicago Tribune, New York Daily News and The Baltimore Sun. This was a devastating blow to Tribune staff, who had been pushing back against AGC’s acquisition efforts for years before the deal was finalized.
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In a frighteningly similar manner to what Lee Enterprises is now experiencing, AGC first infiltrated Tribune Publishing by becoming its biggest stockholder in order to gain control of the company from the inside. Once AGC had the opportunity, the stockholder vote to sell pressed forward without enough power from the opposition to resist.
With Lee Enterprises being one of the United States’ last independent newspaper companies, it faces increasing threats from companies like AGC who want to add the paper to its conglomerate. As AGC encroaches further in an attempt to gain control, Lee Enterprises may not be able to stop them.
After the purchase of Tribune Publishing, many grew concerned with the role of AGC in American newspapers. Despite this public displeasure, companies have continued to take advantage of the dying industry. This could have significant impacts on communities across the nation and their ability to participate in democracy.
For example, layoffs are common as hedge funds seek to maximize profits. Not only does this mean rising threats of unemployment for those in the industry, but it also means fewer active reporters available to cover important stories. The COVID-19 pandemic has only exacerbated this impact, as local newspapers with dwindling staff simply ran out of employees and resources to regularly produce meaningful, challenging and investigative journalism.
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Additionally, when large, distant companies own the firms that are producing news for smaller communities, reports become less specialized, which reduces how effectively the newspapers can serve local interests. Vulture hedge funds continue to buy out companies because of how profitable the market is, regardless of the impacts of local journalism.
This poses a significant issue for communities that are losing sources of nuanced coverage of local politics. Journalism that conveys the complexities of local politics, society and culture helps people stay informed about relevant issues and make informed decisions in elections and everyday life.
In fact, while general distrust of mainstream media has grown, American citizens tend to trust their local news providers increasingly more than national sources. For many people, community-based news is more relevant and seems more likely to be transparent and independent than larger sources. But as local news is dying out, people may turn away from other sources altogether.
This phenomenon is being seen in the growing prevalence of news deserts, where communities lack any form of local news coverage. Studies show citizens living in these communities are less likely to participate in politics and governments are more likely to employ corrupt practices. According to Viktorya Vilk, a manager at a literature and free expression non-profit PEN America, these trends have proven especially harmful to communities that already face systemic inequalities and lack of access to resources.
Undoubtedly, democracies and all other systems that derive their power from the people require popular and informed consent. A functional democracy should support vulnerable communities and provide citizens with the resources they need to make knowledgeable decisions and feel as though their opinions are heard. Without these essential elements, our country cannot be characterized as a healthy democracy.
Vilk suggests in order to combat this issue and its long chain of impacts, we have to fundamentally restructure the way we view and invest in journalism. Local journalism cannot become a product of a commercial and capitalist economy. Instead, it must be supported as a public good that plays a crucial role in our country that cannot be taken away.
With all of this in mind, the future of Lee Enterprises represents a worrisome outlook for local American journalism. Unfortunately, AGC succeeding in its attempts to acquire the company is a distinct possibility. For Wisconsin newspapers, the purchase of Lee Enterprises by the AGC vulture could have tangible impacts in Madison and across the state. If this becomes the case, we can expect to see major newsroom budget cuts, a de-centering of community interests and reduced political participation.
While these updates are concerning, the demise of local journalism does not have to be inevitable. Many organizations in the U.S. work to sustain the efforts of local newspapers for their value in American democracy. Some of the best things individuals can do to support community-based journalism are to read, share and advocate for it.
Evidently, local journalism is a staple of democracy because it provides people with the knowledge they need to participate in civic life as informed citizens. Without these staple news networks, our country will suffer with the pool of political participants becoming increasingly diminished. Only when AGC’s efforts are seen as an urgent threat to democracy can we pursue crucial, journalism-saving reform.
Celia Hiorns ([email protected]) is a freshman studying political science and journalism.