The vultures are circling again. The same hedge-fund investors at Alden Global Capital who sucked the life from scores of US newspapers to buy themselves mansions in Palm Beach now want to buy the Gannett company, owner of the country’s largest newspaper chain. If Alden’s hostile takeover succeeds, the hedge fund’s Digital First Media company would gain control of Gannett’s 100-plus local newspapers as well as Gannett’s flagship publication, USA Today. Digital First, which has a long record of stripping the staff and assets of newspapers, would become the largest newspaper chain in the country. And journalism—enabling the informed public that democratic governance requires—would suffer another grievous blow.
Modern-day descendants of trust-busters like Teddy Roosevelt and of free-press champions like I. F. Stone have assailed Alden’s takeover bid and urged federal officials to block it.
“The fact of the matter is the current monopoly trend is societally and economically unsustainable,” Representative Alexandria Ocasio-Cortez (D-NY), tweeted. “We simply can’t accept the cliché that ‘journalism is dying.’ Journalism will only die if we choose not to fight for it—and if journalism dies, our democracy will, too.”
“Staffing cuts mean that there are fewer reporters where they are needed most—on the streets and in the halls of power,” Thomas Peele, a Pulitzer Prize–winning reporter at the East Bay Times in California, told The Nation. Peele, who experienced Digital First’s staffing cuts at the San Jose Mercury News, added, “We won’t know what happens when people in power feel emboldened that no one is looking. So communities suffer.”
“We cannot understate the threat monopoly poses to the free press,” said Barry Lynn, the executive director of the Open Markets Institute. “It’s time our policy-makers and regulators do their jobs and break up these monopolies, before they destroy our democracy.”
Digital First announced its takeover bid on January 14, proposing to buy Gannett for $1.36 billion. The bid was coordinated with Digital First’s owners at Alden Global Capital, who are headquartered in New York City’s infamous Lipstick Building, where investment fraudster Bernie Madoff once held court.
On February 4, Gannett announced that it would not accept the offer, questioning Digital First’s motives and concluding its bid was not credible. As one of Gannett’s largest active shareholders, with a 7.5 percent stake, Digital First nominated its own merger-friendly Gannett board slate on February 7, according to Gannett. The proposed all-Digital-First slate reportedly includes Alden President Heath Freeman, the man behind Digital First’s draconian cost cuts, as well as Digital First Chair Joe Fuchs. Digital First “nominated a slate of six candidates…and will solicit shareholder votes for them to replace a majority of the board members at the company’s annual meeting this spring,” The Wall Street Journal reported.
A Gannett spokesperson did not respond to questions from The Nation.
Alden has alternately been called “the most reviled newspaper owner in the business,” “a grim reaper,” and “a ‘vulture investing’ firm that makes real vultures look good by comparison.” Like other vulture investors, Alden’s strategy has been to target distressed news outlets, devour their assets, and leave the remains to wither in the desert. Since it took over what became the Digital First Media chain in 2012, Alden has done that to some 200 local newspapers across the United States, including The Mercury News, The Denver Post, and the Oakland Tribune.
Alden’s takeover attempt is “terrible news for Gannett’s readers and anyone who works for Gannett,” said Dan Kennedy, associate professor at Northeastern University’s School of Journalism. Gannett has garnered its share of criticism for severe staff cuts, but Kennedy said Digital First takes the slashing to new lows. “Gannett is no day at the beach, but at least Gannett is trying to figure out how to operate newspapers in long term,” he said. “With DFM, it doesn’t seem there is any particular interest in surviving.”
Alden has slashed Digital First’s workforce by 70 percent since it took over the chain in 2012, according to data from the NewsGuild, a union that represents news workers. That is nearly twice the national rate of newspaper layoffs, according to data compiled by the Bureau of Labor and a study from the Pew Research Center. “Reporters used to go to zoning-board meetings,” said Peele. “They used to go to crime scenes.” The few reporters still hanging on, Peele added, are “so busy doing the work of two or three people that they don’t have time to develop sources and then don’t have someone to call when the shit hits the fan.”
It’s not only the gutting of personnel that has hurt Digital First papers and their communities. Under Alden’s watch, local weeklies and even some dailies have been shut down and morphed into mere sections of larger papers. Alden, through its real-estate company Twenty Lakes Holdings, has sold off papers’ buildings and land en masse, leaving them with no safety net against hard times. In Massachusetts and Pennsylvania, newspaper offices have been shuttered, forcing employees to work from home, cars, and coffee shops. Because Alden has closed many newspapers’ copy desks and printing plants, the physical papers are printed hundreds of miles away, forcing unheard-of deadlines. At the Monterey Herald, for example, reporters have to file their stories as early as 2 pm, leaving print readers with no coverage of many city meetings or even high-school sports.
All this ravaging has been highly profitable for a select few: Since 2012, when his firm started siphoning the assets of hundreds of papers, Alden founder Randall Smith has amassed a collection of 16 Palm Beach mansions, as I previously reported in The Nation. Alden’s co-founder Heath Freeman is building additions to his $5 million Hamptons home. Alden has acknowledged that its papers brought in a very healthy 16.2 percent profit margin in fiscal 2018, dwarfing industry averages of 7 to 8 percent. Harvard’s Nieman Lab reported that the papers netted $159 million in profits in fiscal 2017.
Now, as it targets USA Today and scores of communities served by local newspapers owned by Gannett, Alden has the chutzpah to claim that it’s doing all this to save journalism. In his January 14 letter to the Gannett board of directors announcing the takeover bid, Digital First chairman Joe Fuchs wrote, “When other people won’t step up, we do. We save newspapers and position them for a strong and profitable future so they can weather the secular decline.”
A spokesman for Digital First told The Nation that Alden disapproves of Gannett’s forays into digital tech—presumably a reference, in part, to Gannett’s possible acquisition of digital publisher Gizmodo, which has its own convoluted history. Gannett “could have been investing in its newspaper assets,” the Digital First spokesman said, without irony.
“Clearly, [Alden’s] idea of saving newspapers is to ‘harvest’ the properties until they’re no longer left,” said the Nieman Lab’s Ken Doctor. “It’s an odd idea for saving news—like that old Vietnam War adage, ‘We had to burn the village in order to save it.’”
The Alden-Gannett dance is part of a head-spinning consolidation trend that will likely play out across the news industry in 2019, added Doctor, who has written that “This may be the first newspaper mergers-and-acquisitions story of 2019, but it definitely won’t be the last. Consolidation (and the cost-cutting that comes with it) remains the dominant strategy in the daily newspaper industry.” Indeed, Doctor said that Gannett had been in talks with Tribune Co. about a possible merger before Alden made its bid.
Media consolidation started decades ago, of course, and it transcends newspapers to include digital publishers, television, and radio. According to Business Insider, back in 1983, 90 percent of US media—this includes entertainment and news—was controlled by 50 companies. By 2018, according to Fortune, the total was six.
An additional concern of a Gannett–Digital First merger is whether the new company would be privately held (Gannett is publicly traded, while Digital First is not). “If you’re a publicly traded company, there is some transparency,” said Penny Abernathy, the University of North Carolina’s Knight Chair in Journalism and Digital Media Economics. “There is absolutely no transparency [at Digital First]. You can look at Gannett’s financial statement. You may not agree with how they balance their obligation to communities with shareholder [concerns], but at least you can read about it.” Under Alden’s ownership, she added, “Even if you got a group of people together in the community to complain, who would they go talk to?”
Gannett typically holds its annual shareholder meeting and board elections in early May at its Virginia headquarters. This window could give shareholders time to fight off Digital First’s advances, perhaps exploring whether the Justice Department could intervene on antitrust grounds in communities such as Monterey County and metro Detroit, where Digital First and Gannett currently compete. Such a move is not unheard of: In 2016, citing monopoly concerns, the DoJ sued to block the sale of the Orange County Register to Tribune Publishing because Tribune owned the nearby Los Angeles Times.
Whatever happens with Gannett, a larger question remains: Moving forward, how do we fund the free press?
Some citizens are pushing back against the vultures. A New Jersey–based group called News Voices is organizing community events to educate audiences about media-consolidation awareness and to campaign for legislative reforms.
But others believe that it’s too late to save newspapers’ corporate-revenue model, finding hope instead in the nonprofit news sites now sprouting up all over the country. Steve Cavendish, president of a Tennessee nonprofit news startup, has called Alden-Digital First “the butcher’s butcher.” He added that if we’re going to adopt new journalism models that are not based on corporate greed and consolidation, “we need to do it fast, because the butchers are sharpening their knives.”