The rebellion last week by The Denver Post’s editorial board against newspaper’s hedge-fund owners has spurred a national outcry, including front-page articles in The New York Times and coverage in The Washington Post. Finally, mainstream voices seem to get it that newspapers are a public trust, not an ATM for vulture capitalists. And they seem willing to consider the notion that newspapers are not endangered solely because the big, bad Internet made print obsolete. No, the public-trust function of newspapers is also endangered because greedy investors who care nothing for journalism are intentionally bleeding dry the newspapers they own.
A group of more public-spirited investors declared on Thursday (April 12) that they hoped to buy and save The Denver Post. That will require the agreement of Alden Global Capital, one of the slimiest corporate villains of our time. Alden Global Capital owns The Denver Post, as well as hundreds of other newspapers and websites across the country, through its holding company Digital First Media. Under Alden’s direction, Digital First Media has been eviscerating newspapers at more than twice the national rate, driving the kind of mass layoffs The Denver Post’s newsroom experienced on April 9. Since Alden took control of Digital First Media, the country’s second-largest newspaper chain, in 2011, DFM executives have eliminated a staggering two out of every three staff positions at its media properties.
Where has the money gone? That part of the scandal hasn’t yet been revealed in its entirety, but a lawsuit unfolding in a Delaware courtroom provides some damning evidence. Court records show that the vulture capitalists at Alden have bled at least $241 million in cash—plus many millions more in real estate—from Digital First Media. Meanwhile, Alden “borrowed” $248.5 million from newspaper workers’ pension funds, and had the newspapers take on $200 million in debt to finance its own investments.
Furthermore, court records bolstered by additional shoe-leather reporting reveal that the top executives of Alden Global Capital have rewarded themselves with tens of millions of dollars’ worth of prime real estate in Florida and the Hamptons for their personal enjoyment. They have also plowed hundreds of millions of dollars bled from their newspapers into non-journalistic investments across the United States and around the world, many of which are at best ethically questionable.
Let’s start with Alden cofounder and president Heath Freeman. While The Denver Post’s newsroom staff was being shrunk from 200 to 50 after Alden bought the paper in 2011, Mr. Freeman left his Manhattan penthouse and bought a $4.8-million, five-bedroom, five-bath waterfront mansion on two acres in East Hampton, New York. He also bought the pond next door. But the 3,500-square-foot residence apparently wasn’t enough of a mega-mansion for Freeman, who is now constructing a massive addition that appears to expand the house by perhaps a third.