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Stories about the ailing newspaper business usually feature fabulously wealthy benefactors asserting good intentions as the heroes keeping the lights on. There's Jeff Bezos and The Washington Post, biotech billionaire Patrick Soon-Shiong and The Los Angeles Times, and Laurene Powell Jobs, the widow of Steve Jobs and the majority owner of The Atlantic. But the reality is somewhat different.
Today, about half of America's newspapers are controlled by private equity, hedge funds, and other investment groups, which have been rapidly consolidating the industry since the post-2008 financial crisis. One name stands above the rest, Alden Global Capital. The New York hedge fund is notoriously private, but, since 2007, Alden and its top executives have brought increasingly bigger and bigger regional titles, including Chicago Tribune, Denver Post, and Boston Herald. Those purchases, numbering in the hundreds, have brought greater attention from US officials, labour unions, media watchdogs, and disgruntled journalists.
The main complaint - stop destroying local newspapers. Alden has been accused of whittling down the companies it buys with a brutally efficient zero-based budgeting strategy, straight from the playbook of Wall Street's most feared activist investors. The Alden recipe, get rid of the newsroom and sell the real estate, helping recoup the purchase price of the newspaper. Then go through every line item in the paper's expense sheet and make cuts. Layoffs have become the norm. The result, ghost newspapers unable to produce much in the way of original local journalism. Heath Freeman, the president of Alden, doesn't see it that way, though. He believes he's the one saving newspapers that would otherwise be forced to shut down.
Alden Capital isn't the only player in the ghost newspaper trade. Small and mid-sized regional and local newspapers have long been treated as a distressed asset class and bounced around by investors for short-term profits. Fortress Investment Group, which is controlled by SoftBank, and Chatham Asset Management are all challenging Alden for a spot on the throne as the leading guardian or destroyer of newspapers.