Six weeks in the past, it appeared as if hedge fund boss Heath Freeman was shedding his grip on Tribune Publishing Co. However he by no means let go — and now he has his prize.
Mr. Freeman, the president of Alden International Capital LLC, is poised to develop into the chief of the second-largest U.S. newspaper firm, following the agency’s takeover of Tribune.
Shareholders voted Friday to approve a sale to Alden, which beforehand had a roughly 32% stake within the firm.
Alden, a specialist in distressed property, has centered on the newspaper enterprise lately, and the 41-year-old Mr. Freeman is the low-profile agency’s most public face.
The Tribune deal provides properties just like the Chicago Tribune and New York Day by day Information to Alden’s portfolio, which incorporates MediaNews Group, a series of 70-odd dailies akin to The Denver Publish and San Jose Mercury Information.
Mr. Freeman, who co-founded Alden in 2007 as a 26-year-old alongside his mentor, investor Randall Smith, has pushed a method of consolidation and value reductions on the group’s papers.
As a serious Tribune shareholder, Alden backed cuts final yr on the firm — amid a steep, pandemic-driven promoting downturn — that slashed a 3rd of the full payroll and closed about half its information workplaces, with no acknowledged plans to open new ones.
Journalists and media watchdogs say such cuts have gutted native retailers and hastened the trade’s demise.
Mr. Freeman has stated he is saving newspapers by maintaining them financially viable.
“From Alden’s perspective, it is about managing the decline, and in the event that they hadn’t made these cuts, Tribune would have gone underneath,” stated Mason Slaine, a minority shareholder in Tribune who voted in opposition to the Alden deal.
Mr. Slaine at one level expressed curiosity in buying sure Tribune papers.
The Tribune deal, which can make Alden’s information portfolio the second in U.S. circulation behind solely Gannett Co., virtually slipped away from Mr. Freeman.
Alden reached an settlement in February to accumulate the remainder of the corporate in a deal valued at $635 million. The hedge fund agreed to carve out The Baltimore Solar in a aspect take care of Maryland lodge magnate Stewart Bainum, chairman of Alternative Inns Worldwide Inc.
However that association fell aside, and a annoyed Mr. Bainum determined to make his personal $680 million provide for the whole firm in March.
It appeared on the time that Mr. Freeman might need overplayed his hand. In the end, although, the financing for Mr. Bainum’s bid fizzled, thrusting Alden again into pole place.
Mr. Freeman was unavailable for remark.
“The acquisition of Tribune reaffirms our dedication to the newspaper trade and our deal with getting publications to a spot the place they will function sustainably over the long run,” he stated in an announcement after the deal was authorized.
In an interview final yr, Mr. Freeman argued that the austere cuts enacted at his newspapers mirrored a extra sensible understanding of the trade’s path and higher positioned Alden-owned publishers for the pandemic’s downswing.
“We have been ready for an actual step down when it comes to a recession as a result of we have been trustworthy about what was wanted sooner or later,” he stated. “Numbers do not lie.”
Mr. Freeman had been working as an analyst for a boutique advisory agency when Mr. Smith employed him. Mr. Smith was a longtime distressed-asset investor practically 40 years Mr. Freeman’s senior. The 2 had as soon as lived close to one another in New Jersey, and their households knew one another.
Individuals who know the boys say Mr. Smith has been a serious affect on Mr. Freeman, whose mother and father died when he was in his early 20s.
“He is an ideal man, a terrific mentor,” Mr. Freeman stated of Mr. Smith within the interview final yr.
Whereas Mr. Freeman is Alden’s most public-facing determine, Mr. Smith is a key energy dealer behind the scenes and was closely concerned within the Tribune deal-making, folks accustomed to the scenario stated.
Mr. Freeman’s father, Brian, had labored on the Treasury Division in the course of the Carter administration. Later, as an funding banker, he suggested labor unions at Trans World Airways when famed activist investor Carl Icahn was taking on the corporate.
The elder Mr. Freeman took his personal life within the fall of 2001. Heath Freeman was 21 years outdated. His mom died a couple of years later.
“Their premature deaths taught me how the world works at a really younger age,” Mr. Freeman stated. “It made me are typically extra of a realist.”
A graduate of Duke College, Mr. Freeman was a walk-on place-kicker for the soccer workforce, which had a 3-30 file whereas he was on it. His alma mater and sports activities are key components of his id, individuals who know him say.
In 2014, he spent $120,000 to purchase the sport jersey worn by Duke basketball star Christian Laettner when he made a game-winning shot in 1992 to ship the Blue Devils to the NCAA Closing 4.
“Few labored as laborious as he did,” stated Brent Garber, the beginning kicker when Mr. Freeman was on the workforce, in an interview final yr. “For a man who was a walk-on for 3 years, he had an unbelievable work ethic.”
Mr. Freeman is keen about meals and co-founded Metropolis of Saints Espresso Roasters, a small chain of high-end espresso retailers, one among which was featured in an episode of the Showtime collection Billions.
In relation to managing Alden’s investments, Mr. Freeman reveals little nostalgia and makes choices solely based mostly on the numbers, individuals who have labored with him say.
The newspaper trade’s numbers seemed bleak even earlier than the pandemic. Annual promoting income dropped 70%, or $34 billion, between 2005 and 2018, in line with estimates by the Pew Analysis Heart.
Greater than 1,800 newspapers closed between 2004 and 2018, in line with analysis by the College of North Carolina.
Alden believes some newspaper teams have not run their core print companies effectively. In 2019, as Alden’s information group made an unsuccessful, unsolicited bid for Gannett, it argued that the writer had overspent on digital acquisitions.
Mr. Freeman sees digital progress alternatives for native information retailers, together with from subscriptions and the licensing of tales to tech giants like Fb Inc. and Alphabet Inc.’s Google.
Information Corp, the mum or dad firm of The Wall Avenue Journal, has reached such offers with Fb and Google.
Between 2008 and 2019, the newspaper trade shed 51% of its newsroom jobs, in line with the Pew Analysis Heart.
Alden’s chain of papers reduce employees by 76% at its 11 unionized papers between 2012 and final yr, in line with the Information Guild, a union that represents newspaper workers.
Tribune papers have taken as huge successful as any. Some journalists at Tribune papers, against a takeover by Alden, sought out an alternate purchaser.
Alden has pushed for prime revenue margins at its papers.
In 2017, Alden’s MediaNews Group recorded a revenue margin of 17% in 2017, in line with an individual accustomed to the matter, effectively above the New York Instances Co.’s margin, which was underneath 1% that yr, and Gannett at 1.7%, in line with public filings.
Alden has declined to touch upon the information group’s profitability.
Alden has stated it intends to take Tribune personal. Trade watchers say they anticipate it’ll merge the corporate with MediaNews Group and extract additional value reductions. Alden might additionally use the greater than $200 million in money on Tribune’s books to pay down debt.
“That will be the economic logic behind the deal,” stated Jim Friedlich, an unpaid adviser to Mr. Bainum and govt director of the Lenfest Institute for Journalism, the nonprofit basis that owns the Philadelphia Inquirer. “Alden’s technique has all the time been to take the cash out of those companies.”