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9 great things: Alden Global, Facebook and the future of news




Hedge funds are accustomed to bad printing. But it is rare for anyone to be slandered as widely as Alden Global Capital, a fund that has become notorious among journalists and politicians for its approach to the principle of newspaper ownership. Alden’s media empire is vast and the list of critics is impressive. Impressive may not be the right word there.

This week, Alden added to her portfolio with the purchase of a 173-year-old newspaper icon, sparking a new protest over the fund’s huge impact on an industry that is more integral than most to the functioning of a healthy democracy. Meanwhile, half a world away, two of the world’s largest tech companies engaged in a high-profile battle with the Australian government, one that could have major implications for the future of the newspaper economy.

A quarter of a century into it, the news industry is still trying to adapt to our internet age. And here are one of the nine things you need to know from last week:

Famous newspapers in the Alden Global portfolio continue to accumulate.
(Peter Dazeley / Getty Images)

1. Read everything about it

For most of the 20th century, a steady stream of print advertising revenue was the blood of local newspapers across the US. This model was extinguished by the rise of the world wide web and in the first decade of the 2000s, an account arrived.

Subscriptions were diverted. Advertisers fled the internet. The newsrooms were forced to cut staff and cut coverage. AND started a downward spiral, with reduced coverage leading to even fewer readers, which led to fewer advertisers, all added up to create widespread concerns about how the industry would survive – and how millions and millions of Americans would keep informed about what was happening in cities and towns.

As economic concerns in the industry grew, a new type of investor gained attention. In 2010, Alden Global took control of Digital First Media, a newspaper conglomerate that owns the Denver Post, the Boston Herald, The Orange County Register and other major newspapers across the US. Jobs were lost. The real estate was sold. Budgets were cut, then cut again.

In 2018, the Denver Post published an editorial describing its owners as “vulture capitalists.” Joshua Benton, director of Harvard’s Nieman Journalism Laboratory, wrote in the Boston Globe that “to put the country on fire, buying from Digital First is about the worst possible outcome” for a newspaper.

Which brings us back to this week, when Alden Global reached an agreement to buy Tribune Publishing for $ 630 million. The Tribune is best known for publishing the Chicago Tribune, a key element in Windy City since 1847, but it also owns several other notable titles, including the New York Daily News, The Virginian-Pilot, and the Orlando Sentinel . Everyone is now likely to continue to give up their journalism in search of added profit.

Colin McMahon, editor of the Chicago Tribune, gave his staff a glimpse of what was to come, according to a tweet by NPR media correspondent David Folkenflik. McMahon reportedly told Tribune reporters that their fear of Alden Global was “valid”, that the newspaper would likely cut its ambitions and that Alden Global would seek to increase the company’s profit margin by 10% at 13% to more than 20%.

Why would a newspaper agree to sell itself to such a buyer? The sad fact is that, in most cases, there is no better alternative. (The Baltimore Sun, which is part of the Tribune, is an exception: He agreed to rotate and pursue his future only under the ownership of a non-profit organization led by hotel tycoon Stewart Bainum Jr.). For so many relationships that have been an integral part of civic culture for decades, the economic outlook remains bleak.

Big newspapers like The New York Times have stood steady in recent years, rocked by new subscribers and new digital initiatives. Others, like the Sun and the Washington Post, have found wealthy clients. But Jeff Bezos will not buy everything. And even a wealthy defender may not be permanent: The Wall Street Journal reported Friday that biotech billionaire Patrick Soon-Shiong, who bought the Los Angeles Times from Tribune Publishing for $ 500 million in 2018, was considering selling the publication . Soon-Shiong and a Times spokesman went on Twitter that the report was inaccurate. But it is a reminder of how quickly the future of such a newspaper can change.

And for many, this is the best case scenario. The vast majority of publications are struggling to stand on their own two feet and find some sort of sustainable business model in this not-so-new reality, where advertising dollars have dried up and online readers expect to be able to use whatever they want. for free.

As luck would have it, Alden’s acquisition in Chicago coincided with another major news industry story from 9,000 miles away.

For some time now, the Australian government has been at the forefront of a global effort to force Google and Facebook to pay news publishers for content that tech giants display on their respective platforms. This week, the two companies addressed their differences in two very different ways.

Google reached an agreement to pay Rupert Murdoch News Corp for the use of conglomerate coverage in its search engine, the latest in a series of signs that Google is willing to play with regulators. Facebook, on the other hand, enforced a ban on all news coverage distribution on its platform in Australia, deciding to completely eliminate such content from the site instead of paying for it.

It’s a very complicated issue that I will not try to cover in full here. Personally, however, I can see both sides of the biggest debate. Facebook has argued that the promotion on its site is a net positive for media, traffic management and young readers who would otherwise have stayed away. This is probably true. But Facebook and Google are also not much into the charity business. They also benefit financially. And in an ideal situation, it would seem like a good thing if two of the richest companies in the world were a little more willing to work with an industry that serves as a unique mix of business and public service.

It is an enigma for which there seems to be no good solution. Which is also a fair way to describe the state of the modern newspaper industry in general.

2. Getting space

On Thursday, NASA’s Perseverance Rover touched Mars, the final step in humanity’s ongoing efforts to learn about our planetary neighbor. The successful cut came not long after SpaceX set up a new round of funding, according to a CNBC report, bringing in $ 850 million with an attractive estimate of about $ 74 billion. Elsewhere, the Houston-based start-up Axiom Space raised $ 130 million in funding for its mission to build a commercial space station in low Earth orbit.

3. The Impact of Amazon

Amazon was active in its own right this week with the acquisition of Selz, an Australian ecommerce company that offers Shopify-style services to online retailers. But it was also a busy stretch for companies that might not have existed without the example of Amazon. Locus Robotics raised $ 150 million for its autonomous warehouse robots, taking advantage of the widespread embrace of e-commerce. And Standard Cognition raised $ 150 million from SoftBank and others to help power its cashless, AI-powered stores, similar to the Amazon Go model.

4. Views, which operates an app that combines retail stock trading with a social network, raised $ 220 million this week with a $ 1.2 billion estimate., the developer of a cryptocurrency portfolio and the operator of a crypto exchange, raised $ 120 million from itself. Look, there are many differences between our current investment climate and the bubble of two decades ago. And these two specific companies may very well turn out great. But if genuine dot-com beginners continue to create mega-rounds, I might be more concerned.

Once again, the beginnings of dot-com are always angry. (AlexSecret / Getty Images)

5. Green space

My colleague James Thorne recently wrote about increasing SPACs looking to invest in socially conscious enterprises. This week brought a pair of new examples. Li-Cycle, which works to recycle lithium-ion batteries, agreed to go public in a deal worth nearly $ 1.7 billion. And Origin Materials, a maker of negative carbon materials designed to replace petroleum-based products, is set to go public in a merger valued at about $ 1.8 billion.

6. Judiciary

Big names in both venture capital and private equity were caught in legal squabbles this week. Sixth Street sued Dyal Capital Partners in an attempt to block the planned combination of $ 12.5 billion GP stock investors with Owl Rock Capital, arguing that the deal would turn the combined company into a Sixth Street competitor, in which Dyal already owns a minority stake. Dyal says the lawsuit is based on a misreading of the contract between the firms. Bloomberg reported that Golub Capital, another Dyal-backed lender, has also “faced executives” at Dyal to express his displeasure. In Europe, meanwhile, VC-backed Epic Games has filed an antitrust lawsuit against Apple, claiming that control of the iOS ecosystem firm is anti-competitive.

7. EP complements policies

A group of Democrats in Congress introduced new legislation this week targeting the interest gap carried, the latest in a series of recent efforts to reduce a significant tax break for many private equity investors. My colleague Adam Lewis has more in all the details. And in other news at the intersection of Wall Street and Washington, Apollo Global Management appointed former SEC chairman Jay Clayton to be the chief independent director on its new-looking board.

8. Betting on betting

When Sequoia, Henry Kravis, Y Combinator and Charles Schwab (husband, not the company) all come together to invest $ 30 million in a startup, it is certainly worth considering. Especially when that startup is as intriguing as Kalshi, which plans to launch a federally regulated market where users can trade “event contracts”, allowing them to essentially play in question yes or no to upcoming events. . The idea is to allow a new way to protect against other investments – bad weather bets can offset an investment in the crop, for example. But it’s not too hard to imagine a plethora of other uses, either.

9. No jokes

Second City is a household name in sketch comedy schemes, a Chicago-based troupe that helped spark the careers of future stars such as Tina Fey, Amy Poehler, Stephen Colbert, Steve Carrell, Chris Farley and many more. . Now, it is entering the private equity business: ZMC, a firm led by veteran media executive Strauss Zelnick, has bought Second City, with the Financial Times reporting a price tag of about $ 50 million.

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