Lee Enterprises Holds Off a Hedge Fund Takeover

From a story on cjr.org by Savannah Jacobson headlined “Lee Enterprises holds off an Alden takeover—for now”:

At the end off last month, Alden Global Capital, a notorious newspaper-owning hedge fund, sought to stake its claim on one of the last newspaper chains it hasn’t yet touched: Lee Enterprises, which owns 90 publications across the country. Alden, which currently owns six percent of Lee’s stock, sent an unsolicited offer to purchase the newspaper chain for $24 per share. Later, it nominated three of its own candidates to Lee’s eight-person board of directors.

It was par for the course for Alden; in recent years, the hedge fund has taken over Tribune Publishing and MediaNews Group in a similar fashion, putting it in control of hundreds of newspapers across the country. Since May, when Tribune’s sale was officially approved, those papers include storied and award-winning titles: the New York Daily News, the Denver Post, the Chicago Tribune, and many more. While the Tribune sale had its fair share of ups and downs, and journalists attempted to fight back, Alden ultimately prevailed.

It’s unclear if this time will be any different. Still, so far, Lee Enterprises has put up a respectable fight. Last Friday, Lee’s board rejected all of Alden’s nominees, noting in a news release, “Alden’s hasty and convoluted attempt to work around our simple and common procedure on the eve of the nomination deadline does not meet the clear requirements of Lee’s bylaws. Alden’s failure is entirely of its own making. Alden is not entitled to invent its own process for its convenience.”

On Wednesday, Harris Kupperman, Lee’s second-largest shareholder, wrote in a letter to fellow board members that Alden’s acquisition offer is “clearly insufficient and opportunistic, grossly undervaluing the company.” In an interview with NPR’s Midwest Newsroom, Kupperman elaborated. “You need to protect the newsroom so you can have a product,” he said. “As a shareholder, I see this being a long-term investment. If you have a quality product, you have more subscriptions and you can hire more journalists.”

Yesterday morning, the newspaper chain’s board unanimously rejected Alden’s offer, in language that mirrored Kupperman’s. “Lee’s Board determined that Alden’s proposal grossly undervalues Lee,” the board wrote, “and is not in the best interests of the Company and its shareholders.”

Alden’s proposal is also not in the best interest of American journalism. The hedge fund is notorious for buying newspapers then slashing jobs and consolidating operations in order to turn a quick profit. (In a recent article, NiemanLab’s Josh Benton referred to Alden as “a cost-cutting omnivore that makes every newsroom it touches worse,” and “King Midas in reverse.”) “They don’t care one way or the other about journalism,” Neil Chase, who used to be the top editor at an Alden paper, told me last year. “It’s all about the spreadsheets and the numbers.”

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