Hedge fund’s purchase of The Morning Call, other Tribune newspapers approved
THE MORNING CALL
| MAY 21, 2021 AT 7:17
Morning Call history
[To view the publisher's
Tribune Publishing’s newspapers, including The Morning Call, will be sold to
a New York hedge fund known for aggressive cost cutting after shareholders
on Friday voted to approve the deal.
The vote essentially clears the way for Alden Global Capital, which already
owns more than 31% of the company, to complete its deal to buy the rest of
Tribune, which also publishes the Chicago Tribune, New York Daily News, The
Baltimore Sun and many other storied newspapers. The deal is expected to
close by Tuesday, at which point Tribune will become a privately held
“Local newspaper brands and operations are the engines that power trusted
local news in communities across the United States,” Alden President Heath
Freeman said in a statement. “The purchase of Tribune reaffirms our
commitment to the newspaper industry and our focus on getting publications
to a place where they can operate sustainably over the long term.”
The News Guild, which represents many newsroom employees at most of
Tribune’s properties, has maintained Alden’s track record, however, is one
of slashed costs, reduced staff and flipped real estate, a playbook the
hedge fund has consulted at many of its newspapers to boost profits.
“While we are saddened by the turn of events, we know that our work over the
past year — to build allies in the community and to raise awareness about
Alden — is not in vain,” the guilds, including The Morning Call Guild, said
in a joint statement Friday. “Those allies will support us as we fight
against Alden to protect local news and the cuts that they will inevitably
try to make.”
Tribune said more than 81% of shares not held by Alden were cast in favor of
the transaction, exceeding the two-thirds needed. The deal’s approval hinged
on Tribune’s second-largest shareholder and biotech billionaire Patrick
Soon-Shiong, who owns 23.7% of the company’s 36.9 million outstanding
While a spokesperson for Soon-Shiong said he had “abstained” from the vote,
Tribune officials confirmed that proxy ballots registered to Soon-Shiong had
been submitted without the “abstain” box being checked, and those votes
tallied as a “yes” vote. If a proxy ballot is submitted with no box checked
— “for,” “against” or “abstain” — then the ballot is counted as supporting
the board’s recommendation to approve the deal, according to the voting
instructions on the ballot.
Certain civic-minded business leaders remain interested in trying to buy The
Morning Call and perhaps other Tribune papers, should Alden be willing to
sell single properties.
Former investment banker Gary Lutin, of Manhattan, submitted an offer to
Tribune Publishing in March to buy The Morning Call for $30 million to $40
million. Since it already was under agreement to sell Tribune to Alden,
Tribune leadership passed Lutin’s proposal along to Alden.
Call mystery bidder revealed: A Manhattan investor who sees opportunity in
Lehigh Valley news »
There also have been rumblings in the community of other high-profile Lehigh
Valley business leaders willing to put together a bid, though those
potential plans have not yet led to a public announcement.
“In a perfect world, I’d love to see this incredible daily locally owned,”
said Tony Iannelli, president and CEO of the Greater Lehigh Valley Chamber
of Commerce. “That continues to be my hope.”
Lutin said Friday he remains committed to pursuing an acquisition of The
Morning Call, an operation he has analyzed and sees as having the potential
to be a sustainable news publisher.
“First, you need a community that wants reports of information they can rely
upon,” Lutin said in an emailed statement. “And then, obviously, you need an
organization of individuals with the professional skills and judgment to
understand what is important and how to report it to their community. You
obviously have that kind of community here. And you also have an
exceptionally effective organization of the individuals who report the news,
which is a whole lot better than having to start from scratch to collect all
While The Morning Call’s staff has dwindled considerably over the years, to
under 100 employees total, the newspaper remains a leading source of news
and in-depth coverage for a growing metro area of more than 800,000 people.
Since the Alden deal to buy Tribune for $17.25 a share was announced Feb.
16, several Lehigh Valley community and business leaders have come out in
support of The Morning Call.
a letter May 13 to Tribune shareholders, community members and union workers
of newspapers in Allentown, Chicago, Maryland, New York, Orlando, Virginia
and Florida wrote that Alden’s bid “represents a profound threat to the
quantity and quality of information we have about where we live.”
The letter was signed by dozens in the Lehigh Valley, including state
politicians and nonprofit leaders.
a local owner emerges, a complex web of consolidated functions will have to
be untangled, allowing The Morning Call to again stand on its own in a way
it likely hasn’t since Lehigh Valley business leader and philanthropist
Donald P. Miller owned the paper before selling it to The Times-Mirror Co.
Tribune and other newspaper chains have centralized many activities over the
years, such as the use of corporate software licenses and the sale of
classified advertising or subscriptions, along with finance, customer
service and back-office support. In addition, The Morning Call since early
2018 has been printed in Jersey City, New Jersey, and trucked 85 miles daily
to the Lehigh Valley.
any prospective buyer would have to replicate some of those services so it
could operate a newspaper independently. Such a transaction also could lead
to a transition services agreement, a costly deal that could have a new
buyer paying Alden for use of certain services.
When Alden’s deal was announced, it was a moment many industry observers had
expected ever since Alden bought out Michael Ferro’s 25% stake in the
company in November 2019. In fall 2019, even before acquiring Ferro’s stock,
Alden had contacted Tribune to discuss the possibility of an acquisition,
regulatory documents indicate.
Alden is the second-largest newspaper owner in the country, trailing only
Gannett. Through operating company MediaNews Group, Alden owns about 200
publications, including The Denver Post, The (San Jose) Mercury News, The
Orange County Register and The Boston Herald.
MediaNews already owns several publications in Pennsylvania, including eight
daily newspapers — the Reading Eagle among them — five weeklies and two
niche publications, according to its website.
Alden also will acquire a company that has a strong balance sheet. At the
end of the first quarter, Tribune had more than $250 million in cash and no
The company also reported a healthy first-quarter profit, increased its
digital-only subscriber revenue and boosted its digital subscribers to
441,000, up from 370,000 a year earlier.
But Tribune also has been trimming expenses. For instance, the company had
2,865 employees as of Dec. 27, a 30% decrease from a year earlier as a
result of the company’s “strategy to flatten its management organization,”
according to Tribune’s annual report filed March 8.
The Morning Call’s presence in Allentown dates to 1883, when a Saturday
evening newspaper called The Critic was founded. Following a reader contest,
the publication was renamed The Morning Call in 1895.
The newspaper, for the better part of nine decades, remained in the hands of
the Miller family before it was sold in 1984 to Times Mirror for $108
million in cash and notes.
Sixteen years later, Tribune Co. acquired Times Mirror. By 2014, Tribune
spun off its publishing business, and The Morning Call became part of
addition to The Morning Call, Tribune owns The Baltimore Sun and the Capital
Gazette in Maryland; the Chicago Tribune; the Hartford Courant in
Connecticut; the New York Daily News; the Orlando Sentinel and South Florida
Sun Sentinel in Florida; and the Daily Press and The Virginian-Pilot in
Morning Call reporter Jon Harris can be reached at
484-280-2866 or at email@example.com.
Jon Harris joined The Morning Call in
May 2015. He previously spent two years at the Press & Sun-Bulletin in
Binghamton, N.Y., covering upstate New York’s casino expansion, Lockheed
Martin and BAE Systems. Harris, a western New York native, graduated from
Syracuse University in May 2013 and lives in Allentown.
Copyright © 2021, The Morning Call