‘Slash and burn’ hedge fund bids for owner of multiple Wisconsin newspapers

A hedge fund that has cut staff and resources drastically while becoming the second largest owner of newspapers in the country is now bidding to buy Lee Enterprises, which owns several daily newspapers in Wisconsin.

Alden Global Capital is offering $24 a share for Lee, the investment firm stated in a letter to Lee’s board of directors Monday, which would value the company at about $141 million. The offer is a 30% premium over Lee’s share price as of the close of trading on Friday, Nov. 19.

Word of the proposal quickly sent Lee’s stock price to near the offering amount by noon on Monday. The publishing company did not have an immediate comment.

Lee papers in Wisconsin include its state flagship, the Wisconsin State Journal, as well as dailies in La Crosse, Racine and Kenosha. Lee owns 90 newspapers nationwide, including the St. Louis Post-Dispatch, the Buffalo News and the Omaha World-Herald.

Over the last decade, Alden Global Capital has been buying newspapers around the country, including the chains Media General and the Tribune Co. It now owns about 200 papers, according to published reports.

“Alden comes in and it slashes and it burns,” said Lewis Friedland, a University of Wisconsin journalism professor. “They’re basically strip-mining newspapers.”

The hedge fund completed its acquisition of Tribune Co., owner of the Chicago Tribune, in May. Almost immediately, according to reporter McCay Coppins, writing in The Atlantic in October, Alden conducted “an aggressive round of buyouts” at the newspaper.

“In the ensuing exodus, the paper lost the Metro columnist who had championed the occupants of a troubled public-housing complex, and the editor who maintained a homicide database that the police couldn’t manipulate, and the photographer who had produced beautiful portraits of the state’s undocumented immigrants, and the investigative reporter who’d helped expose the governor’s offshore shell companies,” Coppins wrote. “When it was over, a quarter of the newsroom was gone.”

Friedland said the potential impact on local as well as statewide news coverage if Alden succeeds would be devastating.

“I think that Lee has been doing a good job in Wisconsin, despite the fact that, as with newspapers everywhere, their papers are getting thinner, their coverage is not as wide as it used to be. That’s Lee and every other newspaper.”

In the face of those trends, the newspaper has maintained strong coverage in local and state government as well as other areas, he said. He called Racine, Kenosha and La Crosse “important cities in the state” that deserve aggressive local news coverage as well.

“If this deal goes through it will be an unmitigated disaster for democratic and civic life in the state of Wisconsin,” Friedland said.