Tribune Publishing shareholders voted Friday to approve hedge fund Alden Global Capital’s $633 million purchase of the Chicago-based newspaper chain that owns The Baltimore Sun.
The deal, which is expected to close Tuesday, will take Tribune Publishing private and add The Sun, the Chicago Tribune and other major dailies to the Alden portfolio, making the New York-based hedge fund the second-largest U.S. newspaper owner behind Gannett.
The vote ends an upstart bid by Maryland hotel executive Stewart Bainum Jr. to acquire Tribune Publishing and sell its various newspapers to local investors. Bainum initially had a deal to acquire The Baltimore Sun and its affiliates from Alden as the hedge fund acquired Tribune Publishing, but that deal foundered on details of a shared services agreement and Bainum instead attempted to buy all of Tribune Publishing.
In a statement, Bainum said he remained focused on doing what he could for journalism in Baltimore and Maryland.
“While our effort to acquire the Tribune and its local newspapers has fallen short, the journey reaffirmed my belief that a better model for local news is both possible and necessary,” Bainum said in a statement provided by KO Public Affairs.
“Today, my focus remains where it began: in the city of Baltimore and my home state of Maryland. I am busy evaluating various options, all in the pursuit of creating locally-supported, not-for-profit newsrooms that place stakeholders above shareholders and journalistic integrity above all.
“Baltimore has a proud tradition of impactful journalism that resonates within its borders and far beyond, and I am excited to be working with those who are committed to writing its next chapter,” he continued. “In the days ahead, I expect to make an announcement that might just make some news on its own.”
Bainum, the chairman of Rockville-based Choice Hotels International, declined to comment further through a representative, and his next steps are unclear.
Rick Edmonds, a media business analyst at the Poynter Institute in St. Petersburg, Florida, said Bainum seemed to be hinting he might establish a nonprofit, digital-only startup like the The Daily Memphian, which is challenging the legacy Commercial Appeal in Memphis, Tennessee, or a similar effort in Colorado, where Alden owns the Denver Post and Boulder Daily Camera.
“It is not clear to me whether Mr. Bainum will redouble his effort to acquire The Sun,” Edmonds said in an email. “And it is not clear that Alden would want to sell or be willing to alter the shared services terms that caused it to fall through.”
Jim Friedlich, executive director and CEO of the Lenfest Institute for Journalism, which own The Philadelphia Inquirer and Philadelphia Daily News, also said Bainum might be eyeing alternatives.
“Stewart has both an inventive mind and a deep commitment to local journalism in his native state of Maryland,” Friedlich said in an email. “If he is unable to buy The Baltimore Sun, I have no doubt that he will find or invent an alternative path.”
Lenfest has been advising Bainum since November and continues to do so, he said.
“The Lenfest Institute and I will do whatever we can to help Stewart and the cause of local news [in] Baltimore and around the country,” Friedlich said.
Baltimore Sun Media includes the Capital Gazette newspapers in Annapolis, The Carroll County Times in Westminster and a number of community newspapers.
Tribune Publishing announced that 81.28% of the shares held by non-Alden stockholders voted to approve the merger with Alden, in excess of the two-thirds required.
The approval hinged on California biotech billionaire and Los Angeles Times owner Patrick Soon-Shiong, who owns 23.7% of Tribune Publishing’s 36.9 million outstanding shares. Soon-Shiong announced he abstained in the vote.
However, Tribune Publishing officials confirmed that proxy ballots registered to Soon-Shiong had been submitted without the “abstain” box being checked, and those votes were 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 being in support of the board’s recommendation, according to the voting instructions on the ballot. A special committee of the board recommended the sale to Alden.
The Tribune Publishing proxy filed April 20 with the Securities and Exchange Commission said votes to abstain were the same as a vote against the merger.
Soon-Shiong stands to collect about $150 million from the sale of his 8.7 million shares.
“For the past several years, Tribune Publishing has been a passive investment,” said Soon-Shiong spokeswoman Hillary Manning, “When he made the investment in 2016, he hoped it would be a pathway to local newspaper ownership in Southern California.
“In 2018, he and his family were proud to acquire the Los Angeles Times and San Diego Union-Tribune from Tribune Publishing, creating the California Times. Their focus is and will be on the continued rebuilding and revitalization of The Times and Union-Tribune.”
In addition to The Baltimore Sun and the Chicago Tribune, Tribune Publishing owns the Hartford (Connecticut) Courant; the Orlando (Florida) Sentinel; the South Florida Sun Sentinel; the New York Daily News; The Morning Call in Allentown, Pennsylvania; the Daily Press in Newport News, Virginia; and The Virginian-Pilot in Norfolk, Virginia.
Those newspapers now will be controlled by Alden, a hedge fund with a history of deep cost-cutting at its other newspaper properties. Other Alden newspaper properties include the Boston Herald, Mercury News in San Jose, California, and Orange County Register, also in California.
In a statement, Alden President Heath Freeman said the Tribune purchase reaffirms Alden’s “commitment to the newspaper industry and our focus on getting publications to a place where they can operate sustainably over the long term.”
The Baltimore Sun Guild, which represents newsroom and other employees at the newspaper, issued a statement expressing disappointment in the vote’s outcome.
The Evening Sun
“We aren’t giving up hope for a future with a brighter Sun,” read the statement signed by reporters Liz Bowie, Scott Dance and Lillian Reed. “We continue to support Stewart Bainum in his efforts to invest in local journalism. And we ask those who have joined us in our Save Our Sun campaign to support us. No matter who signs our paychecks, we will continue to serve our readers and produce quality journalism.”
Bainum had been seeking funding for an $18.50 per share offer that valued Tribune Publishing at $680 million. The proposal suffered a significant blow last month when Swiss billionaire Hansjörg Wyss abruptly pulled out of the deal.
Bainum was subsequently unable to find an equity partner to buy the Chicago Tribune, though he reportedly had potential buyers lined up for the other properties.
Alden is headed by Randall D. Smith, 78, who made his fortune on Wall Street by investing in distressed companies. Smith holds one of three Alden seats on the seven-member Tribune board. Freeman, 41, a Duke University graduate and the son of an investment banker who represented unions, joined Alden as president at its inception.
Alden’s $633 million offer is fully financed, but the hedge fund can use Tribune Publishing’s cash on hand and reserved the right to have the newspaper chain take on up to $375 million in debt to close the deal, according to its equity commitment letter filed with the Securities and Exchange Commission.
Tribune Publishing is debt-free and profitable and has more than $250 million in cash, according to financial statements.
The Baltimore Sun’s John O’Connor contributed to this article.