A deal for a nonprofit backed by a Maryland businessman to buy The Baltimore Sun and its affiliates may be off — or at least stalled.
According to a report in The New York Times, the negotiations for Stewart Bainum Jr. to acquire Baltimore Sun Media from Alden Global Capital have “run into complications.”
Bainum had a “nonbinding term sheet” with Alden to acquire The Sun for $65 million as the New York-based hedge fund purchased the rest of Tribune Publishing’s stock for $17.25 a share. That deal, currently expected to close before June 30, would value Tribune at about $630 million.
Now Bainum may be organizing a competing bid for all of Tribune Publishing, which includes the Chicago Tribune, the New York Daily News and other major daily newspapers around the country, according to the Times report, which cited three sources with knowledge of the matter.
The prospect of a competing bid didn’t send Tribune Publishing’s stock soaring Monday, but it did rise 24 cents to close at $17.28 a share, 3 cents more than Alden’s offer.
The negotiations between Bainum and Alden reportedly stumbled over the details of operating agreements for shared back office operations. Tribune Publishing performs numerous shared services across its newspaper properties, including finance, human resources, customer service, technology and design.
A representative for Alden could not be reached for comment Monday, and Bainum did not respond to a request for comment. Neither has spoken publicly about the preliminary deal since it was announced Feb. 16.
Alden offered Bainum a shared services contract for the Sun that would run five years, but the Maryland businessman balked at those terms, two sources familiar with what happened told The Baltimore Sun.
With those negotiations at an apparent impasse, Bainum has asked the special committee of Tribune Publishing’s board of directors for permission to be released from a nondisclosure agreement that prohibits him from discussing the deal, the Times reported. That would allow him to seek partners for a larger bid for all of Tribune Publishing, essentially competing with Alden, the three people told the Times.
A spokesman for the Tribune special committee, made up of its independent directors, said the committee had no comment.
The Times, citing two of its sources, reported Bainum was willing to put $100 million of his own money into purchasing Tribune and would need partners to come up with the rest.
Bainum, the chairman of Choice Hotels International, the Rockville-based parent of numerous hotel chains, is pursuing a decidedly different model than Alden for running newspapers, no longer considered part of a growth industry, said Karyl Leggio, a professor of finance at Loyola University Maryland.
Bainum’s plans for The Sun and its affiliates, including the Capital Gazette papers in Annapolis and the Carroll County Times, involved placing them into a nonprofit called the Sunlight for All Institute and running them for the benefit of the community. A lifelong Democrat and former state legislator, Bainum sees newspapers as critical to the functioning of the American republic.
Alden has grown over the past decade into a force in the newspaper industry, acquiring roughly 60 newspapers through its MediaNews Group subsidiary with the stated intent of saving them. Journalists and others, however, have criticized Alden’s cost-cutting tactics. Alden’s strategy typically results in layoffs of journalists and reduced local and community news coverage.
It’s possible Bainum has the means and connections to assemble a larger bid for Tribune Publishing, experts said, but he likely would face steep odds.
“Bainum is trying to buy local papers and keep them local,” Leggio said. “The challenge you have is if Bainum is looking to put up $100 million, he would need a lot of additional input from others, and it’s not an industry that has high returns. The likelihood that he’s able to line up a group isn’t that high.”
Such a strategy could involve persuading other wealthy individuals or local investors to purchase Tribune newspapers in their communities and set up similar nonprofit operations.
Bainum “could always increase his stake, but his interest is in the Maryland papers,” Leggio said. “Ideally, he would line up other investors like him, but he would have quite a coalition that he would have to build.”
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Bainum made his fortune in both hotels and nursing homes, two family-run businesses started by his father and grown by him.
He and his wife, Sandy Bainum, a singer and actress, joined the Giving Pledge, a campaign seeking commitments by the world’s wealthiest people to contribute most of their wealth to philanthropic causes. Others who have made the pledge include Facebook’s Mark Zuckerberg and his wife, Priscilla Chan, Elon Musk, Michael Bloomberg, CNN founder Ted Turner, and, notably, Patrick Soon-Shiong, who acquired the Los Angeles Times and San Diego Union-Tribune from Tribune Publishing for $500 million in 2018.
If Bainum does launch a bid for all of Tribune, Soon-Shiong is among those he would need to convince because he still holds a 24% stake in the company. While Alden owns 32%, it can’t vote on its own deal, giving Soon-Shiong the power to hold up any Alden deal for Tribune.
A spokeswoman for Soon-Shiong at the Los Angeles Times could not be reached Monday.
One analyst said he would welcome the idea of local ownership for not only Baltimore Sun Media papers but other newspapers through the Tribune chain.
“It’s an exciting possibility ... if an Alden takeover can be stopped,” said Rick Edmonds, a media business analyst for the Poynter Institute, a nonprofit journalism school and research group. “But by the same token, I think it’s a little bit of a long shot. ... It depends on whether potential buyers come forward from their markets.”
The Baltimore Sun’s John Holland and John O’Connor contributed to this article.