Business leaders, philanthropists hope to buy The Baltimore Sun and run it as local nonprofit
By John Holland
May 21, 2020 at 9:25 AM
A group of Baltimore philanthropists, businesspeople and the union representing journalists are again rallying support for an idea that’s long been floated but never materialized: regaining local ownership for The Baltimore Sun.
Now, with the latest campaign in full swing, even some of the players involved say they aren’t sure whether it’s a realistic pursuit or a well-intentioned but futile effort to preserve an iconic newspaper and local institution.
“They gave us a friendly response, basically saying: We got your letter, we aren’t interested in selling right now, but stay in touch,” Venetoulis said. “I was the initial contact point, but the letter offering to buy came from Bob and the foundation. I am a born optimist and so is Bob, but at this point nothing has changed, so that’s where we are."
A Tribune Publishing spokesman said the company does not comment on merger and acquisition activity.
Venetoulis said the overture was delivered several months ago and made clear that the Abell Foundation had the money on hand to make the purchase without any concerns about financing.
The Abell Foundation was established with the fortune amassed by the longtime publishers of The Sun with a mission of enhancing the quality of life in Maryland for all. The foundation’s most recent tax filing, for 2018, shows total investments of about $306 million.
If successful, the plan calls for Embry’s foundation to turn The Sun into a nonprofit, modeled after National Public Radio, which relies on a combination of sponsorship, corporate underwriting, donations and subscriptions, Venetoulis said.
The Sun has not been locally owned since 1986 when the A.S. Abell Company sold it to Times-Mirror Co., the parent of the Los Angeles Times, which was acquired by the Tribune Company in 2000.
Embry and Venetoulis have expressed interest in buying The Sun before, including efforts in 2006, 2008 and around 2012 as Tribune exited bankruptcy. In 2014, Tribune spun off its legacy newspapers as Tribune Publishing, keeping television stations and online businesses, as well as the newspapers’ valuable real estate.
Embry would not comment on the current efforts, but Venetoulis, philanthropist Matthew Gallagher and members of the guild representing Sun journalists and other newspaper employees say they hope the effort will encourage Tribune Publishing to enter talks with the local group.
“I don’t think there is any way around the fact that there is a serious, well-resourced effort here in Baltimore," said Gallagher, president and CEO of the Goldseker Foundation, which reported about $118 million in assets at the end of 2019.
The group has had no contact with Tribune Publishing since the initial overture and the launch of the unusual campaign seeking public support for the effort.
Embry or others interested in buying The Sun face several obstacles even if Tribune Publishing agrees to talk. First is coming up with a fair price, Venetoulis said.
The newspaper industry has been clobbered in the past decade by the digital revolution, with advertising leaving print for the internet. Pricing a company, which is usually based on current and projected revenues and profits, is difficult when those are shrinking. And Tribune Publishing, which is publicly traded, does not break out how much revenue or profit The Sun generates.
Convincing Tribune Publishing and its largest shareholder, Alden Global Capital, to sell also could be challenging. Alden, a hedge fund with a reputation for acquiring newspapers and cutting staff to continue making money, appears to be setting up a merger of Tribune Publishing and its Digital First Media newspaper unit, according to Ken Doctor, a media analyst who writes extensively on the economics of newspapers.
And any sale by Tribune likely would lure additional potential bidders, forcing the local group to compete with other newspaper companies, hedge funds or wealthy individuals, Gallagher and Venetoulis acknowledged.
The impetus for their latest campaign to buy The Sun comes largely from the union representing its journalists and other newspaper employees, who have faced furloughs and pay cuts amid the coronavirus pandemic that’s decimated advertising revenue. The union is pinning its hopes on the local foundations winning The Sun and making it nonprofit. Baltimore Sun Media also includes the Capital Gazette, Carroll County Times and more than a dozen other publications.
Guild leadership began acting late last year after Alden acquired 32% of Tribune’s stock. Several Alden publications have rebelled openly against the ownership through editorials on Digital First’s own pages, notably The Denver Post. And local groups in Denver made overtures to buy the newspaper from Alden but were rebuffed.
Now the newspaper guild is seeking to act before Alden increases its stake in Tribune. Alden controls two of Tribune’s eight board seats and is barred from acquiring more shares until June 30.
Guild president Jon Schleuss said recently that he hopes to convince Tribune’s board of directors that it has a responsibility to the community as well as to shareholders.
“When you don’t have a strong newspaper in a community, corruption goes up, people are less informed and communities suffer," Schleuss said. “I think the Pulitzer Prize The Sun won [earlier this month] shows the kind of journalism that will be missing if Alden takes over.”
The guild also is taking its fight directly to shareholders, asking them to vote against the two directors backed by Alden at Thursday’s annual meeting.
While such an outcome is unlikely given the control Alden already exercises, the publicity effort has paid some dividends in recent days with both U.S. senators for Maryland and 38 Maryland delegates and 19 Maryland senators urging Tribune Publishing to sell The Sun to the local group. A petition supporting the effort garnered 6,000 signatures.
Doctor said media chains are reluctant to sell one newspaper because it can devalue the entire business model. Until recently, newspapers operated in silos, even within chains, with all news-gathering, advertising sales, printing and other back-office functions performed locally.
“What’s happened since is an increase in shared services, such as news pages being created in a central place. Then you have human resources, finance and other basic functions are centralized to save money," Doctor said.
“If you pull one paper out of the chain, it makes it more difficult to either sell entirely or to operate the rest of the chain."
Still, some local ownership efforts have succeeded, he said, pointing to newspapers in Salt Lake City, Philadelphia and the Berkshires in Massachusetts, which were acquired from chains and now operate as nonprofits.
But even the nonprofit newspapers struggle with declining print advertising and the economic devastation caused by the coronavirus pandemic. The Tampa Bay Times, owned by the Poynter Institute, has cut salaries, laid off employees and stopped printing except for Wednesdays and Sundays since February.
Venetoulis said the financial value of newspapers has plummeted since the local group first tried to buy The Sun, recalling what he jokingly referred to as his “fool’s errand.” The earlier attempts hinged on making a sound investment that would yield a reasonable profit while supporting the newspaper’s public service mission. Now the mission is pure philanthropy, Venetoulis said, with the understanding that even “nonprofits have to make profits if they are going to be sustained."
He said any effort to buy The Sun remains “aspirational."
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Doctor said the nonprofit model has advantages, but even those outlets must keep an eye on costs.
“It can be helpful to the extent that it really establishes philanthropy as a new, added line of revenue to replace what is being lost with advertising in decline,” Doctor said. “It’s not a panacea, but if you now have 5 or even 10% of your budget coming from philanthropy and tax-free contributions, it can work, as long as you still run the business correctly.”
Venetoulis said Embry and other supporters have the business expertise to make The Sun thrive.
“When we lose a football team as we did with the Colts, the community got aggressive to go get it back, including selling seat licenses and that type of thing," he said. "The Sun is one of the major institutions in this town, and if we lose it, I don’t know that we will retain a reputation as a big league town.
“I don’t agree with everything the newspaper does or writes, but this wouldn’t be the same town without The Sun doing the work it does. The newspaper is just too valuable to let it slip away.”