THE NEWSGUILD – CWA 501 3Rd Street, NW, 6Th Floor, Washington, DC 20001 (202) 434-7177 Fax (202) 434-1472 Newsguild.Org
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THE NEWSGUILD – CWA 501 3rd Street, NW, 6th floor, Washington, DC 20001 (202) 434-7177 Fax (202) 434-1472 newsguild.org April 30, 2020 The Honorable Dick Durbin The Honorable Tammy Duckworth United States Senate United States Senate 711 Hart Senate Office Building 524 Hart Senate Office Building Washington, D.C. 20510 Washington, D.C. 20510 Re: March 27, 2020 Letter from Heath Freeman, Alden Global Capital LLC Dear Senators Durbin and Duckworth: The NewsGuild-CWA would like to comment on the letter that Mr. Freeman wrote in response to your March 12, 2020 letter. Publicly available documents and news stories refute nearly every major claim in Freeman’s letter, which contains numerous distortions, misrepresentations, and patently false claims. Independent Journalism Mr. Freeman writes (¶ 2) that MNG Enterprises is “committed to ensuring communities across the country are served by robust, independently minded local journalism.” The fact that layoffs at MNG are twice the average in the news industry is a strange take on robust journalism and does not offer much comfort to those communities. Layoffs and furloughs have continued into the pandemic.1 NewsGuild-CWA takes issue with Freeman’s assertions of “independently minded local journalism” (¶ 3). One Colorado editor, Dave Krieger, was fired after publishing a column critical of Alden Global Capital on his own blog. At The Denver Post, opinion page editor Chuck Plunkett said he resigned because management wouldn’t let him keep publishing editorials critical of Alden’s impact on local news. Meanwhile, reporters in Kingston, NY, have been warned not to write about Alden.2 Mr. Freeman (¶ 3) suggests that MNG papers exist for the “benefit of communities and shareholders.” Certainly, MNG papers have benefited MNG shareholders with profit margins of 16-20%, roughly twice what is normally considered successful in this industry. Respected newspaper industry analyst Ken Doctor said of Alden: “This is a company that can’t even keep employees safe from mildew and rats while making huge profits — it’s just beyond the pale. This is kind of an outlaw company that just horrifies anyone.”3 MNG is controlled by Alden, a hedge in the business of making money, not producing journalism. MNG has extracted balance sheet capital out of its news operations and moved it to such non-news ventures as Fred’s Inc. (discount pharmacy chain),4 the online job site owner Monster Worldwide5, coal miner Peabody Energy6, Payless Holdings debt7, and Alden’s own Alden Global CRE Opportunities Master Fund LP.8 It has also purchased shares in Gannett9 and New Media Investment Group.10 Such cash extraction weakens the news operation, undermining public health and our democracy. Martha Waggoner Jon Schleuss Marian Needham Chairperson President Executive Vice President CWA|SCA Canada President: Martin O’Hanlon Vice Presidents: Diane Mastrull, Steven Cook, Kevin Flowers, Michael Cabanatuan, Bill Baker, Jeff Gordon Alden’s Track Record Mr. Freeman claims (¶ 3) that MNG has a “successful track record of turning around and sustaining challenged newspaper businesses.” This assertion is extraordinary. MNG, via its wholly-owned subsidiary Strategic Investment Opportunities LLC and with cash generated by its newspapers, purchased Fred’s shares, populated the board with 4 Alden board members (out of 5 total), and presided over its liquidation. That is not a typical success story. As for the state of MediaNews Group, dba Digital First Media, we cannot agree that its news operations have been “turned around” unless these executives define the term by cutting newsrooms and ad sales staff by more than two-thirds, reducing page count and coverage areas, and displacing design staff with contract workers in the Philippines. Most of us define “turning around” a business as developing a strategy and cultivating a workforce for growth, expansion, and long-term sustainability. According to media analyst Doctor, Alden’s strategy appears to be to “milk its newspapers until they run dry.”11 More chutzpah was shown in the statement: “MNG has never closed a daily newspaper during our ownership” (¶ 4). The 142-year-old Oakland Tribune and The Contra Costa Times no longer exist. Both were daily newspapers. Digital First Media also closed three smaller daily newspapers – The Hayward Daily Review, The San Mateo County Times, The Alameda Times-Star, and The Fremont Argus also disappeared in 2016. The six dailies were folded into one paper, The East Bay Times. The combined newsroom staffing at these Bay Area papers shrank from roughly 148 NewsGuild-represented employees in 2012 to fewer than 45 today. Just days after Mr. Freeman wrote to you, MNG announced that it would close the Eden Prairie News and Lakeshore Weekly News in Minnesota, two of 11 papers it recently acquired there.12 Mr. Freeman trumpets his role at The Reading Eagle, The Greeley Tribune, The Boston Herald and The Orange County Register (¶ 4). Alden bought The Eagle from a bankruptcy court in May 2019 and proceeded to cut the entire workforce (221 employees), requiring them to re-apply for their jobs.13 (140 jobs were retained.14) This month 19 workers at the Eagle have been laid off. Since Digital First Media acquired The Boston Herald in February 2018, NewsGuild-CWA representation has dropped from 108 to 25 workers and after DFM laid off another 6 employees.15 We do not have data for The Tribune, purchased in February 2020. DFM purchased the OC Register in March 2016, folding it into its Southern California News Group. Later that year, it sold the Register’s headquarters. It initiated buyouts in 2017. The SCNG had cut its newsroom staff in half between 2016 and 2018.16 The Register stopped reviewing local theater productions in May 2018 due to short staffing.17 In May 2019, the SCNG began outsourcing copy editing and page design to the Philippines.18 Mr. Freeman himself has been involved in two retail bankruptcies at Fred’s and Payless Shoes that have resulted in the loss of 23,584 jobs – 597 lost jobs in Illinois alone.19 He was chairman of the board at both companies. Investors in both companies filed lawsuits over Alden’s role at the companies. Future of News Indeed, when Alden was trying to convince Gannett of its purchase offer in February 2019, an effort that failed, it criticized the company for spending money to transition to digital publication: Why should shareholders view this strategy shift from print towards digital as anything but a substantial waste of shareholder capital, and why should shareholders have any reason to believe that the Board’s digital strategy will ever bear fruit?20 NewsGuild-CWA Commentary on Heath Freeman Letter Page 2 The month before, Alden had called for Gannett to “commit to a moratorium on digital acquisitions.”21 This opposition to aggressive digital work at Gannett either betrayed a gross ignorance of the trend in news publications or it was motivated by the simple assertion that it was better to reward shareholders now and let the company die. Mr. Freeman laments the fact that “digital advertising dollars are not near replacing the dramatic declines in print advertising dollars” (¶ 5). This is an odd concern given that Alden lambasted Gannett for investing in digital. The running joke in the news industry is that Digital First Media was a misnomer since it folded its experiment in centralized, digital-first, mobile-friendly news platform in 2014.22 According to media analyst Ken Doctor, Freeman “milked and milked MNG through its Digital First years, making sure that when it comes to investment in the product, it’s Digital Last.”23 Tribune Publishing and Alden Mr. Freeman claims (¶ 7) that since its investment in Tribune Publishing, the company makes all the decisions, not Alden. Since Alden’s 32% investment in November 2019, Tribune launched buyouts and cut key executives who had a history of commitment to journalism, including Chicago Tribune Editor-in- Chief Bruce Dold (Pulitzer Prize for editorial writing in 1993) and Managing Editor Peter Kendall (a 32- year veteran journalist). Alden has demanded and received two appointments to the Tribune board of directors – Dana Goldsmith-Needleman and Christopher Minnetian. A Freeman family friend, Needleman served as a director at Fred’s as it went into bankruptcy, liquidation, and the destruction of 6,572 jobs.24 Minnetian has been president of Smith Management LLC – an investment firm owned by Alden co-founder Randall Smith – since 2014.25 As a long-serving hedge fund executive, Minnetian may be best known for his term as chairman at Hostess Brands when he was a managing director at Ripplewood Holdings when the firm went bankrupt in 2012 and laid off 18,000 workers.26 He is currently a director of MNG Enterprises. Alden Ethics and Transparency We call your attention to the U.S. Department of Labor investigation into Alden’s investments of pension fund assets from DFM papers (¶ 8). Mr. Freeman claims the case has been closed, but he does not discuss the outcome of the investigation. NewsGuild-CWA’s research found that, in one case in 2015, Alden invested 90% of the assets of the San Jose Mercury-News pension fund in two of its own investment funds. We found similarly irresponsible investments in two other Digital First Media pension plans. All these Alden investments underperformed what the funds would have generated had they been invested in the S&P 500 index or a 60/40 stock/bond index fund. The investment of MNG Enterprises employees’ pensions in Alden-controlled funds appears to have negatively impacted performance, leaving the funds worse off than if they had invested in a more traditional investment portfolio. Alden has not offered to compensate the pension plans for its irresponsible and fiscally imprudent investments.27 By investing pension fund assets in its own funds, Alden may have violated its fiduciary duty to the pension funds and their participants.