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The Senator vs. the Hedge Fund
Worried about layoffs and pension investments, Senator Charles Schumer called on Alden Global Capital for details about its interest in buying Gannett.
U.S. Senator Charles Schumer is pressing hedge fund firm Alden Global Capital for more details about its proposed purchase of newspaper company Gannett Co., expressing concern the deal may be detrimental to the media business.
“Public reports indicate that — over the last several years — Alden Global has pursued a strategy of acquiring newspapers, cutting staff, and then selling off the real estate assets of newsrooms and printing presses at a profit,” Schumer wrote in a February 21 letter to Alden’s president Heath Freeman. MNG Enterprises, which is owned by Alden and does business as Digital First Media, announced in January that it proposed buying Gannett for about $1.36 billion.
Since Alden and MNG took control of Digital First Media, executives have cut more than 1,000 jobs, including layoffs at The Denver Post, The Delaware County Daily Times, and The San Jose Mercury News, according to Schumer’s letter. For this reason, Schumer told Freeman that he was “troubled” by MNG’s bid for Gannett, which publishes USA Today and several important local newspapers in the state of New York, which he represents in the U.S. Senate.
“MNG has not made public details regarding any commitments it is willing to make to maintain newsroom staffing and ensure Gannett’s newspapers can continue to create high quality local journalism in their communities,” Schumer said in the letter. “Regulatory concerns regarding pension liabilities may be heightened given past management of pension plans sponsored by MNG and the proposed debt financing for the acquisition.”
Schumer cited a 2018 shareholder complaint filed in Delaware court that said MNG invested almost $250 million of its pension assets in hedge funds and accounts advised by Alden. He expressed concern about self-dealing and fiduciary obligations.
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Freeman didn’t immediately return a phone call seeking comment on the letter.
In his letter, Schumer asked Freeman to respond to his request for additional information about the proposed purchase of Gannett by March 5. His questions for the hedge fund centered around any plans for layoffs or the sale or lease of Gannett’s office or printing facilities. Schumer also asked about the impact the acquisition would have on Gannett’s pension plan.
“MNG has a long track record of operating newspapers profitably and sustainably to serve their communities,” a company spokesperson said in an emailed statement. “We look forward to providing Senator Schumer with additional information.”
Private equity firms have also been criticized for the impact of their acquisitions on workers.
In November, KKR & Co. and Bain Capital announced the creation of a financial assistance fund for former Toys “R” Us employees who lost their jobs in the U.S. after their leveraged buyout of the retailer resulted in bankruptcy. The company filed for bankruptcy protection in September 2017, 12 years after KKR and Bain saddled it with debt under their $6.6 billion buyout.