Tuesday, November 23, 2021

Lee Enterprises sale to Alden would create hedge fund-owned duopoly for U.S. dailies, include dozens of weeklies

Locations of Lee Enterprises' daily newspapers
"Lawmakers, local reporters and journalism advocates are sounding the alarm over a takeover attempt of local newspaper group Lee Enterprises by Alden Global Capital, a hedge fund known for cutting journalists at local papers to maximize profits," Sara Fischer reports for Axios.

If Alden bought out Lee, a "clear majority" of U.S. dailies would be owned by hedge funds. Moreover, it would "essentially create a local news duopoly between Alden and Gannett/Gatehouse, which merged in 2019," Fischer reports.

"It was pretty clear this day would come," Joshua Benton writes for Nieman Lab. "Lee is the biggest acquisition target left out there, with papers in 77 markets across 26 states — not to mention nearly 350 weekly and specialty publications." Benton adds, "At some previous companies that Alden has tried to acquire, there’s been resistance — from management, employees, civic leaders, or all of the above. . . . But frankly, I’d be surprised if Lee put up much of a fight this time," since it's offering cash and a 30 percent more than the price of Lee stock last week.

As Lee's stock spiked 26 percent on Monday after Alden announced its offer, policymakers and reporters expressed concern. Sara Gentzler, a state-government reporter for the Omaha World-Herald, tweeted that it was a "gut-wrenching scenario for Nebraska newspapers and anyone who cares about preserving robust local news."

Scores of Lee's papers were once owned by Warren Buffett, "who soured on the business in recent years and said most newspapers were 'toast'," Katie Robertson of The New York Times reports. Lee "managed the 31 daily newspapers and dozens of weeklies owned by Mr. Buffett for a time before he sold them to that company in 2020."

Lee was recently in the news after reports that Iranian hackers broke into the company's computer systems the day after the 2020 election and tested how to create fake news.

UPDATE: Editor & Publisher hosts a discussion among Gordon Borrell, founder and principal of Borrell Associates; Rick Edmonds, media-business analyst for The Poynter Institute; Steven Waldman, president and co-founder of Report for America; and Gretchen A. Peck, contributing editor at E&P.

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