In the end, the hedge fund got its way.
Shareholders of Tribune Publishing, whose titles include The Chicago Tribune, The Baltimore Sun and The New York Daily News, on Friday voted to approve the company’s sale to Alden Global Capital, an investor with a reputation for slashing costs and cutting jobs.
The bid by Alden, which already owns about 200 local newspapers, had faced resistance: Journalists at Tribune’s papers protested the sale and publicly pleaded for another buyer to step in. Stewart W. Bainum Jr., a Maryland hotel executive who had planned to buy the The Baltimore Sun, offered a glimmer of hope when he emerged with a last-minute offer for the entire company. He was backed for a brief time by a Swiss billionaire.
But the rival bid never fully came together, so the choice facing Tribune’s shareholders was to approve or reject Alden’s offer. Tribune’s board had recommended that they vote for the sale.
“The purchase of Tribune reaffirms our commitment to the newspaper industry and our focus on getting publications to a place where they can operate sustainably over the long term,” Heath Freeman, the president of Alden, said in a statement Friday, after The Associated Press and Chicago Tribune reported that the deal had been approved.
The vote on Friday had required approval by two-thirds of the shares held by investors other than Alden, which holds a 32 percent stake in Tribune, to pass.
The company’s second-largest shareholder, Dr. Patrick Soon-Shiong, who owns a 24 percent stake in Tribune, did not cast a vote, his spokeswoman said on Friday.
“For the past several years, Tribune Publishing has been a passive investment, as he has remained focused on the leadership roles he holds across his companies,” Dr. Soon-Shiong’s spokeswoman said in an emailed statement.
Alden began buying up news outlets more than a decade ago and owns MediaNews Group, the second-largest newspaper group in the country, with titles including The Denver Post and The Boston Herald. While buying a newspaper may sound like a questionable investment in an era of shrinking print circulation and advertising, Alden has found a way to eke out a profit by laying off workers, cutting costs and selling off real estate.
“Alden’s playbook is pretty straightforward: Buy low, cut deeper,” said Jim Friedlich, the chief executive of The Lenfest Institute for Journalism, a journalism nonprofit that owns The Philadelphia Inquirer. “There’s little reason to believe that Alden will approach full ownership of Tribune any differently than they have their other news properties.”
The hedge fund’s first priority would be to consolidate operations of Tribune with those of its other newspapers, resulting in job losses and cost savings, predicted Mr. Friedlich, who served as an unpaid adviser to Mr. Bainum.
“This is the strategic logic of the acquisition, and one would hope — but not expect — that the savings from these synergies will be reinvested in local journalism and digital transformation,” he said.
Tribune agreed in February to sell to Alden, which had pursued ownership for years, in a deal that valued Tribune at roughly $630 million.
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Mr. Bainum emerged as a potential savior in February, when he announced that he would establish a nonprofit to buy The Baltimore Sun and other Maryland newspapers from Alden once its purchase of Tribune went through. But his deal with Alden soon ran aground as negotiations stalled over the operating agreements that would be in effect as the papers were transferred.
So Mr. Bainum made a bid for the whole company on March 16, outmatching Alden with an offer that valued the company at about $680 million. He was then joined by Hansjörg Wyss, a Swiss billionaire who lives in Wyoming and had expressed an interest in owning The Chicago Tribune. Mr. Bainum would have put up $100 million, with Mr. Wyss financing the rest.
Tribune agreed to consider the bid from the pair, who formed a company called Newslight, saying on April 5 that it would enter negotiations because it had determined that the deal could lead to a “superior proposal.” Part of the discussions included access to Tribune’s finances.
Mr. Wyss took himself out of the equation less than two weeks later, exiting the bid after his associates reviewed the books. Part of the reason for his decision, according to people with knowledge of the matter, was the realization that his plans to transform the Chicago newspaper into a competitive national daily would be near impossible to pull off.
Mr. Bainum notified Tribune on April 30 that he would increase the amount of money that he would personally put toward the financing from $100 million to $300 million, as he hunted for like-minded investors to replace Mr. Wyss. In addition to needing to fund the balance of his bid, $380 million, Mr. Bainum’s offer was contingent on finding someone to take on responsibility for The Chicago Tribune, according to three people with knowledge of the discussions.
In a statement on Friday, Mr. Bainum thanked “the journalists, readers, and civic-minded investors” who had supported his mission.
“While our effort to acquire the Tribune and its local newspapers has fallen short, the journey reaffirmed my belief that a better model for local news is both possible and necessary,” he said.
Mr. Bainum said he remained focused on Baltimore and was evaluating different options for locally-supported nonprofit newsrooms, and would make an announcement in the coming days.
“Baltimore has a proud tradition of impactful journalism that resonates within its borders and far beyond, and I am excited to be working with those who are committed to writing its next chapter,” he said.