“They’re not reinvesting in the business,” Ken Doctor, a longtime newspaper analyst and president of the website Newsonomics, said about Alden Global. “It’s dying and they are going to make every dollar they can on the way down.”
Alden Global didn’t respond to a request for comment. A Fortress spokesman said the firm has no role in New Media’s day-to-day operations. In a statement, McClatchy President Craig Forman said Chatham also has no influence on its operating decisions. And the company has a two-tier ownership structure that helps insulate the McClatchy family, which controls the company, from outside influence.
The plight of local newspapers is different from bigger national ones like the New York Times that have developed successful subscription models and large metro outlets like the Boston Globe that have been acquired by billionaire backers.
New Media disputes any suggestion that efforts to slim down its newsrooms are driven by profits.
The company has cut highly paid but unproductive reporters while asking the remaining reporters to write more articles, according to Michael Reed, New Media’s chief executive officer. The company has also eliminated local copy editors and designers and moved those jobs to a central hub in Austin, Texas, where it has hired more than 300 people, Reed said.
“We’re buying newspapers because we think we have a strategy that can save local journalism,” Reed said in an interview, referring to plans to find new revenue sources by selling various services, such as online marketing help, to local businesses.
New Media’s shares are up 36 percent in the past year, and Reed says its profit margins are about 10 percent. Alden’s Digital First Media generated a 17 percent profit margin in 2017, which is more than the New York Times, Doctor said.
While Fortress has “no influence” on how the newspapers are operated, the firm has helped New Media raise funds to buy more newspapers, Reed said. It has also tapped executives who have industry experience. And one of the newspapers under its control, the Sarasota Herald-Tribune, won a Pulitzer Prize two years ago.
But journalists protesting Alden Global’s stewardship of newspapers had plenty of stories to illustrate how cost cuts are gutting their newsrooms. Outside Alden’s offices this month, they shouted into megaphones and held signs reading “Stop Bleeding Our Newsrooms Dry.”
“We just want Alden Global Capital to get the hell out of the news business,” Doxsey said. “It has no business owning newspapers. We’re not widgets. If they close us down, the news goes away.’’