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Hedge Fund’s Run at Tribune Publishing Ends, for Now, With a New Board Seat

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Alden Global Capital seemed poised in recent days to take control of Tribune Publishing, the owner of The Chicago Tribune, The Baltimore Sun, The New York Daily News and many other dailies.

After a closed-door session on Wednesday, the New York investment firm ended up with a board seat for one of its founders, Randall D. Smith — and an extension of an agreement, struck last year, that allows it to pursue a majority stake in the Tribune chain next year.

Alden’s designs on Tribune Publishing, a publicly traded company, became clear in November when it revealed that it had become its largest shareholder, with a 32 percent stake. The news led to an outcry from reporters, many of whom have denounced the hedge fund’s habit of slashing newsroom costs at papers it owns through a subsidiary, MediaNews Group.

After this week’s negotiations, Alden agreed not to pursue a significantly larger stake in Tribune Publishing until after the newspaper company’s next annual shareholder meeting, which is scheduled to take place no later than June 15, according to a public filing Thursday.

“Tribune Publishing will continue to focus on our long-term strategy to drive digital growth and invest in high-quality content while reducing legacy costs,” said Philip G. Franklin, the chair of Tribune’s board and not an Alden member, in a statement.

An Alden spokesman did not reply to a request for comment Thursday.

Mr. Smith is the third executive from Alden or affiliated companies to join the Tribune Publishing board, which grew to seven seats, from six. The other Alden representatives are Dana Goldsmith Needleman and Christopher Minnetian.

Few newspapers have been immune to cost cuts since readers started getting their news from digital devices rather than printed pages. In that time, Alden has been aggressive in laying off newsroom employees in an effort to wring profits out of MediaNews Group, which operates roughly 200 publications.

Two years ago, journalists at The Denver Post, a MediaNews Group paper, blasted Alden in a special opinion section. “If Alden isn’t willing to do good journalism here, it should sell The Post to owners who will,” the Post’s editorial board wrote in the lead editorial.

Journalists at Tribune Publishing papers believed they saw fresh evidence of Alden’s cut-to-the-bone style when the company offered buyouts in January.

Then, in February, there was turnover: Terry Jimenez, the Tribune Publishing chief financial officer, replaced Timothy P. Knight as the company’s chief executive.

Weeks later, Mr. Jimenez announced a change in leadership at The Chicago Tribune: Bruce Dold, the publisher and editor in chief, was replaced by Colin McMahon, who had been Tribune Publishing’s chief content officer. Mr. Dold, a winner of a Pulitzer Prize, had worked at the paper for 42 years.

Tribune Publishing also imposed cuts when the coronavirus pandemic hit, including three weeks of furloughs for some employees and permanent pay cuts for others.

As Alden became a significant part of the company, the NewsGuild union teamed with several Baltimore-area benefactors to push for local ownership of The Sun. Matthew D. Gallagher, the chief executive of the Goldseker Foundation in Baltimore, said his group had been “in contact” with Tribune Publishing, but he declined to comment further.

Journalists have also sought new ownership for other Tribune Publishing papers. Among them, a pair of Chicago Tribune investigative reporters lobbied wealthy Chicagoans.

Those pushing for Tribune Publishing to sell its papers to local owners have found an ally in Mason Slaine, an investor who bought a roughly 7 percent stake of the company this spring.

“The newspapers should really be owned by the local communities,” Mr. Slaine, a former chief executive of Thomson Financial, said in an interview last month.

Mr. Slaine, who lives in Boca Raton, Fla., added that he had some interest in buying The Sun Sentinel of South Florida, a Tribune Publishing paper.

In 2018, Dr. Patrick Soon-Shiong, a medical entrepreneur, bought The Los Angeles Times, The San Diego Union-Tribune and other California papers from Tribune Publishing, then known as Tronc, for $500 million. Dr. Soon-Shiong is the second-largest shareholder in Tribune Publishing, with about a quarter of its shares.

Wall Street ownership of newspapers has become common, and Alden helped drive that trend since the Great Recession, when it started grabbing stakes in distressed media companies.

Last year, in a deal financed by the private equity firm Apollo Global Management, the newspaper chain Gannett was acquired by the parent company of GateHouse Media to form a giant that publishes more than 250 dailies. The resulting company, called Gannett, is controlled by another private equity fund, Fortress Investment Group, which is owned by the Japanese conglomerate SoftBank.

McClatchy, another chain, is likely to emerge from the bankruptcy it declared this year into the hands of its largest bondholder, the hedge fund Chatham Asset Management. Alden itself recently disclosed a significant stake in the newspaper chain Lee Enterprises.

Tribune Publishing fell into bankruptcy a decade ago, shortly after it was bought by the Chicago billionaire Sam Zell, who presided over a leadership culture that resembled a frat house.

In 2016, the fund Merrick Ventures became the largest shareholder in the company. Its chairman, Michael W. Ferro Jr., oversaw extensive job cuts before stepping down in 2018, after two women accused him of unwanted sexual advances. Alden then acquired Mr. Ferro’s shares.