With a dubious record of milking newspapers they acquire, the hedge fund Alden Global Capital is setting its sights on Gannett Co., owner of USA Today and scores of local newspapers. Their newspaper subsidiary Digital First likes to cut jobs and in the case of the Denver Post, it reduced staff from 200 to 100 in eight years and then called for another cut of 30 jobs. (Bloomberg News, January 14, 2019, by Gerry Smith)
Jim Hightower in the Texas Observer, December 6, 2018, sees hedge funds as a greater threat to journalism than President Donald Trump. Writes Hightower, “They know nothing about journalism and care less, for they’re ruthless Wall Street profiteers out to grab big bucks fast by slashing the journalistic and production staffs of each paper, voiding all employee benefits (from pensions to free coffee in the break room), shriveling the paper’s size and news content, selling the presses and other assets, tripling the price of their inferior product – then declaring bankruptcy, shutting down the paper, and auctioning off the bones before moving on to plunder another town’s paper.”
Hedge funds became interested in buying up newspapers when by 2011, newspapers facing bankruptcy could be bought at three times earnings. The plan was to sell quickly after cutting costs but when no buyers surface, they enact more cost-cutting measures without developing new sources of revenue, resulting in the collapse of some newspapers. (Institutional Investor, April 24, 2018, by Alicia McElhaney)