Commentary

'Baltimore Sun' Moves To Nonprofit Status, Magnifies Broader Trend

Alden Global Capital's proposed takeover of Tribune Publishing included an interesting side deal that will transform the 184-year-old Baltimore Sun into a nonprofit news organization.

As local newspapers grapple with declining advertising revenue and cutbacks to print distribution, accepting tax-deductible charitable donations could make all the difference.

Alden, a hedge fund that already owned almost one-third of Tribune, agreed to acquire the remaining shares in a deal that valued the publisher at $630 million -- more than I had expected. In my rough estimate, its enterprise value was as much as $573 million. Before the deal was announced, Tribune's market value had crept upward to about $583 million.

As part of the agreement, Alden signed a $65 million nonbinding deal to sell The Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr., chairman of Choice Hotels International, the hotel chain based in Rockville, Maryland. The nonprofit group is also buying several other papers in the state, including the Capital Gazette in Annapolis, the Carroll County Times and several Baltimore-based weeklies and magazines.
Bainum has many of the characteristics that used to be common among owners of local newspapers before relentless rounds of consolidation. He is a wealthy individual who oversees a public company and demonstrated an interest in public issues as a former Democratic member of Maryland's legislature. Ideally, a civic-mindedness grounded in business realities will translate into fruitful efforts to sustain independent journalism for Maryland.
The proposal deal to transform The Baltimore Sun into a nonprofit news organization comes more than a year after the IRS approved the struggling Salt Lake Tribune's plan to become a public charity. However, the move wasn't that unusual after The Philadelphia Inquirer become a nonprofit in 2016.
Amid the financial hardship of the pandemic, nonprofit news has become a high-growth industry.

The Institute for Nonprofit News, a 12-year-old consortium of journalism organizations, last year saw growth of 28% to 309 members, Axios reported. While most news publishers still seek to operate as profitable businesses, nonprofit status may be necessary for some to survive.

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