• by Tony Silber , January 3, 2022

Unionized media-industry workers are calling on public-sector pension funds to stop investing in Cerberus Capital Management, theprivate-equity firm backing Alden Global Capital, the hedge fund that owns the second-largest group of newspapers in the country.

Alden is known for aggressively cutting costs in newsrooms and laying off journalists. In effect, it hobbles the work of local newsrooms. The firm has been called everything from “vulture capitalists” to “grim reaper of American newspapers” to “corporate strip-miners seemingly intent on destroying local journalism.”

Conversely, Alden claims its cuts have been necessary to keep newspapers from going out of business, that it is building a sustainable model for the newspaper industry going forward.

Most recently, Alden attempted a hostile takeover of Lee Enterprises, another large newspaper chain that owns 75 daily newspapers, among them the Buffalo News, Omaha World-Herald, and Richmond Times-Dispatch. The Lee board of directors rejected the offer, and Lee’s stock price shot up after word of Alden’s bid got out.

Earlier in 2021, Alden acquired Tribune Publishing, owner of nine major dailies, including the Chicago Tribune and TheBaltimore Sun, for $625 million.

Cerberus has a broad portfolio of investments, and in 2007 it, along with other investors, acquired a controlling stake in the automaker Chrysler. The secretive Cerberus has a history with the equally secret Alden that goes back at least as far as 2015, according to the Neiman Lab. Like Alden, it specializes in distressed investments, and during the years of its relationship with Alden, it has enabled Alden to make “unprecedented, draconian cuts to the hundreds of local newspapers it controls, according to the NewsGuild.

Most recently, the freelance writer and Guild member Julie Reynolds spoke out at a meeting of the Pennsylvania Public School Employees’ Retirement System in December. This retirement fund has $1.6 billion invested in Cerberus, Reynolds said.

Since Alden took over the MediaNews Group and Journal Register chains over a decade ago, Reynolds told PSERS, newspapers like the Denver Post, St. Paul Pioneer Press, Orange County Register and many others have lost more than three quarters of their staff. When Alden took over the Tribune newspapers — including the Allentown Morning Call in Pennsylvania — newsrooms lost 36% of their staff and the news content in its papers was ordered reduced by 20%.

“By investing in Cerberus, the board is running reputational risks,” Reynolds said. “Your pension fund is supporting the wholesale destruction of communities’ right to essential information. Research shows that towns without a robust local press often pay higher bond rates, are more likely to suffer government corruption and have lower voter turnouts.”

In addition, Reynolds said, PSERS might be making a bad investment in Cerberus. One study showed that several Cerberus funds have under-performed. One question Reynolds wants the PSERS board to ask Cerberus: “Will Cerberus refuse further business with Alden Global Capital and Alden-owned entities because of Alden’s history of destroying America’s local news ecosystem?”

In the coming months, the Guild said, more members plan to speak to other public pension systems, asking them to stop investing in Cerberus.