• by Tony Silber , Staff Writer, February 22, 2022

This report is an updated version of one that was published on Dec. 2.

The fight for control of Lee Enterprises continues. Just last week, the battle took another turn when the Delaware Chancery Court ruled that Lee was justified in rejecting nominees from the hedge fund Alden Global Capital to Lee’s board of directors.

The court ruled that Lee’s board “acted reasonably in enforcing a validly adopted bylaw with a legitimate corporate purpose.” It said that Alden “could easily have met the bylaw’s form requirements had it not delayed” in preparing its nomination notice.

The bid to add directors came in November, and Lee, the Davenport, Iowa-based owner of 75 daily newspapers, dismissed what it called a “purported notice” by Alden to nominate three members. In response, Alden, which acquired the Tribune Company last year, owns more than 200 newspapers, and is notorious for stripping the media brands it acquires of reporters, editors and resources.

Now the court has rejected that suit. The board election is in just over two weeks, on March 10.

The larger context, though, is that Lee’s fierce opposition to Alden’s hostile takeover might end up being futile. Alden’s current offer is far lower than Lee thinks it should be, but that might change. In the end, shareholders have to go where the money is—and company executives and boards of directors have a fiduciary responsibility to do that as well.

Twelve newsroom unions from some of Lee’s most prominent newspapers, including the Omaha World-Herald, The Buffalo News and the Richmond-Times Dispatch, wrote a letter last year urging the rejection of Alden’s bid. In the letter, the unions noted a comment from Alden saying the takeover bid is a reaffirmation of its commitment to the newspaper industry. “That is a bold-faced lie,” the letter stated. “Look to the many examples of newsrooms now operated by Alden, and you will find not one that is better position to serve its community.”

Alden, the letter continues, has cut staffs at twice the rate of its competitors. It’s created untenable workplaces that make it impossible to retain talent. It has closed physical newsrooms, leaving reporters to work from their cars.

As impassioned and compelling as that letter was, it’s sort of become a standard component in the process of Alden takeovers. Journalists mount desperate attempts to stop the takeover. They create fact-finding websites. They release letters. They band together to seek other ownership options. The lobby boards of directors and local entrepreneurs. Then Alden gets what it wants anyway.

Perhaps the tide will turn at some point. After all, newspapers enjoyed decades of monopoly status in their served markets. Until they didn’t.

Newspapers exploited reporters, underpaying them while maximizing profits. They responded with monumental ineptitude to the rise of the internet. To this day, most newspaper websites continue to be a rude joke on readers, swirling and flashing with invasive and intrusive ads, obscuring the content to the point that the reader gives up.

As important as journalism is to democracy, newspaper owners rarely did the right thing when they had a chance. Now they all see Alden Global Capital in their rearview mirrors, gaining on them fast.