Rapid-fire modifications underway at newspapers sold to cost-slashing hedge fund Alden Global Capital have led to a profound case of the jitters at newsrooms just like the New York Daily News.
On Monday, Daily News staffers had been hit with the primary bout of probably dangerous information after they had been advised by way of memo that that they had been spun off right into a separate subsidiary of Tribune Publishing referred to as Daily News Enterprises.
The baffling transfer, which doesn’t seem to have been replicated at every other Tribune paper, got here the identical day Alden fired Tribune CEO Terry Jimenez, the lone board member to oppose the Alden takeover.
Concerns had been solely heightened after Alden Global provided buyouts to non-unionized employees on the Daily News and eight different metro dailies, together with the Chicago Tribune, the Baltimore Sun and the Hartford Courant.
The Chicago Tribune reported that the brand new homeowners had contacted the paper’s representatives on the NewsGuild union to debate voluntary buyouts for journalists, however then canceled a bargaining session within the wake of its $633 million takeover.
Such strikes have particularly stirred angst on the News which laid off 98 people, including half of its entire newsroom back in 2018, below the outdated possession. It’s now down to only below 65 newsroom staffers.
As one former insider put it, “What’s left to cut?”
The pandemic has whacked the circulation all newspapers. But circulation on the Daily News has plunged far sooner than others.
And whereas native consumers had sought to purchase different newspapers within the chain, no person stepped as much as attempt to purchase the Chicago Tribune or the Daily News. Both papers have large pension liabilities and consultants say that potential new homeowners had been skittish.
Any new proprietor is more likely to be frightened of getting caught with an infinite tab within the occasion the enterprise must be bought or shut down.
Media Ink couldn’t be taught precisely how excessive are the pension liabilities on the Daily News. Several sources estimated they may very well be near $100 million. But one other stated it may very well be as little as $20 million.
One motive for the vary, based on some pension consultants, is the potential for a pension shortfall compounded by termination charges and different penalties that come when an organization tries to withdraw from a multi-employer pension plan.
In some methods the pension liabilities, whereas they discourage consumers, additionally might make it too costly to shut down since shutdown prices will seemingly exceed the working loss.
“It is entirely possible, even likely, that it will be more expensive to shut down a business than to operate it at a modest loss,” stated Harvey Katz, a associate and pension specialist on the legislation agency Fox Rotchschild LLP.
Daily News staffers had been apprehensive that by singling it out as the one entity among the many 9 main metro dailies to be spun off into its personal subsidiary, it was being arrange for a possible shutdown.
But Katz stated if a worthwhile firm had been to arrange certainly one of its struggling models as a separate firm, the dad or mum firm would nonetheless be left holding the bag. “Moving it to an entity that has only losses will be set aside by the courts,” stated Katz.
Some of essentially the most aged pressmen and truck drivers return to the times when the Daily News was the most important newspaper within the nation, promoting greater than 2 million each day copies and practically 5 million on Sunday within the increase period within the Forties and 50s.
All each day papers within the metro space noticed print gross sales decline in the course of the pandemic. But the Daily News misplaced readers at close to triple the speed of The Post and double the speed of The Times. Its weekday print circulation dropped a staggering 33.5 % to 67,983, down from 102,281 in the identical interval a 12 months earlier.
Fred Drasner, a former associate with Mort Zuckerman who exited in 2004, commented, “Under 68,000 copies a day? They used to steal more copies than that from me each day.”
On the brand new possession, Drasner stated, “If they were bought by a ruthless cost cutter, I guess there will ruthless cost cutting.”
The News additionally enacted a steep worth hike to $3 a replica, which has led to hypothesis that Alden, which had 32 % of the inventory and three seats on the Tribune board previous to its takeover, had been intentionally making an attempt to crash circulation to justify abandoning print down the highway.
Heath Freeman, the 41-year-old president of Alden, is the sole voting shareholder within the new firm.
Daily News editor-in-chief Robert York addressed some staffers’ questions at a distant Zoom assembly Tuesday, however couldn’t supply a motive for the spin off right into a separate subsidiary, sources stated.
York didn’t return emails searching for remark. A Tribune spokesman had additionally not returned calls.
In certainly one of its final public filings, Tribune disclosed that Cerberus has loaned Alden $218 million partly “to finance the merger” of the previously debt-free firm.
Alden additionally controls newspaper chain Media News Group–also called Digital First Media. Media News holdings — from the Denver Post to the Boston Herald and the San Jose Mercury — have additionally been hit with deep cuts within the Alden period.
To finance the most recent deal, Alden’s MNG Enterprises, Inc. loaned $60 million to its dad or mum hedge fund on the sky-high rate of interest of 13 %.
Calls to Alden Global Capital weren’t returned on the time of writing.