A few weeks ago, we wrote about Style Weekly, Richmond’s alt-weekly newspaper, folding after nearly four decades in business.

“The paper is owned by Alden Global Capital, a cannibalistic hedge fund known for sucking the life out of the publications in its portfolio by gutting staff and selling off real estate,” reporter Leigh Tauss wrote in early September.

This week for The Atlantic, writer McKay Coppins takes a close look at Alden Global Capital, its origins, business model, and the bleak future for any misfortunate newsroom that finds itself in the grips of the hedge fund’s talons, including once-great, pioneering, Pulitzer prize-winning publications such as the Chicago Tribune, which Alden acquired in May, and the Baltimore Sun, director David Simon’s former employer, where he worked the police beat that inspired him to create the HBO series The Wire.

Founded and run by Randall Smith, “a reclusive Palm Beach septuagenarian” Trump donor and his protégé, Heath Freeman, a fratty walk-on placekicker during a winless season for Duke’s football team in the early 2000s, Alden now controls nearly 200 newspapers across the country. Smith, who doesn’t give interviews and is rarely photographed, is near impossible to track down. He divests himself of assets every few years so he doesn’t end up on any lists of the world’s richest people, Coppins reports, but Coppins doesn’t speak to him for the story. Alden’s spare website gives away nothing and its list of investors is kept strictly confidential. But Freeman gives Coppins an interview and Coppins’ takeaway is that he “had underestimated how little Alden’s founders care about their standing in the journalism world.” 

“The profits generated by Alden’s newspapers did not go toward rebuilding newsrooms,” Coppins concludes. “Instead, the money was used to finance the hedge fund’s other ventures.”

From the story:

Since they bought their first newspapers a decade ago, no one has been more mercenary or less interested in pretending to care about their publications’ long-term health. Researchers at the University of North Carolina found that Alden-owned newspapers have cut their staff at twice the rate of their competitors; not coincidentally, circulation has fallen faster too, according to Ken Doctor, a news-industry analyst who reviewed data from some of the papers. That might sound like a losing formula, but these papers don’t have to become sustainable businesses for Smith and Freeman to make money.

With aggressive cost-cutting, Alden can operate its newspapers at a profit for years while turning out a steadily worse product, indifferent to the subscribers it’s alienating. “It’s the meanness and the elegance of the capitalist marketplace brought to newspapers,” Doctor told me. So far, Alden has limited its closures primarily to weekly newspapers, but Doctor argues it’s only a matter of time before the firm starts shutting down its dailies as well.

This investment strategy does not come without social consequences. When a local newspaper vanishes, research shows, it tends to correspond with lower voter turnout, increased polarization, and a general erosion of civic engagement. Misinformation proliferates. City budgets balloon, along with corruption and dysfunction. The consequences can influence national politics as well; an analysis by Politico found that Donald Trump performed best during the 2016 election in places with limited access to local news.

Read about Alden’s origins, the future of its newsrooms, and how some reporters are desperately clinging on—and how others are trying to push back—in Coppins’ long piece in its entirety here.

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