·  by Joshua Lamel and Elliott Sangara

The JCPA: A Hedge Fund Handout

Local journalism is in trouble. In the past 15 years, a quarter of newspapers in the U.S have closed, and financial management companies have bought half of the daily newspapers. The death of newspapers impacts communities as well as the individuals who lose their jobs. Areas of the country that don’t have reliable newspaper outlets tend to have higher rates of poverty, lower rates of education, and lower voter turnout. As newspapers became less profitable, they started being viewed as attractive takeover targets for vulture hedge funds/equity based firms. The acquisition of local newspapers by hedge funds has led to massive layoffs in newsrooms across the country, de-localizing of local coverage and selling of assets to maximize profits. As a result of their actions, these hedge funds have become known as vulture funds. They’re not interested in news, they’re interested in the profit of news. 

Alden Global Capital is the poster child of a vulture fund. Alden is a New York-based hedge fund that now owns an estimated 100 newspapers across the nation. Known for buying newspapers and then enforcing severe cost-cutting measures to maximize profits, Alden has laid off thousands of newsroom employees across the country. In California, they cut the staff of 16 regional papers from 1,000 editorial employees to an estimated 150. In Minnesota, Alden laid off 80% of the Pioneer Press employees; in Denver, Alden cut 75% of jobs. 

Due to these brutal downsizings, newsrooms have spoken out against Alden Global Capital. Ahead of their takeover from Alden, the Orlando Sentinel begged readers and potential investors to “deliver us from Alden” and compared the company to “a biblical plague of locusts – it devours newsroom resources to maximize profits, leaving ruin in its wake.” Now, Alden is about to be rewarded for preying on newsrooms – with even more money straight from tech platforms.

As Congress is looking at local journalism and its challenges, they are ignoring the huge problems created by these vulture funds. A recently leaked draft of changes to S. 673, the Journalism Competition and Protection Act, will empower, enrich and encourage vulture funds to further invest in purchasing local outlets while doing nothing to prevent them from their current model of layoffs, de-localization of coverage, and focus on profits over good journalism.

It should be no surprise that an enterprise like Alden has been one of the largest supporters of the JCPA. The News Media Alliance, the prime lobbying organization pushing for this legislation, has an Alden representative sit on their board. And Alden is using their assets to push for the legislation. Op-eds in support of the JCPA have become a regular in Alden-owned newspapers. A series of op-eds from Douglas Schoen (a pollster who worked for News Media Alliance on a very misleading poll about the JCPA) has been re-published in many Alden owned papers over and over again. This creates an appearance of local support, when the reality is this is a hedge fund using their own assets to try and make more money, while couched as independent journalism. 

The JCPA does nothing to protect newsrooms from vulture funds like Alden. Instead, it would help line their pockets further by guaranteeing both coverage and payments from internet platforms who will be forced to link to Alden’s content. Given Alden’s track record, they will pocket this windfall and do nothing to invest in local journalism. A hedge fund worth over a billion gets richer while local journalism in Alden communities gets no help. And given the newfound windfalls created by the JCPA, Alden and other venture funds will have even more reason to buy local papers only to destroy them.