Surprise media deals often turn out to make all kinds of sense in the light of the second day. So it is with Alden Global Capital’s sale, announced Monday night, of The Baltimore Sun to Sinclair Inc.’s executive chairman, David D. Smith.
Wait, isn’t Alden an acquirer of struggling newspaper properties, which it then runs on the cheap, rather than a seller? Why say yes now to a local bid from Smith when Alden rejected one from hotel magnate Stewart W. Bainum Jr. less than three years ago?
With financial terms not disclosed, it is unclear whether the semi-retired Smith, buying on his own nickel, was highly motivated and overpaid for the Sun. Probably. All the more likely if Smith wants a soapbox to advocate pet conservative causes as he has at Sinclair’s 290 local stations.
There is a second certain payoff for Alden — a so-called “shared services” contract, through which it will provide tech systems and a host of other operating necessities to the new owner for a fee.
Think about it from the buyer’s point of view. He doesn’t have time to reinvent all those from a standing start or bid them out to other vendors. For continuity’s sake, he is stuck, bargaining as best he can with the seller on the price and duration of the contracts.
Guy Gilmore, chief operating officer of Alden’s MediaNews Group, chose to highlight the importance of the agreement in a brief, slightly coded comment for the paper’s own account of the deal: “We are … pleased,” he said, “that our preeminent newspaper operating and technology platform will continue to provide services for The Baltimore Sun.”
Shared services played a pivotal role in the earlier chapter of the Baltimore ownership drama. Bainum has said that he and Alden agreed, at least in principle, on a $65 million sale price. But he and his adviser, Imtiaz Patel, balked at a demand for five years of shared services at a rate they considered inflated.
A couple more factors likely played into Alden’s decision that this was a good time to exit rather than stay the course in Baltimore.
After his efforts to buy the Sun or its parent, Tribune Publishing, fell through, Bainum said that he would focus instead on options for a new nonprofit news venture for Baltimore. And he did, announcing soon after a commitment of $50 million to create what came to be The Baltimore Banner.
The competition made Alden think twice about its typical cut-and-slash approach to newsroom staffing. Weeks after Alden took over Tribune and began eliminating jobs, the NewsGuild tallied the first round of cuts of its members and told me then that the Chicago Tribune had a 21% reduction, while five other Tribune papers had more than 10%. But the Sun had none.
The Banner has since hired away 15 news staffers from the Sun, and my sources say management chose to replace them rather than eliminate the positions through attrition.
Alden may be wishing now that it had accepted Bainum’s bid for the organization back in 2021. Hands tied on cost cutting, it faces an industrywide financial pinch with soaring costs like producing and distributing print editions and disappointing ad and subscription revenue results.
Plus the competition from the Banner is not easing. Bainum told me in a phone interview that paid digital subscriptions at his publication now stand at 32,000, well on the way to a break-even goal of 75,000. The Banner’s editorial staff is 75, he said, with plans to add another 10 to 15% this year.
It remains to be seen whether Smith is looking to put a right-wing spin on the 186-year-old Sun. The conservative Adelson family largely did not after it acquired the Las Vegas Review-Journal at a premium price from otherwise expanding GateHouse Media in 2015.
Smith fed into fears that he will be a heavy-handed owner in a disastrous meeting Tuesday with the Sun’s staff. Among other offensive comments, he said that he had rarely read the paper and its website for decades but was sure the journalists were doing inferior work to that of Sinclair’s Baltimore television station.
In just the first day of his tenure, Smith is giving all the signs of being the kind of rich guy who thinks he is so smart he can quickly master running a little business like a local newspaper. It’s not all that easy, and any competent adviser would tell Smith so.
Smith’s record at Sinclair — nicely summarized in a piece by Nieman Lab’s Joshua Benton — suggests he won’t be shy about imposing some ideology on his baby. He said as much in the meeting with staff.
If Smith does go that route, he risks nudging liberals and moderates to the Banner and other news alternatives. And there are plenty of moderates and liberals in blue Baltimore.
This story has been revised to include a summary of Smith’s meeting Tuesday with the Sun’s staff.
