Swiss billionaire Hansjörg Wyss has agreed to contribute $100m to buy Tribune Publishing, joining forces with a Maryland hotel magnate to fend off a hedge fund’s takeover of one of the largest US newspaper companies.
Wyss has teamed up with Stewart Bainum, chair of Choice Hotels, who this month offered to buy Tribune for $650m with the hopes of running its newspapers, which include the Chicago Tribune, New York Daily News and Baltimore Sun, as non-profits.
The entrance of Wyss is the latest twist in a battle to control Tribune after Alden, a New York hedge fund known for taking over distressed American newspapers, last month struck a deal to buy the media group that valued it at $630m.
As part of that agreement, Tribune would sell the Baltimore Sun and two other Maryland newspapers to Bainum for around $65m. However, Bainum and Alden were unable to agree on details of the deal in recent weeks, motivating Bainum to mount his own bid for the entire company.
Bainum in recent days had been seeking investors to join his bid for the whole of Tribune. He plans to invest $100m of his own money, while Wyss has agreed to contribute $100m and could also provide debt if needed, according to people familiar with the deal. Bainum has also generated interest from banks to provide debt financing, these people said.
The interest from Wyss, the Swiss-American entrepreneur who made his fortune producing medical devices, will give heart to Tribune journalists who have cast the takeover battle as an existential fight against the influx of financial groups into their business.
After decades of shrinking revenues, struggling US newspapers have become targets for hedge funds and private equity.
Alden has been one of the leading consolidators, making deep cost cuts at its titles to boost profitability. Employees of its publications have described the firm as “vulture capitalists” while politicians such as Democrat Chuck Schumer, the Senate majority leader, have argued that the hedge fund’s management of local newspapers is having a negative impact on American democracy.
Tribune unions over the past year have launched a campaign against Alden, seeking local wealthy individuals to buy their papers, which helped inspire Wyss’s interest in buying the company, he told the New York Times. “I don’t want to see another newspaper that has a chance to increase the amount of truth being told to the American people going down the drain,” he said.
Wyss and Bainum plan to eventually find investors for Tribune’s newspapers, with the goal of turning them into non-profits.
Despite Bainum’s efforts, Tribune’s board last week recommended shareholders vote for Alden’s offer, after concluding it offered greater certainty than any other option, according to a regulatory filing.
Alden’s takeover requires the approval of at least two-thirds of Tribune shareholders excluding Alden. This could leave the fate of Tribune in the hands of Patrick Soon-Shiong, the pharmaceuticals billionaire and owner of the Los Angeles Times, who owns about 24 per cent of Tribune — a stake big enough to complicate Alden’s plans.