The Washington PostDemocracy Dies in Darkness

A Maryland business executive wanted to buy the Baltimore Sun. Now he may try to buy the rest of Tribune’s newspapers.

Stewart Bainum Jr., photographed at the White House in 2011, is exploring a bid to buy not just the Baltimore Sun but the entire Tribune Company newspaper chain. (Ron Sachs/Shutterstock)
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One month after a Maryland business executive struck a tentative deal to return the Baltimore Sun to local ownership, the plan may be in jeopardy after the hedge fund he was negotiating with attempted to add additional fees to the agreed-upon price, according to people close to the matter.

But rather than abandoning his plan, business executive Stewart Bainum Jr. is doubling down by exploring a bid to buy the entire Tribune Publishing Company away from Alden Global Capital, an investment fund known for heavy cost-cutting that was poised to take over the nation’s third-largest chain of newspapers this spring.

Two people familiar with the conversation say that Bainum’s camp got on the phone Thursday with Alden executives to hash out some details of the Sun deal. That’s when they told Bainum he would have to pay Alden fees for five years, starting at $12 million the first year.

Bainum saw the request as exorbitant and a sign that Alden’s managing director Heath Freeman wasn’t interested in selling the Sun at all. The two had agreed in February upon a $65 million sale price; the fee agreement Freeman was proposing could quickly outstrip the value of the overall deal, the people close to the conversation said. They spoke on the condition of anonymity because they were not authorized to speak on the matter.

Freeman, through a spokesman, disputed the characterization of the call but offered no further comment. Bainum, through a spokesman, declined to comment.

Bainum, though, has asked the special committee on Tribune’s board of directors to release him from a nondisclosure agreement so he can launch conversations with potential partners in his bid for the entire company.

The idea isn’t new. Bainum had already suggested buying all of Tribune’s newspapers last fall, after he sensed that Tribune was uninterested in selling just the Sun.

“While Stewart Bainum’s principle interest has been and remains the purchase of the Baltimore Sun, he seems both sincere in his offer and fully capable of pursuing the whole of Tribune,” said Jim Friedlich, chief executive of the nonprofit Lenfest Institute, which owns the Philadelphia Inquirer and who has talked with Bainum about nonprofit models for the local news industry.

From February: The Baltimore Sun was spared a hedge-fund owner. Now it will try to survive as a nonprofit.

Tim Ragones, a spokesman for the Tribune board’s special committee, which is assessing bids for the company, declined to comment.

The 11th-hour stalemate between Bainum and Freeman casts uncertainty on the fate of the Baltimore Sun and also presents an alternative fate for other Tribune newspapers, where journalists are fearful of Alden’s reputation for job-slashing and selling off newspapers’ real estate assets.

Bainum’s plan had been to put the Sun and its local affiliates — Annapolis-based Capital Gazette and the Carroll County Times — under control of a nonprofit entity, Sunlight for All Institute.

Alden has long disputed its reputation for media cost-cutting, arguing that it is one of the few players willing to buy newspapers at a difficult period in the industry.

“That’s really traditionally how hedge funds have operated, for better or worse: When hardly anybody else wants to buy stock, they see an opportunity,” said Poynter media business analyst Rick Edmonds. News of Alden’s deal with Bainum hitting a snag didn’t surprise him. “They are hard bargainers,” he said.

The closely watched acquisition is seen as one of the last stands of the local newspaper industry, which has been gutted by decades of cost-cutting and has been further decimated by the advertising fallout during the coronavirus pandemic.

Freeman’s hedge fund, through its MediaNews Group newspaper chain, is one of the largest newspaper operators in the country, and its deal with Tribune would make it an even bigger one by adding the Chicago Tribune, the Hartford Courant, the Orlando Sentinel, among other newspapers to its portfolio.

Bainum is the chairman of Maryland-based Choice Hotels International, and his vision for a bid for Tribune involves lining up other investors who would seek to transfer individual Tribune newspapers to local owners.

The primary challenge for any Bainum bid has to do with math. Alden already holds 32 percent of Tribune shares and in February reached a deal with Tribune to buy even more shares, valuing the media company at $630 million. Any offer from a Bainum consortium would have to top that.

Heath Freeman is the hedge fund guy who says he wants to save local news. Somehow, no one’s buying it.

Employee unions at 10 Tribune newspapers launched campaigns this summer to try to find local ownership for the publications.

Bainum’s interest in the entirety of Tribune, first reported by the New York Times on Sunday, caught journalists at the Sun by surprise. They had already been cautious about prematurely celebrating the Sun’s conversion into a nonprofit organization and it still “feels uncomfortable and uncertain and a little bit more scary than how we felt like last week,” said longtime Baltimore Sun reporter Liz Bowie.

Still, she said, “this could be the first sort of real glimmer of hope that there are enough people in this country who believe that newspapers have an essential role in their communities and that they will stand up in this moment and put their money down on the table.”

Bainum emerging as a potential buyer still carries unknowns. But Tribune journalists have been vocal about their opposition to Alden.

“Anything that moves us in [the local-ownership] direction is a good development, and we encourage civic-minded individuals in Tribune-publishing towns to step up,” said Gregory Pratt, a city hall reporter for the Chicago Tribune.

During Bainum’s first discussions with Tribune last fall, the company indicated that it would accept an offer of roughly $100 million for the Sun, a sum that Bainum found far too high and as a sign that the company was uninterested in entertaining offers for individual newspapers. He countered that given that valuation, it made sense for him to mount a bid for the whole company.

But soon after, Freeman indicated that Alden would be content with an offer of between $60 million and $70 million for the Sun. Bainum signed a nonbinding letter of intent for the Sun in December and signed an NDA to not discuss the details of his transaction with other investors.

Now, Bainum is seeking to get out of that agreement so he can approach other potential investors, including billionaire Los Angeles Times owner Patrick Soon-Shiong and his wife, Michele, who purchased the Times and the San Diego Tribune from Tribune for $500 million in 2018. Behind Alden, they are the second-largest shareholder in Tribune with 24 percent of the company.

Regardless of whether Alden already has a deal approved by the Tribune board, it still requires two-thirds approval from non-Alden shareholders.