Show notes
Rick Goldsmith,1 director of the documentary, "Stripped for Parts: American Journalism on the Brink",2 discusses how Alden Global Capital has purchased many newspapers in the US, laid off many journalists and closed many newspapers. Malfeasance in government and business are increasing as a result.
Vulture capitalists and hedge funds make money in multiple ways including the following:
If society is lucky, the investors find ways to make the company more profitable with, e.g., better marketing, new products or cost cutting. Investors that help put a potentially failing company on a more positive trajectory should not earn the negative term, "vulture".
Vultures have often saddled companies they acquire with massive debt at excessively high interest rates like 13 percent.3 This serves vultures well, because that debt typically survives bankruptcy under current US laws. Many companies owned by vultures were profitable before being bought but cannot service the massive debt that the vultures saddle them with. Vultures have been confiscating pension funds like this at least since the 1980s.4 Edge (2024) describes this in some detail. He says, for example, that newspaper chains purchased by vultures "were all still profitable ... .. The only thing that took them down was debt.5
Vultures often make money by cutting costs faster than customers stop buying.6 As Internet companies started making money from advertising, newspaper revenue has declined. Newspapers adjusted by cutting costs, including laying off journalists. However, vultures have been cutting staff at double the rate of the industry. Nieman Lab at Harvard reported, "Alden Global Capital is making so much money wrecking local journalism it might not want to stop anytime soon."7
Many companies, especially newspapers, own prime real estate that is worth more than the market value of the company. Before Alden, The Denver Post was right in the center of power in Colorado looking out onto a square with the State Capitol, the state Supreme Court and Denver City Hall on the other three sides of the square. That's the proper place for the "Fourth Estate", the watchdog press. However, not long after Alden acquired The Denver Post, they moved all the staff they did not cut to a far away space with no windows at the intersection of an animal rendering plant, the wastewater treatment plant, and a dog food factory.8
The movie rests heavily on the work of Julie Reynolds9 and Penny Abernathy.10 It includes extensive comments by Greg Moore, editor of The Denver Post from 2002 to 2016, and others. The movie recommends government subsidies, similar to those provided by the US Postal Service Act of 1792, mentioned by Penny Abernathy and cited in research reports by McChensey and Nichols.11 The latter two were co-founders of Free Press, an organization lobbying for public support for local news in several states.12 The Institute for Nonprofit News including their former executive director Sue Cross15 has been supporting local news nonprofits that are trying to fill the gap created by news deserts and ghost newspapers.
The threat
A previous Media & Democracy interview with Arizona State University accounting professor Roger White on "Local newspapers limit malfeasance" describes problems that increase as the quality and quantity of news declines and ownership and control of the media become more highly concentrated: Major media too often deflect the public's attention from political corruption enabled by poor media. This often contributes to other problems like scapegoating immigrants and attacking Diversity, equity, and inclusion(DEI) while also facilitating increases in pollution, the cost of borrowing, political polarization and violence, and decreases in workplace safety. More on this is included in other interviews in this Media & Democracy series avail...
Vulture capitalists and hedge funds make money in multiple ways including the following:
If society is lucky, the investors find ways to make the company more profitable with, e.g., better marketing, new products or cost cutting. Investors that help put a potentially failing company on a more positive trajectory should not earn the negative term, "vulture".
Vultures have often saddled companies they acquire with massive debt at excessively high interest rates like 13 percent.3 This serves vultures well, because that debt typically survives bankruptcy under current US laws. Many companies owned by vultures were profitable before being bought but cannot service the massive debt that the vultures saddle them with. Vultures have been confiscating pension funds like this at least since the 1980s.4 Edge (2024) describes this in some detail. He says, for example, that newspaper chains purchased by vultures "were all still profitable ... .. The only thing that took them down was debt.5
Vultures often make money by cutting costs faster than customers stop buying.6 As Internet companies started making money from advertising, newspaper revenue has declined. Newspapers adjusted by cutting costs, including laying off journalists. However, vultures have been cutting staff at double the rate of the industry. Nieman Lab at Harvard reported, "Alden Global Capital is making so much money wrecking local journalism it might not want to stop anytime soon."7
Many companies, especially newspapers, own prime real estate that is worth more than the market value of the company. Before Alden, The Denver Post was right in the center of power in Colorado looking out onto a square with the State Capitol, the state Supreme Court and Denver City Hall on the other three sides of the square. That's the proper place for the "Fourth Estate", the watchdog press. However, not long after Alden acquired The Denver Post, they moved all the staff they did not cut to a far away space with no windows at the intersection of an animal rendering plant, the wastewater treatment plant, and a dog food factory.8
The movie rests heavily on the work of Julie Reynolds9 and Penny Abernathy.10 It includes extensive comments by Greg Moore, editor of The Denver Post from 2002 to 2016, and others. The movie recommends government subsidies, similar to those provided by the US Postal Service Act of 1792, mentioned by Penny Abernathy and cited in research reports by McChensey and Nichols.11 The latter two were co-founders of Free Press, an organization lobbying for public support for local news in several states.12 The Institute for Nonprofit News including their former executive director Sue Cross15 has been supporting local news nonprofits that are trying to fill the gap created by news deserts and ghost newspapers.
The threat
A previous Media & Democracy interview with Arizona State University accounting professor Roger White on "Local newspapers limit malfeasance" describes problems that increase as the quality and quantity of news declines and ownership and control of the media become more highly concentrated: Major media too often deflect the public's attention from political corruption enabled by poor media. This often contributes to other problems like scapegoating immigrants and attacking Diversity, equity, and inclusion(DEI) while also facilitating increases in pollution, the cost of borrowing, political polarization and violence, and decreases in workplace safety. More on this is included in other interviews in this Media & Democracy series avail...