Virus notes: July 16, 2020 -- American war on journalists
MERCED (BLJ) – On July 16, Merced County Public Health Department announced 2,313 cases of coronavirus (301 new since July 14) and 15 deaths (3 new since July 14).
California reported 356,178 cases (8,544 new) and 7,345 deaths (118 new).
The United States reported 3,533,905 cases (50,000 new) and 138,358 (new).
The global count is 13,654.445 cases (272,425 new) and 586,174 deaths (6,136 new).
Back in the heady days of American Imperialism during the invasion of Iraq, a US tank fired on the Palestine Hotel in downtown Baghdad, known to be the main media hotel in the city, and killed a few and wounded a few. But now that monopoly finance capitalism has gained complete control over the carcass of the homeland, a hedge fund with a tabloid takes Mama McClatchy for her last ride. -- blj
New York Times
Under Hedge Fund Set to Own McClatchy, Canadian Newspapers Endured Big Cuts
Since Chatham Asset Management took over Postmedia, Canada’s largest newspaper chain, 1,600 employees have been laid off and more than 30 papers shut down.
By Edmund Lee
In October 2016, a New Jersey hedge fund assumed ownership of Canada’s largest newspaper chain with very little fanfare. Few people noticed, including some of the chain’s employees.
The fund, Chatham Asset Management, acquired two-thirds of Postmedia, the publisher of The National Post, the Vancouver Sun and several other major Canadian papers, by trading a portion of the money it was owed for the majority ownership stake. The deal happened so quietly that Postmedia’s own financial news site described it as a debt restructuring in a report that included a single mention of Chatham as “one of the investors.”
Last week, that kind of financial maneuvering reappeared in another major newspaper deal, when Chatham emerged as the winning bidder in a bankruptcy auction for the McClatchy Company, a chain with 30 media outlets including The Miami Herald, The Kansas City Star and The Sacramento Bee. With roots going back to 1857, McClatchy, a consistent winner of top journalism awards, was one of the last major family-run news publishers.
Chatham’s track record as an owner of a major newspaper chain is grim, according to 10 current and former Postmedia employees who spoke with The New York Times on the condition of anonymity because they feared retaliation.
Since Chatham took a majority stake in Postmedia, the company has cut its work force, shuttered papers across Canada, reduced salaries and benefits, and centralized editorial operations in a way that has made parts of its 106 newspapers into clones of one another.
That may worry McClatchy journalists, who are wondering how Chatham would run the business at a time when Google and Facebook dominate the online ad market and fewer readers are willing to pay for news, challenges that have been worsened by the coronavirus pandemic.
Andrew MacLeod, the chief executive of Postmedia, said that Chatham was not a day-to-day operator of the business, and that the cost cuts were “all natural outcomes of a legacy business that’s been in structural decline.” He added that when Chatham came on board in 2016, it was one of the few financial players willing to take a risk on a newspaper business.
“We’re very grateful,” he said.
Chatham owns the majority of Postmedia shares and the debt, but because of a Canadian law that limits non-Canadian control of media properties, it cannot exercise full control over the business. Still, Chatham can elect one-third of Postmedia’s board, and it has debt covenants that give it huge sway over its long-term plans.
Like most newspaper companies, including McClatchy, which struggled for more than a decade before filing for Chapter 11 bankruptcy protection in February, Postmedia has suffered falling revenues, making cost cuts all but inevitable. But in recent years it has increased bonuses for its top executives and added more debt, angering the news staff.
“It’s pretty frustrating,” said Brian Gibson, the president of the local union that represents 140 editorial staff at Postmedia’s Vancouver papers. “They give us a lowdown on how much money we’re losing and the need for cost cutting, but then they go and give these big bonuses. It’s a huge problem, and it’s getting to the point where it’s unacceptable.”
Since 2017, Postmedia has paid out over $6.2 million Canadian, or about $4.5 million, in bonuses to its five top executives, including Mr. MacLeod, the chief executive, and Paul Godfrey, the executive chairman of the board.
In that same period, the editorial ranks at The National Post, its flagship paper, have been reduced by about a third, according to three of the people. The number of journalists at its Vancouver papers — the Vancouver Sun and The Province — have been cut in half, according to Mr. Gibson. Altogether, the company has cut over 1,600 employees since 2016, or 38 percent of its staff, based on company filings.
“We have less boots on the ground,” Mr. Gibson said. “We’re not even covering some City Hall things, which we miss.”
Postmedia said in a statement that it did not “share specific numbers” on staffing. But Mr. MacLeod, the chief executive, acknowledged complaints about the cuts. “That’s something we wrestle with,” he said. “It’s a fair question."
Hedge funds and private equity companies have become a force in the news industry. Alden Global Capital controls roughly 200 outlets through its newspaper chain, MediaNews Group. It has made money in an ailing business partly by cutting the number of reporters and editors at The Denver Post and other publications, moves that have angered journalists and press advocates who accuse the firm of diminishing local news coverage.
The private equity fund Fortress Investment Group controls the largest American newspaper chain, Gannett, which publishes USA Today, The Arizona Republic and 250 other dailies. Fortress is owned by the Japanese conglomerate SoftBank.
Postmedia is under investigation by Canadian regulators over a deal with a rival publisher, Torstar, the owner of The Toronto Star, that resulted in the closing of 36 newspapers and the loss of nearly 300 jobs.
The merger took place in November 2017, about a year after Chatham took majority ownership. Postmedia and Torstar concluded the deal with no cash changing hands. As part of it, Postmedia traded 17 of its papers to Torstar in exchange for 24 Torstar papers.
Shortly after, Postmedia announced it would shut down all 24 newsrooms it had acquired, except for one, according to public filings. Torstar closed all but four of the 17 papers it had received.
In all, the two companies closed 36 of the 41 newspapers that were part of the unusual deal, resulting in 291 job losses.
In 2018, Canada’s Competition Bureau, a law enforcement agency that oversees commerce, opened an investigation into the transaction for possible “anticompetitive conduct” and has searched the offices of both Postmedia and Torstar. The investigation remains active, according to an agency representative.
“Postmedia (along with its external counsel) is strongly of the view that there has been no contravention of the Competition Act with respect to this matter,” Phyllise Gelfand, a Postmedia spokeswoman, said in a statement.
Bob Hepburn, a Torstar spokesman, said, “Torstar continues to cooperate with the bureau in its investigation.”
Chatham is led by Anthony Melchiorre, a Chicago-area native who has earned a reputation on Wall Street as a tough negotiator. After several stints at elite firms like Goldman Sachs and Morgan Stanley, he was let go from Morgan Stanley in 2002 as part of a sweeping round of layoffs. Soon after, he crossed the Hudson River to set up his own hedge fund in Chatham, N.J.
Mr. Melchiorre manages over $4 billion in assets for clients through various funds, including some listed under a Cayman Islands address, where more favorable tax rates apply.
Chatham’s media interests are led by two of its partners, Evan Ratner, a longtime Wall Street investor and a former analyst with Goldman Sachs, and Barry Schwartz, who has specialized in debt investments. Both have had roles in Chatham’s other media company, American Media, the publisher of The National Enquirer and other supermarket tabloids. (One of the people whom Chatham installed on the Postmedia board was Daniel Rotstein, a consultant for American Media.)
Since Chatham’s takeover of Postmedia, Mr. Ratner and Mr. Schwartz have checked in regularly with its management team. They stay away from editorial matters but tend to focus on finding efficient ways to cut costs, according to two of the people.
Under Chatham, Postmedia has consolidated editorial operations to create what company insiders call “common pages.” National and political coverage is often prepared at a central site, and content from The National Post is inserted into newspapers across Postmedia.
Freelance budgets have shrunk at Postmedia, and travel expenses have been severely curtailed, the people said. Sports coverage has been trimmed.
During the coronavirus shutdown, Postmedia has made further cuts, laying off 80 employees and closing down 15 community papers.
Even before the pandemic, Postmedia saw a falloff in advertising, once the lifeblood of newspapers. Revenue has dropped an average of 10 percent a year since 2016.
Despite the losses, Postmedia has managed to shunt most of its cash toward paying off its heavy debt load, which ultimately will benefit Chatham. The hedge fund owns about two-thirds of the company’s long-term debt. (Another Postmedia creditor, the hedge fund Canso Investment Counsel, is being paid back more quickly based on an earlier agreement.)
In the last two fiscal years that ended in August, Postmedia booked losses totaling about $40 million in Canadian dollars. In the same period, it spent nearly $127 million on debt payments. During that time, it invested relatively little, about $5.4 million, to try to improve the business.
“As far as leadership goes, I feel like the way they talk about it, we’re almost operating like a sales agency, not a news service,” Mr. Gibson, the union leader, said. “Which is concerning.”