Stewart W. Bainum Jr. wants to acquire Tribune Publishing whole, not just The Baltimore Sun. This is what a report in The New York Times reveals about the Choice Hotels chairman. Bainum has been chairman of the hotel firm since October 1997. He has strong roots with the Maryland based public company. Furthermore, he served in the Maryland General Assembly as a delegate and senator from 1979 to 1987.
Tribune Publishing announced on February 16, 2021 that they had entered into a merger agreement with Alden Global Capital. Alden would acquire all of the outstanding shares of Tribune common stock not currently owned by Alden for $17.25 per share in cash. Alden owns MediaNewsGroup, which operates 200 publications. Titles include the Denver Post, Mercury News, Orange County Register and Boston Herald. Together, Tribune and Alden would control media properties in half of the top 10 markets in the United States. This includes the three biggest media markets in the country, New York, Los Angeles and Chicago.
As part of that Tribune deal, Alden signed a “non-binding term sheet” to sell The Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr.
Baltimore Sun staff welcomed the news on social media. The Sun even ran an image of a rainbow emerging from the clouds behind their Baltimore headquarters building.
Deal Runs Into Trouble
Fast forward to this week, the deal seems in doubt. The Times report says the deal has “run into complications just one month after an agreement was reached, according to three people with knowledge of the matter.” Alden was going to spin off The Sun (and two small Maryland papers for $65 million to Bainum’s nonprofit. But the hotel chairman and hedge fund are having trouble over the fine print of the operating agreement. Furthermore, Bainum has taken a step toward making a bid for all of Tribune Publishing, according to the report.
Bainum wants Tribune Publishing’s special board committee, which gave the go-ahead for the Alden deal, to release him from a nondisclosure agreement. Therefore he would be able to seek partners for a new bid for Tribune.
Key Vote
The Alden-Tribune deal will need shareholder approval. Dr. Patrick Soon-Shiong will hold a powerful set of cards as he controls 25% of Tribune stock.
Dr. Soon-Shiong hasn’t commented on Bainum’s plan, but did say last month that “newspapers are important to the community.” That was in response to a Wall Street Journal report that he was trying to unload the newspapers he owns, The Los Angeles Times and San Diego Union-Tribune.
If nothing else, Bainum should talk with Dr. Soon-Shiong about his experience in running The Los Angeles Times. The Journal claimed the LA Times owner had “grown dissatisfied with the news organization’s slow expansion of its digital audience and its substantial losses, the people said. He also has increasingly come to believe that the Los Angeles Times and San Diego Union-Tribune—together known as the California Times company—would be better served if they were part of a larger media group.”
Stronger Together
If the Journal report is accurate, Bainum likely would discover it is difficult to run one property alone. Furthermore, The Washington Post is reporting that Bainum is balking at having to pay 5 years of fees starting at $12 million.
It may make sense for Bainum to simply launch his own Maryland news brand if he is unable to complete the transaction for the Sun. And the LA Times would be better off part of a larger organization, like Alden’s MediaNews Group. The LA Times would join The New York Daily News and Chicago Tribune as part of the Alden group. That would give MediaNewsGroup a powerful offering to national advertisers, as other newspaper firms are attempting to do.
