“the ultimate cash flow mercenary”
by Tom Sullivan
Still from Pretty Woman (1990)
This story of vulture capitalism from the Washington Post is ominous for an already struggling newspaper business.
Twenty Lake Holdings, a subsidiary of hedge fund Alden Global Capital, is buying up newspaper buildings. Alden has been investing in newspapers since 2009, imposing heavy cost-cutting resulting in the loss of more than 1,000 jobs. Twenty Lake Holdings is simply selling off the buildings of struggling papers and flipping the valuable real estate:
It claimed to have acquired more than 180 properties and 2.3 million square feet of real estate in 29 states. A review of property records by The Washington Post found dozens of newspaper buildings Twenty Lake Holdings or Twenty Lake Management had bought or sold.
After the Post made inquiries to company executives, their website disappeared, replaced by, “Our website is under construction.”
Gannett has sold off $150 million of its properties since 2015 to prop up its business. But Alden and Twenty Lake’s model is different, says Doug Arthur, an analyst for Huber Research, “They are the ultimate cash flow mercenary. They want to find cash flow and bleed it to death.”
This strikes close to home for me:
In April of last year, Gannett sold Twenty Lake the headquarters of the Asheville Citizen-Times in North Carolina for $3.2 million. In a transaction the county recorded on the same day, Twenty Lake flipped the property to a local developer for $5.3 million.
Alden subsidiaries are now working to help other media companies monetize their real estate, listing their properties for sale or lease, even as journalists at Alden-owned papers decry their management as “insanity,” as the Denver Post editorial board did.
Journalists in on case the Post cites now find themselves working out of “a converted CVS and bicycle repair shop.”
Descend on the weak. Buy them out. Sell them off for parts. Make money, but nothing else. Julia Roberts is nowhere to be found.