Why the Denver Post Will Never Be Sold in a Standalone Deal

Journalists at the Denver Post continue to call for new ownership at the paper in the wake of its newsroom staff being slashed by nearly one-third at the behest of Alden Global Capital, the so-called vulture hedge fund that currently holds the property. But knowledgeable sources contacted by Westword believe strongly that Alden will never sell the Post in a standalone deal because the paper's operations are so intertwined with those of more than a dozen other publications in Colorado that a split could well kill.

And that's not to mention the profits from all of these publications, which continue to pile up. The Post earned $28 million in fiscal year 2017, our sources confirm, while the other Colorado papers collectively generated $8 million.

These observations echo ones recently shared with us by former Post owner Dean Singleton after he resigned as the newspaper's chairman and also left his position on its editorial board. In speaking about MediaNews Group, the Post parent company that merged with Digital First Media, which is controlled by Alden, in 2013, he said, "I see very little hope that Alden will sell the Denver Post. It's the core newspaper for MediaNews. It's a very important part of keeping Digital First together. There certainly would be tax complications and corporate overhead complications, and for now, the Post throws off a lot of cash. So I don't see any interest in their part to sell. That could change someday, but I don't see any prospect that's going to happen."

The other Digital First/MediaNews Group publications in Colorado include the Boulder Daily Camera, the Cañon City Daily Record, the Fort Morgan Times, the Longmont Times-Call, the Loveland Reporter-Herald, the Sterling Journal-Advocate, the Akron News Reporter, the Broomfield Enterprise, the Brush News Tribune, the Estes Park Trail-Gazette, the Lamar Ledger, the Burlington Record and the Colorado Hometown Weekly. And while the papers have separate editorial departments, a number of their key operations, including IT and digital, are centralized at the Post, which also supplies a great deal of their content.

The cost of changing that equation would be extraordinarily difficult for the other newspapers to bear, the insiders argue. That's why Digital First Media, the company Alden Global Capital controls, tried to sell them as a bloc to another hedge fund, Apollo Global Management, in March 2015, a few months after DFM's September 2014 announcement that its newspaper properties were for sale. Our sources say Apollo lowered its initial offer for the Colorado papers during a thirty day due-diligence period and Alden decided to walk away.

These factors will make it even more difficult for Colorado Springs Independent publisher John Weiss, who's trying to gather investors to make a run at the Post, to succeed at his mission. And sources reveal that within the last year, a company owned by billionaire Phil Anschutz, owner of the Colorado Springs Gazette, made an offer to buy the Post. We're told Alden didn't even bother to respond.

In recent weeks, journalist Ken Doctor, writing for Nieman Lab, published a column about the Post's owner headlined "Alden Global Capital Is Making So Much Money Wrecking Local Journalism It Might Not Want to Stop Anytime Soon." His reporting includes a breakdown of Digital First Media profits for fiscal year 2017 that shows overall revenue of $939 million, expenses of $780 million and profits of $159 million, or 17 percent, for properties in eight states. The Colorado numbers show revenue of $187 million, expenses of $151 million and profits of $36 million, or 19 percent.

Our sources say the Colorado figures are accurate — and they show that the Post's profitability hasn't slipped in recent years. In May 2016, we published "Denver Post Making Millions, Profits Rising Despite Buyout Offer," which shared insider information that the paper had made north of $25 million in the previous fiscal year, 2015.

Additional controversy has surrounded the decision by the Boulder Daily Camera to fire editorial-page editor Dave Krieger, who self-published a piece critical of Alden Global Capital after his publisher, Al Manzi, rejected it. In his blow-by-blow account of his dismissal, Krieger shared his impression that neither Manzi nor Camera executive editor Kevin Kaufman seemed happy about having to send him packing, and he appears to have been right. Our sources say Manzi's original instinct was to suspend Krieger, but decision-makers at Alden demanded that he be given a pink slip.

Of course, Alden's got troubles of its own. Digital First Media's corporate nameplate, MNG Enterprises, is being sued by Solus Alternative Asset Management, a separate hedge fund that owns 24 percent of its newspaper business — and in a recent response to the suit accessible below, Alden acknowledges that it diverted monies from the publication division into other investments it managed. As noted by Julie Reynolds, writing for dfmworkers.org, "The cash siphoning, engineered through obscure subsidiary companies created after Alden became the news chain’s majority shareholder in 2012, came as thousands of workers were laid off and newspapers stripped of real estate and other assets to help finance Alden’s often risky investments."

This startling admission raises plenty of legal questions. But for now, Alden shows no signs that it's interested in selling the Post, even if it's part of a package deal. After all, the profits keep rolling in as more and more journalists are walking out.

Click to expand or download the MNG Enterprises response to the Solus Alternative Asset Management lawsuit.