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The Sayonara Strategy: How Newspapers Will Fade Away


For newspapers, access to capital at anything approaching a reasonable rate is now impossible. Usually, given the circular logic that prevails in the world of investing, the presence of the smart money alone convinces others to jump in without looking too closely at what they’re buying. The opposite holds true, too. Once one bank turns down a deal, the others reflexively follow suit. Most institutional investors began to smell a rat four of five years ago and decided to keep their wallets in their pockets when newspapers came begging. That left only the hedge funds. Enter Alden Global Capital, run by Randy Smith, the man who practically invented vulture investing.

Once again a hard-nosed financial practitioner was buffaloed by a record of remarkable cash generation. Like Sam Zell with Tribune or Warren Buffett with the Washington Post, Smith failed to understand that the Internet had blown up the monopoly on which newspaper profit was…

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