Key Takeaways
- • The U.S. Department of Labor is investigating Alden Global Capital, controlling shareholder of MNG Enterprises, over its handling of pension fund assets at more than 100 local newspapers, including The Denver Post and Boston Herald.
- • As much as 90% of some MNG newspaper pension assets were invested in two hedge funds controlled by Alden during recent years, according to Department of Labor records.
- • Most pension assets have since been transferred out of the Alden-controlled hedge funds, MNG stated in response to the investigation.
- • The investigation emerges amid MNG's hostile takeover attempt of Gannett (parent of USA TODAY), including a proxy fight to seat six board nominees ahead of Gannett's May 16 shareholder meeting, with Gannett opposing the slate.
- • Senate Democratic Leader Chuck Schumer has raised concerns about the proposed acquisition's potential effects on newspaper pension plans and staffing, and escalated inquiries to the Department of Justice and Pension Benefit Guaranty Corp.
Summary
The Department of Labor is investigating Alden Global Capital's management of retirement plan assets held by newspapers under its control through MNG Enterprises, which operates more than 100 local news properties branded as MediaNews Group and formerly Digital First Media. The investigation centers on concentration risk and potential fiduciary concerns related to pension fund investments. According to Department of Labor records, as much as 90% of certain MNG newspaper pension assets were invested in two hedge funds controlled by Alden during the preceding years—a concentration level that typically triggers regulatory scrutiny under Employee Retirement Income Security Act (ERISA) standards.
An unnamed spokesman for Alden confirmed to the Washington Post on Wednesday that Department of Labor officials are conducting the investigation. MNG responded by stating that most of those pension assets have since been transferred out of the Alden-controlled hedge funds, suggesting remedial action in response to regulatory oversight. Neither an Alden representative nor Department of Labor spokeswoman Megan Sweeney immediately provided additional comment on the investigation's scope or timeline.
The timing of the investigation coincides with significant corporate activity in the media sector. MNG launched a hostile bid for Gannett at $12 per share, which Gannett rejected. Following the rejection, MNG initiated a proxy fight, nominating six candidates for Gannett's board ahead of the company's May 16 annual shareholder meeting, with Gannett actively opposing the slate. This acquisition context has drawn political attention: Senate Democratic Leader Chuck Schumer sent correspondence to Alden in February inquiring how the proposed Gannett acquisition could affect newspaper pension plans, staffing levels, and related issues. Schumer subsequently escalated the matter by writing to both the Department of Justice and the Pension Benefit Guaranty Corp., signaling heightened legislative concern over pension protections in the media industry during periods of ownership transition.
An unnamed spokesman for Alden confirmed to the Washington Post on Wednesday that Department of Labor officials are conducting the investigation. MNG responded by stating that most of those pension assets have since been transferred out of the Alden-controlled hedge funds, suggesting remedial action in response to regulatory oversight. Neither an Alden representative nor Department of Labor spokeswoman Megan Sweeney immediately provided additional comment on the investigation's scope or timeline.
The timing of the investigation coincides with significant corporate activity in the media sector. MNG launched a hostile bid for Gannett at $12 per share, which Gannett rejected. Following the rejection, MNG initiated a proxy fight, nominating six candidates for Gannett's board ahead of the company's May 16 annual shareholder meeting, with Gannett actively opposing the slate. This acquisition context has drawn political attention: Senate Democratic Leader Chuck Schumer sent correspondence to Alden in February inquiring how the proposed Gannett acquisition could affect newspaper pension plans, staffing levels, and related issues. Schumer subsequently escalated the matter by writing to both the Department of Justice and the Pension Benefit Guaranty Corp., signaling heightened legislative concern over pension protections in the media industry during periods of ownership transition.
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