PORTLAND, Maine — MaineToday Media announced Tuesday that financier Donald Sussman has acquired a larger share of the company, although his financial stake remains the same.
The announcement follows one last month that Sussman, a hedge fund manager and philanthropist and husband of Rep. Chellie Pingree, D-Maine, took a 5 percent stake in MaineToday Media through Maine Values LLC, which he owns. That deal included a loan valued between $3 million and $4 million. It also gave Sussman a seat on the company’s board of directors.
Institutional investors, including out-of-state pension funds, asked for changes to the original package, the company said in a press release. Instead of a loan, the money now is being used for a straight purchase of private stock. The result is that Maine Values will have a 75 percent ownership stake in the company.
Sussman’s financial contribution remains the same at $3.3 million. The difference is that the money is now an investment rather than a loan that must be paid back.
“Although I would have preferred the original arrangement that combined a loan with a smaller equity stake, at the end of the day I want to do what is best for the company,” said Sussman in the release. “I simply wasn’t willing to abandon this important community resource and the hundreds of good jobs that come with it.”
With $3.3 million getting Sussman 75 percent of the company, the overall price tag of MaineToday Media would come in at roughly $4.4 million. According to a 2009 Seattle Times article, the Blethen family-controlled Times Co. borrowed roughly $213 million to buy the Maine newspaper chain from the Gannett family in 1998. The actual sales price of the 1998 deal never was disclosed. And while the 2009 purchase price of the Maine media company was also never disclosed, the Times article notes it had been “expected to sell for far less than the [Times Co.] had paid for them.” That apparent decline in value over the years is reflective of the print media landscape in general.
Other investors in MaineToday media include HM Capital and Portland businessmen Robert C.S. Monks and John Higgins.
Sussman has said that his initial investment in the struggling company came as MaineToday Media was in danger of closing. He had been approached by members of The Portland Newspaper Guild and was convinced to make the loan.
Tom Bell, president of the Portland Newspaper Guild, said the deal provides financial stability for a company that was in trouble.
“The alternatives to this investment were very grim — the alternative was bankruptcy, and that would have really hurt the business,” said Bell. “We would have survived as a company, but having this kind of investment allows us to revive the journalism and make investments in technology that will allow us to grow rather than just stagnate.”
Bell said further investment by Maine Values is expected to finance new technology purchases as well as hiring of additional staff.
The Press Herald, the flagship of MaineToday Media, has nine full-time news reporters at this time, Bell said, with additional journalists on the sports and features desk. A decade ago, there were roughly double that many news reporters at the paper.
MaineToday Media owns and operates the Kennebec Journal, the Morning Sentinel and the Coastal Journal, in addition to the Portland Press Herald and several digital properties. The company employs 364 people.
Sussman married Pingree last year. A North Haven resident, Sussman is the founder of the Paloma Partners hedge fund, an investment firm in Greenwich, Conn., that manages more than $1.7 billion in funds. Sussman is also a major donor to Democratic causes.
He again pledged not to interfere in news decisions.
“I’m a businessman, not a newspaper editor,” Sussman said in a written statement. “I have tremendous faith in the editors and newsroom staff who have been hired by previous owners. … They report the news thoroughly and fairly, and I’m not going to interfere with that in any way.”
Republicans including Sen. Roger Katz of Augusta and the Maine Heritage Policy Center raised concerns when Sussman first invested in the paper.
Justin Martin, a University of Maine journalism professor and columnist for the Columbia Journalism Review, said he was less frightened than some about the ownership trends in newspapering.
“I know how stubborn journalists are, and how independent they are,” Martin said. “At the same time, a number of news organizations with very powerful owners often don’t cover their owners or their owners’ biz interests in the way they should.”
He pointed to a recent Columbia Journalism Review article about Bloomberg News, which has a policy against covering its parent company.
“That’s an extreme example — but that’s a concern,” he said.
Disclosures of conflicts of interest will be important in any story about Pingree or the business interests of the owners, Martin suggested.
“The most basic conflicts of interest need to be disclosed,” he said. “It’s such a simple, easy thing to do,” especially online, he said, where space isn’t really a concern and disclosures can be made with an editor’s note, in a sidebar or even in a box that pops up when sections of text are moused over.
Bell said members of the public worried about having Sussman own 75 percent of the media company have valid concerns.
“We are aware of the potential conflicts — we talk a lot among ourselves, with editors, about how to assure our professionalism and independence in the newsroom — we think we can work through this,” he said. “And it’s our responsibility to do our job in a way to assure [the public] that we’re a professional newsroom.”
MaineToday Media has gone through a series of tough years, with multiple rounds of layoffs. The latest came last October, when the Press Herald saw voluntary and involuntary layoffs that resulted in 61 job losses.
Later that same month, it was announced that Richard Connor was stepping down from his top position at the company.
And in November 2011, a North Carolina paper company filed a lawsuit against MaineToday Media, alleging it was not paid for tons of paper delivered to the company. McGrann Paper Corp. of Charlotte, N.C., sought payment of more than $124,000 in unpaid bills for more than 300,000 pounds of paper.
According to the suit, CRG Partners Group LLC, a firm that specializes in restructuring troubled companies, was brought in to MaineToday Media to work with the media company.
According to documents provided to the Bangor Daily News, CRG was seeking up to $15 million in investment for a “northeast print and digital media company.” According to the source, that company was MaineToday Media. The investment papers said the company was seeking to replace about $10 million in new investment to retire debt and $5 million to provide new liquidity.
Bell said the paper’s workers are relieved at the close of the deal — which he added hadn’t been a sure thing.
The guild’s members took a 10 percent pay cut, as well as raise freezes and pension freezes as part of a deal to make the 2009 sale go through.