The Daily Herald Deal
By many counts, Illinois has among the most robust infrastructure to support local news in the country.
It passed legislation in 2024 that provides tax credits to local news organizations to support hiring and retaining journalists and a sale notice law to create opportunity for local news outlets to stay under control of local owners.
The state is also home to philanthropic organizations that have contributed millions of dollars to support local journalism.
Despite this, the state’s third-largest newspaper, the Daily Herald, recently fell into the hands of Tribune Publishing, owned by the investment firm Alden Global Capital that’s known for its aggressive cost-cutting measures.
How did this deal happen, even with all this support in place?
The answer to that question lies in unusual circumstances involving the Daily Herald’s ownership structure governed by an Employee Stock Ownership Plan (ESOP) and other factors that the state laws likely couldn’t have addressed.
The Strengthening Community Media Act requires local news organizations to provide at least 120-day notice of a sale to the Illinois Department of Commerce and Economic Opportunity and local groups, like employees and nonprofits, interested in buying local news outlets. The goal is to create transparency and a chance for local ownership to prevent a large chain from taking control of a local entity.
Meanwhile, the tax credit legislation provides money to assist newsrooms in hiring and retaining reporters. In 2025, $4 million in tax credits were granted to more than 120 organizations across Illinois, supporting more than 260 journalist jobs. Paddock Publications, the company that sold the Daily Herald to Tribune, was among those beneficiaries. The organization received $150,000 in tax credits, the maximum a news organization could receive in a year, according to state records. Paddock also received $100,000 in tax credits in 2026.
But these pieces of legislation weren’t enough to change the outcome that puts a community news organization that’s covered Chicago’s northwest suburbs since 1872 under an investment firm focused on maximizing profits. Even before the Daily Herald sale closed, Paddock shut down 13 of its newspapers in Downstate Illinois in early June. The state now has gone from having nine news desert counties in 2025 to at least 14 in 2026.
“That’s not a great trajectory, but what if Illinois had not passed these journalist employment tax credits, half of which went Downstate? What if those news organizations that had gotten those had closed?” said Matt Pearce, the director of policy for Rebuild Local News, a nonprofit focused on crafting public policies to support community news that helped pass the Illinois legislation. “I feel confident saying that the news desert situation would have been worse.”
As for the specific case of the Daily Herald, it appears no legislation could’ve stopped the Alden-backed Tribune Publishing. Multiple memos obtained by Medill showed that Paddock consistently encouraged its ESOP to vote in favor of the sale, even though Paddock had other options.
Not sustainable?
On May 22, exactly one month before its sale closed, a Paddock Publications email to employees obtained by Medill maintained that its board had concluded “that the risks of not going forward with the transaction are significant” and “continuing to operate the Daily Herald is not a sustainable long-term business plan.”
Paddock had recently entered into an agreement to sell its flagship daily newspaper to Tribune Publishing and was making its case for why the company’s ESOP should approve its $24 million sale. Crain’s Chicago Business originally reported the sale amount of $24 million, a number that was confirmed by Medill.
Because Paddock was structured as an employee-owned company, all the employees had a vote on whether to approve the sale.
The email identified three key risks the Daily Herald was confronting, and thus why the ESOP should vote in favor of the sale.
First, it argued that legal notices, a key revenue source for the Daily Herald in print, could be published digitally in the future if the Illinois legislature passed a law allowing such a change. This would lead to a substantial revenue loss.
Second, Tribune already printed and delivered the Daily Herald, and the newspaper’s publication and delivery contracts with Tribune would expire in four years. Paddock expressed concern that in a potential re-negotiation, the company would have less leverage than the current agreement that came following Paddock’s sale of its printing plant in northwest suburban Schaumburg to the Tribune. That could lead to skyrocketing printing and delivery costs or even an inability to print and deliver the paper.
Finally, the company said that “subscription revenue could decline sharply as higher-tier subscriptions are renewed at lower rates.”
Earlier in the email, Paddock wrote that it “did not solicit a buyer for the Daily Herald.”
Doug Ray, the chairman, publisher and CEO of Paddock, did not respond to multiple requests for comment.
It is clear, though, that Tribune wasn’t the only interested buyer.
From May 2025 through Feb. 2026, Shaw Media was prepared to take ownership of the Daily Herald, according to a source familiar with the negotiations who requested anonymity. For more than eight months, the family-owned Shaw, which operates 32 titles in Illinois, aimed to make the Daily Herald a focal point of its company. Shaw also was not planning to lay off any reporting staff, the source added.
The two organizations had operated under a content-sharing agreement for more than a decade, and multiple sources told Medill that the assumption had always been that when the time came, either the Daily Herald would buy Shaw or Shaw would buy the Daily Herald.
According to an internal memo that Shaw sent to its employees, Paddock approached the company about a sale, and at the time it had been communicated that Alden would not be part of the process.
In September, Shaw signed a letter of intent to take ownership of the Daily Herald, and the two parties agreed to a revised version in December following due diligence, according to the source. The financial terms were similar to the $24 million that Alden later agreed to with Paddock, the source said.
On Jan. 6, Paddock submitted a letter to the state of Illinois notifying it of the sale, in accordance with the 120-day notice provision in the Strengthening Community Media Act.
At that point, though, a key hurdle still hadn’t been cleared: Paddock hadn’t received confirmation from Tribune that it would transfer the Daily Herald’s print and delivery contract to Shaw, and by the end of the month, it became clear that Tribune wasn’t interested in transferring it, the source said.
In early February, Alden began running full-page ads in the Chicago Tribune offering to pay the highest price for the Daily Herald, “30% more than anyone else.”
By the end of February, Shaw backed out, according to the internal memo Shaw sent its employees. The family-owned organization had no interest in getting into a bidding war with a major investment firm.
‘We’re supposed to be different’
Then there’s the point of Paddock’s ESOP that was formed in 2018.
To the outsider, an employee-owned newspaper might sound like the gold standard in an age of investment firms buying up newspapers and slashing them in an effort to maximize profits. Yet, not even the Daily Herald’s ESOP forestalled the sale to Alden-backed Tribune Publishing.
Upon completion of the sale to Tribune, Ray released a statement noting that the ESOP vote approving the sale was passed “by a substantial margin.”
In an organization with many veteran staffers, it’s possible that ESOP members simply voted for the sale because it would provide a substantial financial return. A memo sent to ESOP members on May 29 from Ray and Scott Stone, Paddock’s publisher and chief operating officer, encouraged such thinking.
“Participants are urged to not be distracted by untrue and negative narratives and focus on their retirement interests when considering how to direct the Trustee to vote their allocated shares,” the memo said.
But the ESOP was not a one-person, one-vote system, multiple ESOP members said. The votes of Paddock employees who owned more shares of the company carried more weight.
“There was thought that we want to keep this local,” said one ESOP member of the decision to shift to the ESOP structure instead of selling externally in 2018 who was granted anonymity to discuss Paddock’s internal affairs. “We’re different. We’re supposed to be different than what has happened to all of these other newspapers.”
‘Nothing’s guaranteed’
When Illinois Governor J.B. Pritzker signed the Strengthening Community Media Act into law in 2024, the goal was precisely to prevent large chains from swooping in and buying local news organizations. With its Daily Herald acquisition, Tribune now owns 39 local newspapers in the Chicago market.
In the case of Paddock’s sale to Alden, the impact of the 120-day law isn’t entirely clear. Because of the printing and delivery contract Paddock had with the Tribune, it’s possible that Alden would’ve been notified of the deal regardless of any public notice having been provided to the state, multiple sources familiar with the negotiations said.
Illinois Senator Steve Stadelman (D-Rockford), a former TV news anchor, sponsored the local news legislation and defended the public notice provision.
“If you have an important voice in the community that will soon be silenced or be sold, I think people just need to be aware of it versus it flying under the radar,” Stadelman said in an interview with Medill. “The goal is to make sure as many people are aware of it and that leads to transparency shedding light on what’s happening.
“If it increases the chances of local ownership, great,” he added. “If not, nothing’s guaranteed.”
There’s also the idea, Pearce noted, that providing a sale notice could draw more bidders which in turn could drive up the price a local newsroom sells for.
In this instance, perhaps Alden wound up paying more for the Daily Herald than it would have in the absence of a competitor.
“On one hand, you have a risk of journalists losing their jobs at the Daily Herald,” Pearce said. “But on the other hand, the competition, in this instance, meant that Alden ended up paying more for a local newsroom than it might have otherwise.”
Still, there are concerns about how this law could negatively impact both buyers and sellers of local newsrooms. Could a four-month pause in a newspaper purchase discourage some companies from trying to buy local outlets in the first place?
‘A long-term player’
So where do things go from here? The reality facing legacy newsrooms like the Daily Herald doesn’t necessarily change whether its owner is Paddock, Alden or Shaw. The traditional revenue opportunities for newsrooms in print continues to decline, and these outlets will need to make substantial pivots in the future to maintain sustainable businesses.
As part of the purchase agreement, Tribune also indicated that it would guarantee all Paddock employees the same salary and benefits through Dec. 31, 2026. If there are any layoffs before then, employees would receive one week of pay per year of employment, up to 12 weeks, according to an internal memo sent by Paddock.
Stadelman said his current focus is on how to hold large technology companies like Google and Meta accountable for profiting off of local content. With AI platforms also now deriving information from local news sources, there needs to be a level of accountability, he said.
“Fundamentally, we’ve got to help, and I think government does have a role,” Stadelman added. “We’ve got to help media find a business model that works.”
And it won’t just be public money that helps, Pearce said. Continued entrepreneurship and philanthropic support will also be key.
“I think you’re going to see some experiments succeed, and you’re probably going to see some experiments fail. That is the nature of entrepreneurship that’s going to be necessary for what happens here,” he said. “It does seem as though Alden Global Capital is a long-term player … so they are, for better and worse, part of the landscape, I think, for the foreseeable future.”