ANGELO, GORDON & CO. knows how to make money.
But does the company that prevailed in an auction to control the Daily News, Inquirer and Philly.com know how to run a media company?
That depends on whom you ask.
Dan Wikel, managing director of Huron Consulting Group, in Chicago, has been tracking Angelo, Gordon's involvement in Tribune Co., a media company attempting to emerge from bankruptcy that owns the Chicago Tribune, the Los Angeles Times and several other media properties.
"I think they're a very intelligent group," Wikel said. "They know what they're doing. They look for value buys, and they look for long-term holds that will benefit their [investment partners]."
Dan Sullivan, a professor at the University of Minnesota's School of Journalism & Mass Communications who studies media economics, said that Angelo, Gordon brought in a series of "finance guys" to run the Minneapolis Star Tribune after it emerged from bankruptcy last year.
Sullivan said that Angelo, Gordon structured the Star Tribune deal on "ridiculous assumptions" about growing the market for the newspaper and left in place about $100 million in debt.
"My sense is there is absolutely no sense that they will do anything innovative," Sullivan said of the Minneapolis paper. "So, either business rebounds and they can get out from under because they bought so cheaply, or I don't know what."
"They're acting more like long-term owners than I expected," Brauer said. "At least for now, the anvil didn't land with as much of a thud as I expected in the months before they took over."
Brauer said he finds the staff, although saddened by the loss of co-workers, "much happier" working for the creditor group led by Angelo, Gordon than the management that took the newspaper into bankruptcy.
Newspaper analyst John Morton said that the future of the Inquirer and Daily News is now uncertain and bound to be rocky - even radically different - with vast cuts likely.
"What will happen under the creditors?" asked Morton. "Who knows? I mean, their hearts are not in the newspaper business. I suspect you'll see a lot of cost-cutting."
Still, Morton said the news could have been worse.
"At least you've got somebody who will be owning you," Morton said. "It could be worse. You could be just shut down. If the creditors bid that much, they are sort of on the hook to recapture it. And they can't do that through liquidating . . . they now have made a commitment that will assure that the newspapers will continue to publish."
Under Angelo, Gordon, Star Tribune staffers took a 3 percent pay cut and had to take furlough days, according to the Minnesota Newspaper Guild's Web site.
Angelo, Gordon, founded in 1988 by John Angelo and Michael Gordon, led the bid for a group of creditors that is owed $300 million for the 2006 purchase of what became Philadelphia Media Holdings.
The composition of the ownership group has not been finalized, but one of the lenders' attorneys, Fred S. Hodara, said the company's secured creditors can buy into the new company or cash out their debt.
The creditors include: the CIT Syndicated Loan Group; two investment funds set up by Credit Suisse; Eaton Vance Management; General Electric Capital Corp.; the Halbis Distressed Opportunities Master Fund Ltd.; McDonnell Investment Management LLC, and Venor Capital Master Fund Ltd.
Those creditors were joined this week by Alden Global Capital, an investment firm founded in 2007 by Smith Management LLC, which runs a "distressed opportunities fund" with offices in New York City, Dubai and India.
Alden holds major shares in companies that run newspapers, as well as radio and television stations. That includes 8.5 million shares of Gannett, 2.6 million shares of CBS Corp., 1.5 million shares of McClatchy and 1.2 million shares of Sinclair Broadcast Group, according to a Feb. 16 filing with the Securities and Exchange Commission.