New York Times misses the point on Hostess

by Josh Sosland
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Hostess New York Times article
On Dec. 10, the Sunday The New York Times featured a lengthy Page One story about Hostess Brands, Inc.

It isn’t every day that a major mainstream news organization puts coverage of a baking company front and center, but that’s precisely what occurred Dec. 10 when the Sunday The New York Times featured a lengthy Page One story about Hostess Brands, Inc. The article, “How the Twinkie Made the Superrich Even Richer,” traces how the buyers of Hostess Brands, Inc. dug the company from the ashes in 2013, and celebrated a successful initial public offering three years later at an eye-popping multiple of their purchase price.

While sprinkling numerous points in the story with an eye toward balance, the thrust of the article’s message is that the Hostess workforce was ravaged (from about 8,000 dedicated snack cake employees to about 1,200 today) while the company’s private equity owners used a range of financial tactics to enrich themselves.

The job loss associated with the collapse of Hostess in 2012 remains tragic. But for all its extensive length, the article does not begin to capture the depth of futility when, for years and years, one chief executive after another tried to restore the company to sustainable solvency. Anyone watching this sorry episode knows the answer to the question of whether the existing Hostess business model, with its legacy obsolete plants and union contracts, could have been salvaged. An emphatic “no.” Notwithstanding fairness questions over carried interest tax rules, the Hostess saga offers a case study in the astonishing value a talented private equity firm may bring to a failing business enterprise. 
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READER COMMENTS (5)

By Gary 12/17/2016 12:04:40 PM
To those who criticize the new owners profits. Please remember Hostess was down and out. Closed. They took their money to invest to rebuild the brand. if they failed they lost everything. But the won and now 1,200 people got jobs. Not the 8,000 of before in its hayday. But still 1,200 people who were unemployed got back to work. Hopefully they will continue to grow the company and many more will find jobs again.

By Cliff Conrade 12/16/2016 6:50:28 PM
The company was tanked purposely to enrich a few at expence of the workers.Some of those millions belong in the Teamsters pension fund

By Rodney 12/16/2016 2:36:35 PM
Hostess did a remarkable job of rebranding the name. They made the product fun again and they also took an incredible risk monetarily in this project. Let us not forget, it was the unions stranglehold and their unwillingness to compromise that forces the bankruptcy in the first place. Didn't Stella Cookies follow the same fate years prior. Only they were never able to rebrand the name.

By Name Required 12/16/2016 2:01:16 PM
The amount of money made by the private equity firm was obscene. That is was is wrong with economic system. Some of the funds should have been distributed to some of the workers that lost their jobs.

By Sol Pardes 12/16/2016 1:58:54 PM
The amount of money made by the private equity firm was obscene. It would have been easier to accept if the some of the funds were given to the many workers that lost their jobs.