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LA Observed file photo of LA Times building. * Story updated a few times since posting.
Tronc has agreed to sell the Los Angeles Times and the San Diego Union-Tribune to LA biotech billionaire Patrick Soon-Shiong. The deal, first reported on Tuesday by the Washington Post, is for about $500 million, according to the Post and the Times itself. That sounds like a high price for the two papers but there may be real estate involved and Soon-Shiong will assume pension liabilities. The deal is expected to take until April to complete.
"We look forward to continuing the great tradition of award-winning journalism carried out by the reporters and editors of the Los Angeles Times, the San Diego Union-Tribune and the other California News Group titles," Soon-Shiong said in a statement.
Here's the Tronc news release. And Dr. Soon-Shiong's company bio.
"We are pleased to transition leadership of the Los Angeles Times and the San Diego Union-Tribune to local ownership, and we are certain that the journalistic excellence in Southern California will continue long into the future," Justin Dearborn, CEO of Tronc, said in the statement.
"This transaction allows us to fully repay our outstanding debt, significantly lower our pension liabilities and have a substantial cash position following the close of the transaction," he said. "We will have a versatile balance sheet that will enable us to be even more aggressive in executing on our growth strategy as a leading player in news and digital media."
Also Wednesday, Tronc said that Times publisher Ross Levinsohn will return to work. He has been on unpaid leave during an investigation in to sexual misconduct allegations in his past. The Times story says that Levinsohn will lead a new unit of Tronc called Tribune Interactive. The company said its independent investigation found "no wrongdoing" by Levinsohn.
"We are pleased that Ross will be back to work," Dearborn said in the statement. "We have great confidence in him and the team to deliver value for our shareholders through growing digital audiences for our award-winning journalism, new creative content and product initiatives, and growing digital and diversified revenue streams."
This new unit, Tribune Interactive, will have the recently removed Times editor Lewis D'Vorkin as its chief content officer. Tronc's president of the Times, Mickie Rosen, will also go to be president under Levinsohn. The unit will be based in Chicago with offices in Los Angeles and New York, the Times says.
So Tronc can flee screaming from its Los Angeles misadventures, and the Times will return to local ownership for the first time since the Chandler family arranged a sale to Chicago's Tribune Company in 2000. What local ownership will mean in this case is not at all clear. Soon-Shiong has never owned a media outlet so we don't know what kind of business strategy he has in mind, or how he will handle the sticky issues that traditionally come up for newspaper owners, like keeping their hands off news coverage and investigations and staying out of political endorsements. In Soon-Shiong's case, he also owns a major and sometimes controversial collection of health companies based in Culver City that have come under media scrutiny in the past, including from the Times. He'll have to learn that the Times still has to report on his businesses — and that's he now in the spotlight more than ever.
Background from the Post story:
Ever since Tronc’s forerunner company, Tribune Co., acquired the Times in 2000, the newspaper and its parent company have engaged in a cross-country feud about the paper’s management and direction. As newspapers have declined in the digital age, the company has ordered round after round of cutbacks, prompting complaints that Tribune was decimating one of the nation’s most accomplished journalistic institutions.
The paper’s future has been clouded since Tribune Co. filed for bankruptcy court protection in 2008. Although the company eventually emerged from bankruptcy in 2012, the Times has shriveled. Its news staff has been pared to about 400 from more than 1,300 at its peak in the late 1990s.The paper’s journalists voted overwhelmingly last month to form a union. Their immediate concern is the company’s nascent plans to establish a network of non-staff contributors to produce stories outside the main newsroom, which some fear would be a “scab” operation designed to undermine the union.
From the Times story by reporter Meg James:
The deal came together quickly, over the last five days, and took many observers by surprise. Tronc had fended off previous efforts to buy the company outright or peel off the California newspapers. Tronc had insisted that The Times was key to its growth strategy given its proximity to Hollywood, technology hubs and the Pacific Rim.
Soon-Shiong, one of Los Angeles' wealthiest residents and a minority owner of the Los Angeles Lakers, became the latest billionaire to throw a lifeline to a major newspaper. Amazon founder Jeff Bezos bought the Washington Post in 2013. That same year, Red Sox owner John Henry scooped up the Boston Globe and, in 2014, Minnesota billionaire and Timberwolves owner Glen Taylor bought the Minneapolis Star-Tribune.The nearly $500-million price tag represented a premium for the struggling media properties. Traditional publications have fallen out of favor on Wall Street amid plummeting print advertising revenue. Marketers have been steering their ad dollars to Facebook, Google, Snapchat and other sites and away from magazines and newspapers.
At the same time, Tronc and other publishing companies have struggled to boost revenue from the readers they attract online. During the last 18 months, the Times has added more than 200,000 digital subscribers but the company's revenue has still fallen.
From today's New York Times story:
With the sale, The Times would once again come under local ownership, ending nearly two decades of corporate control. It would also represent a significant retreat for Tronc, which entertained national and international ambitions after Michael W. Ferro Jr. became the company’s chairman and biggest shareholder two years ago.
Its decision to sell The Times, its crown jewel, comes after months of turmoil and management turnover at the paper, during which journalists increasingly clashed with Tronc executives and the leaders they had sent to run the paper’s newsroom.[skip]
Dr. Soon-Shiong became a major shareholder in Tronc, formerly called Tribune Publishing, in 2016 as the company and Mr. Ferro tried to stave off a takeover attempt by Gannett, the publisher of USA Today. Dr. Soon-Shiong was also named Tronc’s vice chairman at the time.
In an interview with The New York Times at the time of the investment, Dr. Soon-Shiong — who grew up in apartheid South Africa and largely made his fortune selling generic drugs and developing a new type of cancer treatment — said he considered newspapers a “public trust” and wanted to preserve them. His relationship with Mr. Ferro, however, soon deteriorated, leading to Dr. Soon-Shiong’s removal from Tronc’s board last year.
The steering committee of the newly elected Los Angeles Times Guild bargaining unit congratulated Soon-Shiong in a statement. The guild had been sharply critical of Tronc's management.
We would like to congratulate Patrick Soon-Shiong as the new owner of the Los Angeles Times.
Our readers expect and deserve the high-quality, independent journalism that has defined The Times for decades. This is important to Los Angeles, California and the nation.The L.A. Times Guild looks forward to working with a local owner who can help us preserve The Times as a guardian of our community and as the voice of the American West.
There were whoops and cheers in the Times newsroom yesterday when the news about Soon-Shiong first broke. That's how much they loathed the Tronclodytes — even not knowing a thing about Soon-Shiong's intentions.
This from New York-based LAT photographer Carolyn Cole, one of the paper's stars who remained throughout the 18-year Tribune era:
Goodbye, Chicago! Can’t say I’ll miss you!! pic.twitter.com/lWacfty5Ue
— Carolyn Cole (@Carolyn_Cole) February 7, 2018
11:30 a.m. update: Newsonomics' Ken Doctor weighs in, saying "Patrick Soon-Shiong has finally won his hometown prize."
After a number of years of trying to buy his local paper, Los Angeles’ richest billionaire has seized an unpredictable opportunity. In a move that’s shocking but not really surprising, 65-year-old Soon-Shiong will pay a chunk of his estimated $7 billion-plus fortune to finally split with his erstwhile partner in Troncdom, chairman Michael Ferro. As I’ve reported over the last couple of years, his efforts to gain control of the Times, both public and behind the scenes, waxed and waned, but they never disappeared.[skip]
Questions abound. What happens next? Who will actually run the Times and U-T? Will the Times aim to rejoin its once-peer companies, The New York Times and The Washington Post, in both journalistic excellence and digital business transformation? Will Soon-Shiong, even if he overpaid, reinvest at the levels that such a transformation would require? And how will new ownership deal with a newly unionized and vocal newsroom, one that cares about all those questions — not to mention where the new Times offices will be too?...
Why would Ferro willingly sell his prized flagship, his seat of Hollywood power, his Oscar ticket-enabler, the nexus of the global entertainment franchise he and his team have been planning to launch under the umbrella of the L.A. Times Network?
About 10 days ago, Ferro began spreading the word: The L.A. Times and its sibling the San Diego Union-Tribune were on the market. (The U-T has been semi-merged operationally with the Times since mid-2015.) Ferro and his people put out the word to the kinds of big-bucks buyers they thought might bite — both super-wealthy L.A. residents and some in publishing.
This is the same Michael Ferro who previously used his board power to expel Soon-Shiong from his vice chairman position and who had worked to make his efforts to buy the Times more difficult. So why would Ferro change directions?
Count at least four possible driving forces.
Read the whole thing at Nieman Lab
