Tronc Sells LA Times and San Diego Union-Tribune for $500 Million in Cash
Billionaire Dr. Patrick Soon-Shiong buys the southern California papers.
On Wednesday, Tronc (NASDAQ: TRNC) announced it would sell the Los Angeles Times and The San Diego Union-Tribune for $500 million to billionaire Dr. Patrick Soon-Shiong in an all-cash sale. Soon-Shiong, who is the second-largest shareholder of Tronc, also agreed to buy Spanish-language Hoy Los Angeles and community newspapers. assume $90 billion in pension liabilities. The after-tax proceeds from the sale will be used to repay all outstanding corporate debt. The deal is expected to close late in the first quarter or early in the second quarter of 2018.
‘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,’ said Justin Dearborn, CEO of Tronc, in a press release.
‘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. 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. We have a pipeline of robust opportunities and M&A will continue to be a significant part of our future,’ Dearborn added.
The LA Times, a 136-year-old newspaper, was purchased by the Chicago-based Tribune Publishing, now Tronc, in 2000. In an LA Times article, reporters Meg James and James Rufus Koren called this a ‘particularly stormy period’ for the newspaper which included a recent vote to unionize, a publisher put on administrative leave as a result of sexual harassment charges, and three publishers in six months.
In a note to the LA Times and other publications that were part of the agreement, Soon-Shiong said the following:
‘It is often said that Southern California is the place where the world comes to see its future. It has welcomed generations of immigrants who worked hard, started new businesses and helped others do the same,’ he wrote. My own family immigrated from southern China to South Africa generations ago. We chose to settle in Los Angeles where this is the places that most felt like home,’ Soon-Shiong said.
‘Ultimately, this decision is deeply personal for me. As someone who grew up in apartheid South Africa, I understand the role that journalism needs to play in a free society,’ the billionaire added.
According to the LA Times, Tronc has a 12-month agreement with the California News Group to share corporate services like payroll and human resources during the transition, which will be led by Chris Argentierri as general manager. Jim Kirk, editor in chief of the LA Times, and Jeff Light, publisher and editor of the San Diego Union-Tribune, will remain in their current roles.
The San Diego Union-Tribune reports that Soon-Shiong is the newspaper's fifth owner in less than nine years. It has also been owned by David Copley, Platinum Equity, Doug Manchester and Tronc.
Pardon the pun, but times are tough for news publishers. Not only are many trying to navigate the loss of advertising revenue as the digital landscape continues to evolve, but there is steep competition with news outlets from all over the world competing to be first with breaking stories. It doesn’t help that President Trump has repeatedly bashed the ‘mainstream news media’ for the proliferation of ‘fake news.’
In this case, the LA Times had another set of challenges, as its own reporters pointed out. Others have expressed interest in buying the LA Times in the past, including Soon-Shiong, but Tronc chairman Michael Ferro has rebuffed them. This must have seemed like the right time to buy.