New York: Tronc Inc. has agreed to sell the Los Angeles Times to billionaire investor Patrick Soon-Shiong in a $500 million deal, opening a new chapter for the 136-year-old newspaper’s staff after an outright rebellion against the current owner.
The deal includes the sale of The San Diego Union-Tribune and other smaller titles in the California News Group to Nant Capital, Soon-Shiong’s private investment vehicle., Tronc said in a statement on Wednesday. Nant Capital will pay $500 million in cash and assume $90 million in pension liabilities.
The transaction could solve two problems for Tronc, which also owns the Chicago Tribune and the New York Daily News. A new owner could appease the Times’ editorial workers, who voted last month to unionize and pressured Tronc into replacing editor-in-chief Lewis D’Vorkin. And a deal could end a standoff with Soon-Shiong, who had a public falling-out with Tronc chairman Michael Ferro.
Shares of Chicago-based Tronc surged 66% in early trading before they were halted.
The sale puts another major metropolitan paper in the hands of a billionaire who may be willing to stomach the industry’s advertising freefall to support local journalism. Jeff Bezos acquired The Washington Post in 2013, and John Henry agreed to buy The Boston Globe the same year.
The sale of the Times, one of the largest newspapers in Tronc’s portfolio, is a setback in the media company’s plan to develop a national network of multimedia production built on the foundation of some of the country’s most storied media brands.
Soon-Shiong, 65, made his $8.6 billion fortune with the sale of two drug companies and owns part of the Los Angeles Lakers.
Like the rest of the industry, the Times has suffered through dwindling readership and falling advertising revenue. The newspaper was controlled for much of its history by the Chandler family, before being sold in 2000 to Tribune Co., which was taken over by billionaire Sam Zell in 2007. The parent filed for bankruptcy shortly after, then emerged from protection in 2012 and spun off Tribune Publishing in 2014.
Four years later, Ferro gained control of Tribune Publishing and renamed it Tronc—for Tribune Online Content. The Times’ daily circulation has fallen to a fraction of its April 1990 peak of 1.23 million.
Soon-Shiong’s Nant Capital made a $70.5 million investment in Tronc in 2016, a move seen then as an attempt by Ferro to fend off a hostile takeover by Gannett. Soon-Shiong became vice chairman of the board, and his Nant Capital gained a 13% stake at the time. Tronc agreed at the time to license technology from Soon-Shiong’s company.
The newspaper company decided last year not to renominate Soon-Shiong to the board amid questions about whether he violated company trading policies by buying Tronc shares near the time of earnings reports. Soon-Shiong had levelled his own accusations against Tronc and its chairman, saying the company rigged its trading rules to let Ferro increase his stake while denying that option to him.
Soon-Shiong, a surgeon and chief executive officer of NantKwest Inc., a cancer-research firm, said in a 2016 interview he wanted to use “machine vision" technology he had developed to transform the experience of reading a print newspaper.
For example, a reader could pan a camera across a physical newspaper and the photos could be turned into video. Focus the camera on a photo of basketball star Kevin Durant or Donald Trump and “you’d hear him speaking or Kevin Durant would be dunking", he said.
“You’d be bringing to life whatever you see on the newspaper," Soon-Shiong said at the time. “Every page, every picture, every commercial is merely a TV channel activated by the picture itself through machine vision recognition." Bloomberg