The Chicago-based owner of the Los Angeles Times completed its sale of the newspaper on Wednesday in a surprise move that probably spells the end of its long-troubled relationship with Southern California’s leading news outlet.
The buyer is Patrick Soon-Shiong, a Los Angeles-area physician and a major shareholder of the paper’s former parent company, Tronc. Soon-Shiong is the billionaire founder and chief executive of NantHealth, based in Culver City. As part of the $500 million deal, he will also buy its sister newspaper, the San Diego Union-Tribune. News of the sale was first reported by The Washington Post on Tuesday afternoon.
The past few months have been particularly chaotic at the Times, with rapid turnover in the paper’s top ranks and a major clash between management and journalists over a proposal to have more non-staffers contributing more news content.
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.
[‘Anything could happen’: Amid newsroom clashes, Los Angeles Times becomes its own story]
Tronc — short for Tribune Online Content — also owns the Chicago Tribune, Baltimore Sun and New York Daily News, among other papers. It is controlled by a Chicago investor, Michael W. Ferro. However, Ferro’s control has been contested by Soon-Shiong, who has challenged Ferro on several issues, including his spending on private jet travel and other corporate perks.
A representative for Soon-Shiong said he was traveling and could not comment on the purchase.
Soon-Shiong, 64, made his fortune — estimated at around $9 billion by Bloomberg — by starting and selling biotech companies and by operating an empire of interlocking enterprises. A surgeon by training, he has no background in newspapers, except as an investor in Tronc. Among his investments is a small stake in the Los Angeles Lakers.
He has vowed to “solve health care” and to “win the war on cancer,” two grandiloquent claims that have made him controversial within health-care circles.
Soon-Shiong advised Donald Trump on health-care issues during the presidential transition last year, and also consulted with former vice president Joe Biden on Biden’s cancer initiative. Soon-Shiong has directed his political contributions primarily to Democrats, including Hillary Clinton in 2016.
Despite declining print readership and advertising revenue throughout the newspaper industry, the Times remains a strong brand and the dominant daily newspaper in the nation’s second-largest city. It is the sixth-largest daily paper as measured by print circulation, with 433,134 weekday subscribers on average and 718,774 on Sundays, according to the Alliance for Audited Media. It is also among the leading news providers online, with 31.6 million unique readers in December, according to ComScore.
“It’s still very big and has a great franchise,” said Rick Edmonds, the media-business analyst at the Poynter Institute, a journalism education organization. He said the paper remains profitable, despite its deterioration. “I think they could get a pretty good price. It’s an attractive property.”
Although Tronc doesn’t detail the financial performance of each of its papers, Edmonds estimates that the Times accounted for between 30 and 40 percent of the company’s overall revenue. Tronc reported revenue of $353.1 million in its most recent quarter, down 7 percent. It was barely profitable, earning just $2.1 million, compared with a loss of $10.5 million in the same period a year earlier.
The $500 million price tag is considered rich by analysts, who note that other recent newspaper deals have been for relatively less. The Washington Post — a newspaper roughly the same size as the Times — sold for $250 million in 2013; the smaller Boston Globe changed hands for $70 million that same year. Tronc purchased the New York Daily News for $1 plus the assumption of liabilities last year. But Edmonds cautioned that the Times-UT deal may include real estate, which would drive up the price far beyond the value of the newspapers alone.
The paper has been the subject of sale rumors for years. In 2007, shortly after Chicago businessman Sam Zell led a leveraged buyout of Tribune Co., entertainment mogul David Geffen reportedly inquired about buying the Times. Geffen has since said he is no longer interested in the paper.
Other would-be buyers include Los Angeles billionaires Eli Broad and Ron Burkle, who teamed up in an attempt to buy Tribune Co., and with it the Times, in 2007. Broad expressed interest in the paper again in 2012, telling the Times he wanted to partner with “foundations or wealthy families” to restore the paper’s local ownership.
News of a sale caught several Times journalists by surprise, another shock for a newsroom that has been dealing with turmoil in the management ranks and turnover among top editors.
Only last week, Tronc named Jim Kirk, the former editor and publisher of the Chicago Sun-Times, as the Times’s new editor in chief. The appointment of Kirk, a veteran newsman, relieved some of the tension stirred up by his predecessor, Lewis D’Vorkin, a former Forbes editor who did little to foster a close working relationship with his journalists. D’Vorkin lasted just three months on the job; he was appointed after Tronc fired four top editors, including Editor in Chief Davan Maharaj, in August.
Meanwhile, Ross Levinsohn, who was named publisher of the Times in August, was put on leave last month after the disclosure of sexual harassment allegations against him while he worked at other companies.
Tronc said Wednesday that it had completed its investigation of Levinsohn and was restoring him to his job. It did not comment on its investigation.
Tronc acquired the San Diego paper, known as the U-T, in 2015 for $85 million. Shortly thereafter, it announced it was laying off 178 employees, almost a third of its staff, as it moved its printing operations to the Times’s facilities in Los Angeles.
The Times and the U-T, however, have otherwise had a limited relationship. The Times irregularly publishes the U-T’s stories in its local-news sections, and vice versa. They also share some advertising sales. But the two papers mostly operate autonomously under Tronc’s ownership.
“I don’t have the impression that they’ve integrated Los Angeles and San Diego,” said Edmonds, the analyst. Although Los Angeles and San Diego are only about 120 miles from each other, “people don’t care much” about Los Angeles news in San Diego and vice versa, he said.
Tronc tried to consolidate its newspaper holdings in the vast Southern California market in 2016 by buying the Orange County Register — the third major paper in the region — but the purchase was blocked by a federal judge after it was challenged on antitrust grounds by the Justice Department. The Register was sold to another company, Digital First Media.
This story, a version of which appeared in Wednesday’s print edition, was updated online with new details Wednesday morning.