L.A. Watchdog and Poll — More than likely, our Los Angeles Times will have a new owner. Gannett, publisher of USA Today and the largest newspaper publisher in the country, has offered to buy Tribune, the owner of the Times and the Chicago Tribune, in an all-cash deal.
It would be for $15 a share, double the price of Tribune’s stock prior to the publication of Gannett’s initial offer of $12.25 a share on April 25.
While Tribune’s newly installed, self-centered management and clueless directors may resist this very generous offer, most investors will be standing in line to sell their shares at this bonkers price. At the same time, while Gannett is not an eleemosynary institution, our Los Angeles Times will be better off being free of Chicago-based Tribune.
Tribune has mismanaged the Times ever since Tribune acquired Times-Mirror Corp., the owner of our hometown paper, in 2000 for over $8 billion (including debt).
It has been downhill ever since for the Times as the ivory tower know-it-alls from Chicago, armed with their MBAs and little else, dictated policy and cut costs, resulting in an L.A. Times that lost touch with Angelenos. In 2007, the financial wizards that were running Tribune concocted a complicated leveraged buyout deal led by Sam Zell, a real estate magnate with a questionable reputation, which left Tribune with $13 billion in debt. A year later, in December 2008, an overleveraged Tribune filed for bankruptcy.
Tribune emerged from a contentious bankruptcy in December 2012, controlled by vulture capitalists whose wheeling and dealing resulted in the August of 2014 tax-free spinoff of the Tribune Publishing, a newspaper company with dim prospects and almost $400 million in debt, from Tribune Media, a very profitable broadcasting company.
What Smarter Guys Did
At around the same time, Rupert Murdoch’s News Corp. and Gannett spun off their newspaper assets into publicly traded, debt free companies that were better able to transition from print publications to a more competitive digital world.
About the only good news was that Tribune appointed Austin Beutner as publisher of the Times in August 2014. His vision was local, to focus on the city, the county, and Southern California, which included the synergistic acquisition of the San Diego Union-Tribune. But Mr. Beutner was canned in September 2015 by Jack Griffin, Tribune’s power-hungry CEO, who was unwilling to invest in local content or in developing a strong digital product.
Mr. Beutner and other Angelenos made a run at returning the Times to local ownership, but they were rebuffed by Griffin and the Tribune Board of Directors.
In February, Jack Griffin and the Tribune sold 5.2 million shares to Michael Ferro, a Chicago internet entrepreneur, for $8.50 a share. This $44 million investment resulted in Mr. Ferro owning 16% percent of the company. Less than three weeks later, he canned Jack Griffin and took control of Tribune.
[Note: If Mr. Ferro sells his shares at $15, he will have a profit of $34 million, a return on investment of 75 percent in less than 6 months.]
Since Mr. Ferro seized control of Tribune, he attended the Oscars, snagging tickets meant for the news staff, and blew the synergistic acquisitions of the Orange County Register and the Press-Enterprise in Riverside because he was the smartest guy in the room and was unwilling to listen to experienced advisors who knew how to navigate the antitrust issues.
Why It Is Sensible
This transaction makes sense for Gannett, even if it is a high price given the poor business outlook for the newspaper industry. Gannett, a publisher of daily newspapers for the most part in small and midsized markets, will acquire the papers in L.A. and Chicago, two of the three largest markets in the country, as well as papers serving Orlando and Fort Lauderdale, Baltimore, and Hartford.
We need strong local coverage, because without it, “we’re gonna have corruption at a level we never experienced,” according to Bob Schieffer, the trusted TV journalist who was the moderator of Face the Nation (CBS) for 23 years. We all know that we cannot trust City Hall whose occupiers and their cronies are more than willing to sell us out to the real estate speculators and developers and the leaders of the city’s unions.
We need to make a deal with Gannett, that in return for subscribing to the paper and its web site and supporting its advertisers, it will provide us with strong local coverage. This support may also involve setting up charitable entities to sponsor journalists covering the city and its proprietary departments (DWP, LAX, and the Port), the County, LAUSD, our failing infrastructure, and underfunded pension plans.
We need a vibrant Los Angeles Times, one with an institutional memory, properly staffed with inquiring journalists who are willing to spend the time protecting our interests from predatory politicians who have no respect for our wallets. At the same time, the Times needs our support and our money.
While we may not agree with The Times on all issues, the paper has helped defeat ballot measures that would have nicked us for billions. These include its opposition to Measure B, Mayor Villaraigosa’s 2009 solar plan that was a payback for IBEW Union Bo$$ d’Arcy’s generous campaign contributions, or the ill-conceived effort in 2013 to increase our sales tax by a half cent to a mind- boggling 9½ percent.
Put another way, a few bucks here and there for the Times will save us billions if the mayor, City Hall, and the newly constituted Board of Supervisors were to have its way.
Mr. Humphreville writes L.A. Watchdog for CityWatchLA.com. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council. Mr. Humphreville is the publisher of the Recycler Classifieds — www.recycler.com. He may be reached at lajack@gmail.com.
