Photo of Soon-Shiong: Wikipedia.
Wow, what a surprise twist in the LA Times and Tribune saga. Tribune Publishing said this morning that Patrick Soon-Shiong, by some accounts the wealthiest man in Los Angeles, is buying 12.9 percent of the company's stock and paying $15 a share, the elevated price that Gannett has offered in a bid to take over the company. Soon-Shiong will become the second-largest shareholder, get a seat on the board of Tribune Publishing and be vice-chairman. The company is also entering into a licensing deal with Soon-Shiong's NantWorks for use of what Forbes calls in its story "over 100 machine vision and artificial intelligence technology patents for news media applications." Per Forbes, Tribune would earn the first $80 million in revenues from NantWorks’s AI patents and a 6% royalty after that. Tribune would issue 333,333 shares tof stock to a NantWorks subsidiary, NantStudio.
So it sounds like when all is said and done, the future of the LA Times will remain a plaything in the hands of new TPub boss Michael Ferro. And there will be an LA billionaire in the picture, just not Eli Broad or any of the ones previously mentioned. Why does this sound like just an early plot twist in what will be yet another long, tumultous story in the LAT's future history, should it have one.
To fight off a $15 a share takeover bid by Gannett, Tribune and its non-executive chairman Michael Ferro have entered a licensing agreement and share purchase deal with biotech billionaire Patrick Soon-Shiong, founder of NantWorks. Dr. Soon-Shiong is in the process of what FORBES has dubbed a ‘Manhattan Project’ to cure cancer and offer low cost alternatives to the healthcare system. But NantWorks also apparently has patents that are relevant to a newspaper conglomerate mired in layoffs, and struggling for solid footing in the digital media age...
“We are committed to completely transforming Tribune Publishing and Dr. Soon-Shiong is a tremendous addition to those efforts,” Tribune CEO Justin Dearborn said in a statement.
Added Dr. Soon-Shiong, “All industries go through cycles and Tribune, recognizing the vital role of technology in the future of publishing, is transitioning from a legacy newspaper company to a technology and content company… I believe it is critical to our democracy and to our way of life that we have a strong, vibrant media and that it continues to function as the fourth estate.”
Tribune Publishing on Monday also formally rejected Gannett's bid to pay $15 a share for the company, calling the offer "clearly inadequate." TPub stock "cratered" this morning, in Forbes' words, to $11.60 in early trading.
Tribune Publishing's current number 2 shareholder, Oaktree Capital, said last week it listened to Ferro's grand designs for the newspapers and declared he is not a guy whose musings they want to bet on. They urged the sale to Gannett so at least Oaktree could get its investment back. Final word from Forbes:
Tribune’s actions to combat what it deems is a low-ball bid that leaves value on the table may in fact bring about a worse outcome.
Although Tribune Publishing is attempting to paint Oaktree as the short-sighted and self-interested voice in the room, the investing giant is adding an important realism to counteract chair Ferro and CEO Dearborn’s grand turnaround ambitions. Tribune Publishing’s plunge on Monday indicates other investors are on Oaktree and Gannett’s side.
The New York Times says documents show that Ferro had been willing to consider a sale to Gannett only if he remained a key player in the future company. He is the guy who commandeered seats to the Oscars that usually go to reporters, and who has a plan to leverage some kind of mysterious "artificial intelligence" applications unavailable to the rest of the news industry to turn the LA Times into some of world entertainment power. Ugh.
Here is the LAT story on today's developments, which include more machinations between Tribune, Gannett and Oaktree — but the big news is Soon-Shiong, who has no media investment experience but at least has built successful ventures.
Last week the LA Business Journal ranked Soon-Shiong as LA's wealthiest person.