Hold on, now…The chances of snatching Tribune Publishing from the jaws of hedge fund/newspaper strangler Alden Global Capital have just increased significantly, with a big investor having stepped forward.
I wrote last week that Alden was “poised to take over Tribune Publishing,” with its $630 million offer for the Tribune chain, which includes such distinguished papers as the Chicago Tribune, The Baltimore Sun, the Hartford Courant, the Orlando Sentinel and the South Florida Sun-Sentinel.
Alden already owns 32 percent of Tribune and controls three of seven spots on its board of directors.
The wrinkle in the deal began when a Maryland hotel magnate named Stewart W. Bainum Jr. offered to buy The Baltimore Sun and two other Maryland papers owned by Tribune for $65 million and turn them over to a nonprofit he would create. Bainum, chairman of Choice Hotels International, had a nonbinding agreement to buy the three papers, but negotiations over terms faltered, and on March 16, Bainum offered to buy the whole company at a slightly higher price — $650 million — than Alden had agreed to pay.
The problem was, he couldn’t swing the deal on his own, and it appeared the transaction with Alden would go forward. Last week, however, a possible white knight stepped forward in the person of Hansjorg Wyss, former chief executive of the medical device manufacturer Synthes. Wyss (pronounced Vees) has teamed up with Bainum, and together they appear to have the financial heft to swing the deal. (Ten years ago, Wyss led the sale of Synthes to Johnson & Johnson for $20 billion.)
Judging from what Wyss told The New York Times, it appears he, along with Bainum, could be the savior this once-great newspaper company needs to get back on track after nearly 15 years of being mishandled and abused by misguided and reckless owners.
“I have an opportunity to do 500 times more than what I’m doing now,” Wyss, who lives in Wyoming, was quoted as saying.
He added this about the Chicago Tribune: “Maybe I’m naive, but the combination of giving enough money to a professional staff to do the right things and putting quite a bit of money into digital will eventually make it a very profitable newspaper.”
The pivotal player in the drama now is a surgeon-turned-entrepreneur named Patrick Soon-Shiong, who, along with his wife Michele B. Chan, bought The Los Angeles Times and the San Diego Union-Tribune from Tribune a few years ago for $500 million.
All eyes are on Soon-Shiong and Chan because they own 24 percent of Tribune and could quash the Alden deal on their own. They could do so because sale of Tribune requires regulatory approval and “yes” votes from company shareholders representing two-thirds of the non-Alden stock.
Soon-Shiong has given no clue, however, where his intentions lie. A possible indicator of which direction he might turn cropped up last month, though, when the Wall Street Journal reported that Soon-Shiong was exploring the possibility of selling the LA Times and the San Diego paper.
The Journal article said options being considered included “an outright sale of the entire company, bringing in an additional investor…or transferring management of the San Diego publication to another company, possibly Alden Global Capital Inc.’s MediaNews Group.”
Speculation has been that Soon-Shiong might have become disillusioned after spending hundreds of millions of dollars over and above the purchase price to try to invigorate the papers and make them profitable, or more profitable, in the long run. Now that they are privately held, their financials are not a matter of public record.
Soon-Shiong quickly took to Twitter to deny the report, writing: “WSJ article inaccurate. We are committed to the @LATimes.”
At odds with his unequivocal denial, however, was the fact that the Wall Street Journal article had noted that Soon-Shiong did not respond to a request for a comment before it published the article.
A Los Angeles Times story about the WSJ article said it “unnerved journalists who work at Soon-Shiong’s properties.”
I can understand why.
And now, once again, the stakes are high not only for journalists and journalism at the LA and San Diego papers, but also for nearly 3,000 employees working at Tribune Publishing.
I hope, for once, the good guys prevail in this new, awful era of hedge-fund newspaper owneership.
JimmyCsays: At the juncture of journalism and daily life in KC 
What’s next? The Yellow Pages, The Encyclopedia Britannica, and the Rand McNally Atlas…?
The Wall Street Journal reporting tonight that the Tribune board is going to recommend the Bainum bid.
I still think the Chicago Tribune could carve a market like the NT Times and Washington Post by becoming middle America’s online and print source. The Tribune has always leaned Republican, so it could with an effort make a market.
You got the scoop, Bill…Alden isn’t out of it, according to that story; they could raise their bid. I don’t know how much higher Bainum and Wyss would be willing to go, but this is an exciting development.
As the Journal story says, “If Alden loses the deal, it would mark a stunning 11th hour turnaround for the New York hedge fund and a major victory for critics who say its model of aggressive cost cutting has hurt the local news industry.”
…I know The Trib has always leaned Republican, and now is the time to change that. You only have to look at the success The New York Times and The Washington Post have enjoyed in recent years by going “full left” to see that’s the way to go now for big papers. The Republicans are all watching Fox News and looking at right-wing, nutty websites.
“You only have to look at the success The New York Times and The Washington Post have enjoyed in recent years by going ‘full left’ to see that’s the way to go now for big papers.”
If you’re defining success in terms of subscriptions, more likely the big draw is the fire-sale rates they’ve been running for the past few years: $29 for a year of the WaPo or six months free with an Amazon Prime subscription, and $1/week for the NYT. For over a year, I’ve received several emails a week from the NYT telling me that the $1/week promo is for a limited time only.
I wonder how many of these subs renew at full price — and how many get offered another discount if they don’t.
I’ve had a great deal on the Washington Post. A cousin put me on as a guest on her subscription a few years ago, and The Post has never tried to bill me separately, which surprises me. I don’t think The Times, however, is going to let people stay on a discounted price very long; they’ll come after you, Tim.
If you define “very long” as 13 months and counting, it’s been that long. And there are always Black Friday specials, such as $20 for a year of The Star. It all smacks of desperation — and could have been avoided if fat-and-sassy publishers had simply not given away their content for free starting ~25 years ago. But that genie will never go back in the bottle. So here they all are, begging.
Adding another digital subscriber even at a $1 week is almost pure profit to a base that is already turning a profit. You’ve already scaled your IT infrastructure to handle a large base. So adding one, ten or one hundred users have virtually no impact or cost. If you are adding thousands or tens of thousands, yes that impacts your IT cost, but you are also bringing in more revenue which quickly covers that cost. And don’t forget they also get digital ad revenue for the ads they are showing you as part of that $1 a week subscription.
If you look at the financials, the NY Times and Washington Post are doing quite well.
One of the of The Stars many subscriber problems is that their app is extremely poor compared to the NY Times or Washington Post apps. I don’t how many times I’ve tried to use The Star app on my phone or tablet and I’m told content is not available.
You’re right about incremental costs. But all of those $1/week (NYT), $4/week (WSJ) and $20/year (Star) subs don’t generate enough revenue to replace the print revenue. A major reason why papers such as The Star and the Columbia Tribune) suck so bad these days is that they no longer have the revenue necessary to maintain the staff (both in terms of amount and experience) capable of producing content that more people are willing to pay for. Fewer eyeballs also make them less attractive to advertisers, so they take a revenue hit there, too.
Plus there’s increasing competition from radio and TV. A lot of stations have stepped up their game. For example, KCUR’s website frequently runs stories of a length and depth once found only in newspapers.
I think the future will consist entirely of majors such as the NYT and WSJ, and hyperlocals such as the Shawnee Mission Post that have a sustainable business model. Everyone else will be toast.
Tim you are correct about public radio. In the Chicago media market, the public radio station (WBEZ) is now a consistent second in the radio ratings. The first place station is WBBM newsradio as it has been for a long time. The last time I saw radio ratings for the KC and St. Louis markets the public radio stations were also doing quite well in the ratings.
The Chicago NPR is also running long pieces on their web site like KCUR that has brought them some national attention. Anyone know if this is a strategy that NPR is trying to get their stations to do nationwide?