@THE GUSS REPORT-The corporate chaos continues at the Los Angeles Timesand its parent company, Tronc, which may be resulting in poor supervision over transparency on stories it publishes.
For example, has the Timesexplored whether one of its reporters (who has a voice on affordable housing and homelessness issues) is personally benefitting from, and actually residing in, multi-million-dollar housing flips owned by a family real estate trust, thus helping drive up the cost of housing while reporting on it?
Inquiring minds want to know…
But things aren’t all that bad at the Timesthese days, unless you are a staffer, executive, the prospective new owner Dr. Patrick Soon-Shiong or a shareholder of Tronc.
On Friday, Tronc stock plummeted 4.29%, having been down more than 7% earlier in the trading day. The bad news is that this is an improvementover how the stock did the day before, when it dropped 6% as its latest disappointing earnings and forecast were released.
So why, as of Sunday morning, is there no apparent story about it on its website or app?
The Timesreporters were very vocal, including on social media, about their recent formation of a writer’s guild. And we heard from them on its recently released report on gender and race pay inequity at the Times which showed that white men there are paid more than virtually all others. So why are they suddenly silent on Tronc’s plummeting stock price?
Have they been ordered by Tronc to stay quiet in order to keep intact the half-billion-dollar sale of the Timesand the San Diego Union Tribuneto Soon-Shiong? And how, in just a few weeks, is he supposed to move the paper from downtown LA to El Segundo when it appears he is either trying to pay a whole lot less for the two newspapers, or to extricate himself from the deal altogether?
Does it have something to do with the fact that Tronc paid just $1 for the famed New York Daily Newstabloid just eight months ago? The two deals are not apples-to-apples, but it is like comparing a Granny Smith to a Red Delicious. And the silence from the Timeson the subject is, indeed, delicious.
At close of business on Friday, Tronc’s entire enterprise was worth just $598.5 million, so for just $98.5 million more than Soon-Shiong was believed to have offered for just the Timesand SDUT, he could have owned the entire Tronc universe and sold off the assets he didn’t want to keep. Whoever is advising him on this deal is not earning their salary.
Meanwhile, rent on the TimesDTLA digs is expected to go up by $1 million a month in June, raising the question of who is more desperate, Tronc, to keep the deal, or Soon-Shiong, to kill it or pay a heck of a lot less for it? (Soon-Shiong may also be on the hook for $90 million in pension obligations.)
While some media outlets suggest that the delay in closing the deal has more to do with the complex untangling of the Timesand SDUTfrom the Tronc universe, don’t buy it. And don’t buy Tronc stock, which I suspect may dip below its 52-week bottom of $10.80 per share in the coming 52 weeks.
The smartest guy in the room may be former Tronc co-owner, Michael Ferro, who is believed to have dumped his Tronc shares before the recent plummet and got a $15 million consulting fee for what amounts to simply getting out of Dodge. A regulatory filling shows that Ferro sold his shares at $23 per, which on Friday, were worth just $16.96 each. And Ferro is really smart: he got that moolah in a lump sum payment last week.
(Daniel Guss, MBA, is a member of the Los Angeles Press Club, and has contributed to CityWatch, KFI AM-640, Huffington Post, Los Angeles Times, Los Angeles Daily News, Los Angeles Magazine, Movieline Magazine, Emmy Magazine, Los Angeles Business Journal and elsewhere. Follow him on Twitter @TheGussReport. Verifiable tips and story ideas can be sent to him at [email protected]. His opinions are his own and do not necessarily reflect the views of CityWatch.) Prepped for CityWatch by Linda Abrams.