Another nudgy shareholder just surfaced to complain that the present management of Tribune Publishing isn’t up the job of running the company.
“The gut-wrenching transformation of newspapers to the digital age is complex and difficult,” says a letter to the Tribune board from Towle & Co., which owns 1.4 million shares, or 3.85 percent of Tribune Publishing’s common stock. “Our concerns persist that Tribune’s revenue and earnings will decline in coming quarters. . . . Failure of Tribune in its current form is a distinct possibility.”
So let someone else have all the headaches. “The gut-wrenching transition of newspapers to the digital age is highly uncertain,” Towle’s CEO wrote Tribune chairman Michael Ferro in a separate letter. “Let Gannett wrestle with this challenging transition!”
Gannett offered $12.25 a share for Tribune Publishing stock a month ago, and later upped the ante to $15.
Towle adds its voice to that of Oaktree Capital, which has made its lack of faith in Ferro crystal clear, and until the other day was Tribune’s second largest investor, behind Ferro. But this week Ferro unveiled a new ally: biotech billionaire Patrick Soon-Shiong of Los Angeles has supplanted Oaktree at number two by making a $70.5 million investment. “I’ve come to know Michael,” said Soon-Shiong. “We’re completely aligned in transforming the company from a newspaper company into a technology and content company.”
So now, according to the breakdown in the Tribune-owned LA Times, Ferro owns 14.4 percent of the stock, Soon-Shiong 12.92 percent, and Oaktree 12.91 percent. In fact, according to the Times, Ferro’s original idea was for Soon-Shiong to buy out Oaktree for $15 a share. But Oaktree said no, holding to its position that Tribune needs to negotiate with Gannett and that when it does Gannett will sweeten its offer.
Towle sneered at Ferro’s latest maneuver. “Your decision to dilute our ownership position by issuing 4.7 million shares to Nant Capital, LLC [which Soon-Shiong controls] was most distasteful . . . ” said the letter to the Tribune board. “Your brazen efforts of late have disrupted our belief in fair play.”
The Times article cynically but wisely points out that Soon-Shiong, who will now be Tribune’s vice chairman, is nobody’s puppet. An LA investment banker who thinks the move amounts to a “checkmate” of Gannett and Oaktree, goes on to say, “Tribune selling this minority position to [Soon-Shiong]is like letting the fox into the hen house.” Just as Ferro solicited a big investment from Soon-Shiong because he needed the money, early this year Tribune Publishing courted Ferro for the same reason. Ferro took over the company and immediately fired the CEO who’d brought him on. The Times notes that Soon-Shiong figured in past rumors of LA billionaires trying to buy the Times and return it to local ownership. He’s now in a strong position to demand that Chicago leave the Times the hell alone. Given that Gannett is snorting outside the gates and rebellion is spreading inside, he’s in a position to demand much more.