Gannett’s tactics in trying to take over Tribune Publishing now include questioning the competence of the man who runs it, Michael Ferro.
Gannett recently made an $815 million offer to buy Tribune Publishing, inviting shareholders to sell their shares for $12.25 each—or 63 percent above the company’s closing stock price on April 22. Tribune’s board of directors has said no.
On Friday the company issued a statement labeled “Setting the Record Straight” that accused Gannett of “acting in desperation” and misrepresenting facts. Tribune “is well-positioned to drive shareholder value in excess of Gannett’s proposal,” it declared, championing a strategy “centered on driving increased monetization of award-winning brands, capitalizing on the global growth potential of the Los Angeles Times, and accelerating conversion of content to revenue through an innovative and compelling digital strategy.”
Is the Chicago Tribune now chopped liver?
At any rate, Gannett quickly replied. Later Friday it issued a statement asserting the Tribune board was showing “complete disregard for its responsibility to shareholders,” and trying to hang Ferro with his own words. “I don’t know anything about the newspaper business,” Ferro was quoted as saying in a Chicago magazine profile by Bryan Smith in October 2013 (when Ferro ran the Sun-Times). “I like to be in businesses that I know something about.”
Gannett plucked the quote out of context. According to Smith’s profile, this was something Ferro had said in 2011 when he was first invited to invest in the Sun-Times to keep it alive.
But as Ferro thought about it, he saw parallels between the newspaper world he knew nothing about and the digital world in which he’d made a fortune. “Programmers and journalists are very similar,” he told Smith. “They all like to do their own thing, they want to build their own product, they’re all very opinionated, and they’re very intelligent. So I came up with this idea. I said, I believe there’s a way to use these traditional print assets to build new digital properties, and leverage the distribution and the eyeballs, the readership, to launch those properties.”
How well these beliefs served the Sun-Times (or the Reader) can be debated. When Ferro gave up control of the Sun-Times in February on buying a controlling interest in Tribune Publishing, he left behind a dry-eyed staff and he had no successful new properties to boast of. The far larger Tribune corporate realm he entered rippled with apprehensions, which were justified by changes Ferro immediately made—ranging from dumping the CEO who’d brought him into the company to replacing the editor of Chicago magazine with a crony of his. Other moves Ferro is making to consolidate control of the Tribune realm are now cited by Gannett as reasons for shareholders to consider getting out from under his leadership.
Gannett accused Ferro of purchasing, at a discount, a mere 16 percent of Tribune Publishing shares and seizing “disproportionate control.” Gannett’s Friday statement went on, “In the end, Tribune shareholders need to consider whether they are willing to entrust their investment to a Chairman who bought his own shares at $8.50 a share; acknowledged he knows nothing about newspapers; said the Company is not for sale; and supported the nomination of a slate of directors that includes four nominees who are long-time business associates of or have significant ties to him.”
But why shouldn’t the new boss want to surround himself with allies? How you answer that one depends on what you think of the new boss.