Five percent of U-T’s parent acquired by buyer with Chinese ties

San Diego newspaper China syndrome: meltdown or survival?

Tim Tianwei Zhang
  • Tim Tianwei Zhang

Could the San Diego Union-Tribune, the once proud, Republican daily newspaper of America's heretofore impregnable Navy bastion, fall under the sway of unidentified investors led by a China-linked money manager?

The question is raised by an October 2 filing with the U.S. Securities and Exchange Commission by a group called Mount Flag, LLC, headed by Tim Tianwei Zhang, identified elsewhere online as the chief operating officer of China Merchants Capital Investment Limited.

As profiled by Bloomberg News, Zhang is also managing director of Taconic Capital Group, which he created in September 2003, and was managing director of J.P. Morgan Securities (Asia Pacific) Ltd. from July 2007 to October 2011.

Adds Bloomberg, "He has been a Non-Executive Director of China ITS (Holdings) Co., Ltd. since May 20, 2014."

Notes the profile, "Mr. Zhang holds [a] Bachelor of Science in Mechanical Engineering from Tsinghua University at the Faculty of Precision Instruments & Mechanology in July 1986. He has a Master of Economics degree from the Chinese Academy of Social Sciences and a Master of Business Administration from the The University of Chicago."

The U.S. filing, made late Friday, says a Delaware-registered firm by the name of Mount Flag Media Investment, LLC, now owns 1,319,975 shares of Tribune Publishing common stock, or about 5 percent of the company. Tribune owns a chain of American papers, including the San Diego Union-Tribune and Los Angeles Times.

Mount Flag, LLC, is the managing member of a related company known as Mount Flag Media, according to an earlier SEC disclosure filing, dated August 17. Mount Flag Media and Zhang, identified as a U.S. citizen, are listed as reporting persons on the October filing.

"The Reporting Persons intend to engage in discussions with management, the board of directors, other stockholders of [Tribune] and other relevant parties concerning the business, operations, board composition — including our interest in joining the board, management, strategy and future plans of the Company," the document says.

"Mount Flag Media Investment has plans to continue acquiring shares of Common Stock of the Company depending on market indicators and the business performance of the Company."

The document goes on to say that Zhang's firm received its first interest in Tribune on August 20, in the form of 1,177,933 shares of Tribune common stock, which “represented an in-kind investment in Mount Flag Media Investment by one of its members."

The balance of Mount Flag's holding in Tribune was acquired in a series of six open market purchases from September 16 through 28, as the price hovered between $8.40 and $8.10 a share, the filing says.

"Mount Flag Media Investment used available working capital funds and in-kind investments by passive investor-members to fund the acquisition of the shares of Common Stock and did not borrow any of the funds used for the acquisition," the statement says.

According to its August disclosure, Mount Flag Media is a hedge fund which has raised $20 million from unidentified investors, with $5 million as the minimum investment accepted from outsiders. The date of the first investment was August 16, the document says.

The president of Mount Flag, LLC, is listed on the report as Jordan Spiegel of Dana Point. His LinkedIn profile says he was an executive vice president of San Diego County's Laffer Associates, the firm run by Art Laffer, the father of supply-side economics during the Reagan era who departed California for a base in Nashville in 2007.

"Jordy began his career in finance as a securities analyst with Crowell, Weedon & Co., a Los Angeles based brokerage firm," says another profile. “Prior to that, Jordy was on the research staff of the Democratic Senate Campaign Committee."

Another Spiegel bio says he is managing partner of Spiegel Partners Freedom Fund, "an investor in the holding company for the Orange County Register,'' a troubled newspaper operation once said to be coveted by Tribune Publishing.

Zhang and Spiegel join a growing line of those in quest of possible control of the Los Angeles Times and San Diego Union-Tribune, both owned by Chicago-based Tribune, which is already under fire by L.A. billionaire Eli Broad and others for firing Austin Beutner as publisher of both papers, last month.

We've left calls with Spiegel seeking further details.

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Comments

All hail!

I, for one, welcome our new Chinese overlords; as I welcomed our Chicago overlords and our Developer overlord and Mr. Kane and all those who went before.

I have a feeling that everyone here knows who Citizen Kane is. My general suggestion is that powerful people want to control the press. This has not lead to the desired results lately for Manchester, Murdoch and others. Still, it seems that SoCal newspapers interest some power brokers.

Well, of course, Kane was Welles' version of Hearst. The younger generation doesn't even know the movie. Murdoch is still doing OK; he's very rich. Manchester got Tribune Publishing to overpay for the U-T while he kept the property (which he later sold to a developer). I don't think he's crying in his beer. Sounds like Tribune's execs turned out to be the idiots with that deal. With billionaire Broad trying to grab the LA TIMES, it could just be an ego thing to own a newspaper (or a tax write-off). Like Kane, Broad could run it for years while losing money, and not care.

The Chinese own everything else so why not the UT. Maybe we will get a different slant on the news.

Everything? What specifically do they own in the U.S. besides the former Grauman's Chinese Theatre (now TCL Chinese Theatres) in Hollywood and some real estate developments? Do you have a complete list?

AlexClarke, for the first time you are both dark and funny. Thank you.

You don't think the "slant" eye comment is a bit derogatory and racist? I didn't find it funny. I can imagine the comments if a wealthy LGBT person bought the paper.

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