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Tronc'ed again: Union-Tribune faces yet more jobless fears

If Gannett deal dies, could bio-tech billionaire still grab piece of L.A. Times?

A graph in a video released by tronc earlier this year did not include the San Diego Union-Tribune.
  • A graph in a video released by tronc earlier this year did not include the San Diego Union-Tribune.

It may be curtains for media giant Gannett's multibillion-dollar deal for tronc, the Chicago-based newspaper chain that owns San Diego's Union-Tribune and the Los Angeles Times, leaving employees of the troubled print-based business in more fear for their livelihoods than ever before.

The latest take on the fate of the long-delayed move, rumored for months, comes from Bloomberg, citing unidentified insiders who say that Jefferies LLC and SunTrust Banks Inc., the institutions expected to finance the takeover, no longer want to have anything to do with it.

"It appears that the banks are the only rational players in this dance,” Paul Sweeney, an analyst at Bloomberg Intelligence, was quoted as saying.

Bob Dickey

Bob Dickey

A few hours before, asked during Gannett's October 27 third-quarter earnings conference call about how the company's "Mergers and Acquisitions front" was going, CEO Bob Dickey replied, "it all comes down to making sure that these are accretive for our shareholders and add value and that the financing terms make sense for the company or we’re not just going to add properties for the sake of adding properties."

The call was terminated before follow-up questions could be posed. Earlier in the event, Dickey recounted the company's latest bad earnings report.

"As we headed into the quarter we had been projecting stable print advertising trends offset by improving digital advertising trends which combined with the acquisitions would have driven revenue growth of between 7 to 9 percent," noted the CEO.

"Instead we saw pullback in spending in print products in both local and national markets similar to others in the industry," he said. "We saw weakness in domestic preprint down 19 percent and national print advertising down 30 percent, driven by lower spending from large retailers."

Asked to apply a sports analogy to the future of Gannett's cost-cutting, Dickey said, "If you want to use baseball and it's a nine-inning game, we probably just finished the third inning."

Following the call, the price of Gannett shares dropped 17 percent, and tronc stock plummeted as much as 30 percent.

Ken Doctor

Ken Doctor

Meanwhile, Ken Doctor, the online columnist who started much of the talk about a tronc takeover by Gannett, advanced another possible scenario.

Michael Ferro

Michael Ferro

Tronc had been set to hold a Wednesday board confab to go over the prospective buyout, said Doctor, writing before the Gannett earnings announcement, but the meeting was abruptly canceled.

"The plan on the table sets up a complicated structure to preserve the independence of the L.A. Times — and to keep one of its major investors around."

Patrick Soon-Shiong

Patrick Soon-Shiong

Per Doctor, Los Angeles bio-medical billionaire Patrick Soon-Shiong — who in May sank $75.5 million into tronc and was subsequently named to the board by company chairman Mike Ferro — wants to carve out a part-ownership role for himself at the L.A. Times as part of any Gannett deal.

"First: Gannett gains ownership of the Times along with the other tronc properties, but then sells a minority interest in either Gannett overall or in a Times subsidiary to Soon-Shiong," per Doctor.

"Second: Gannett would agree to set up an 'independent' board in L.A. to review the Times’ journalism and insure the robustness of its future report. Housing the fourth-largest newsroom in the nation, the Times would gain a kind of semi-independent status in the deal not granted to any other newspaper in the Gannett ecosystem."

Eli Broad

Eli Broad

All perhaps well and good for the Times, but the question of what would ultimately happen to the smaller San Diego Union-Tribune, now an increasingly satellite-style operation that relies on the Times's Los Angeles printing plant to produce its papers, remains unanswered.

Over the years, a succession of L.A-based would-be owners of the Times have been said to have coveted its control, including billionaire Democrat Eli Broad, a charter schools champion who over the years has dabbled in both Los Angeles and San Diego politics but never managed to close a deal for either paper.

Though tronc has talked up using computer technology developed by Soon-Shiong to boost the chain's online revenue, a widely mocked video posted earlier this year regarding the company's video plans omitted any mention of San Diego.

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I'm beginning to think that Ken Doctor is as awful as tronc leader Mike Ferro: whenever one ship sinks beneath the waves, Doctor produces another rubber dinghy. Doctor ought to put a sock in his baseless speculation at this point.

More important than Doctor's flimsy theories, when the bankers who underwrite these massive transactions are reliably reported to have walked away from a Gannett/tronc deal and when the CEO of putative tronc buyer Gannett reports a huge earnings decline and then hangs up the phone before follow-up questions can be asked -- well, that sounds seriously bleak.

I am so sad for everyone valiantly producing the San Diego Union-Tribune and for its remaining readers. I am sad for the emaciated Los Angeles Times with its growing lists of "special correspondents" in lieu of official reporters. It is terrible to witness these death throes. But great stories are still appearing. I will keep on subscribing and waiting for that morning newspaper on my front step until the last word is written.

Do you mean, until the last word is printed?

Meanwhile, the LA TIMES property was finally sold off recently.

The absence of the U-T in those charts and analyses should be taken as indication that the paper is considered insignificant in the bigger corporate picture. Either that, or the U-T numbers are rolled in with those of the LAT.

It is now impossible to sell off the U-T separately from the LAT. Its papers are printed in an LAT facility, and the bulk of its editorial material is identical to that of the LAT. Maybe the next step is about to be taken, changing the name to LAT, San Diego Edition. That would reprise the valiant attempt the LAT made starting in 1978 and continuing through the early 90's to invade Copley territory and gain a substantial foothold. It failed then, and likely would fail now. And so they stick, for the time being, with the fiction that the U-T is an independent newspaper.

Today's U-T reports that the Gannett deal is dead. So, now we're in a new world of uncertainty. I can't wait to see what happens next.

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