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Los Angeles Times sold to billionaire investor in $500 million deal

Richard Vogel | AP
Richard Vogel | AP
Pedestrians look at news photos posted outside the Los Angeles Times building in downtown Los Angeles, May 16, 2016. It was announced Wednesday that the Los Angeles Times is being sold to Dr. Patrick Soon-Shiong, a local billionaire, for $500 million, ending its strained tenure under the owner of the Chicago Tribune. Soon-Shiong is a major shareholder of Chicago's Tronc Inc., one of the richest men in Los Angeles and, according to Forbes, the nation's wealthiest doctor, with a net worth of $7.8 billion.

LOS ANGELES — Biotech billionaire Patrick Soon-Shiong has agreed to purchase the Los Angeles Times from its parent company Tronc, restoring local ownership and perhaps ending a turbulent period for the storied 136-year-old institution.

Chicago-based Tronc on Wednesday will announce the sale of The Times and the San Diego Union-Tribune to Soon-Shiong’s investment firm Nant Capital for nearly $500 million in cash, according to a source familiar with the deal. In addition to the purchase price, the deal includes the assumption of $90 million in pension liabilities.

The sale comes after a particularly stormy period for the newspaper, which has seen three editors in six months, its publisher placed on unpaid leave amid a sexual harassment investigation, and a historic vote to unionize the newsroom.

The deal came together quickly, over the last five days, and took many observers by surprise. Tronc had fended off previous efforts to buy the company outright or peel off the California newspapers. Tronc had insisted that The Times was key to its growth strategy given its proximity to Hollywood, technology hubs and the Pacific Rim.

Soon-Shiong, one of Los Angeles’ wealthiest residents and a minority owner of the Los Angeles Lakers, became the latest billionaire to throw a life line to a major newspaper. Amazon founder Jeff Bezos bought The Washington Post in 2013. That same year, Red Sox owner John Henry scooped up the Boston Globe and, in 2014, Minnesota billionaire and Timberwolves owner Glen Taylor bought the Minneapolis Star-Tribune.

The nearly $500-million price tag represented a premium for the struggling media properties. Traditional publications have fallen out of favor on Wall Street amid plummeting print advertising revenue. Marketers have been steering their ad dollars to Facebook, Google, Snapchat and other sites and away from magazines and newspapers.

At the same time, Tronc and other publishing companies have struggled to boost revenue from the readers they attract online. During the last 18 months, the Times has added more than 200,000 digital subscribers but the company’s revenue has still fallen.

For Tronc, the sale of its most prominent property marks a retrenchment. The company is expected to use the $500 million in proceeds to pay down debt and further its digital strategy across the remaining papers, which include the Chicago Tribune, Orlando Sentinel, South Florida Sun-Sentinel, Baltimore Sun and the New York Daily News.

The Times has long had a strained relationship with its Chicago-based corporate parent.

For more than a century, The Times was owned by the same family. Harrison Gray Otis gained ownership of the paper in 1884, and he served as publisher until 1917. His descendants, the Chandler family, controlled the Times Mirror Co. until the 2000 sale to Chicago-based Tribune Co.

Soon after, changes in news consumption began to erode the business, and Tribune’s leaders were under pressure to sell. In 2007, Tribune sold itself to Chicago real estate investor Sam Zell in a costly leveraged buyout that left the company drowning in debt. Within a year, Tribune filed for Chapter 11 bankruptcy protection.

The company emerged from bankruptcy on Dec. 31, 2012, with a consortium of wealthy investors in control. Two years later, the board split the company. One group, Tribune Media, was made up of television stations, including KTBC-TV Channel 5 in Los Angeles, a stake in the Food Channel and real estate holdings — including The Times’ downtown L.A. headquarters.

The second company, Tribune Publishing, housed the newspapers, including The Times.

But the turmoil continued. Tribune Publishing’s first chief executive, Jack Griffin, in 2015 ousted The Times’ publisher, Austin Beutner, who was trying to build the paper into a civic square for Los Angeles and surrounding communities.

Griffin himself was sacked a few months later after he brought in Michael Ferro, a Chicago investor and then-owner of the Chicago Sun-Times. Ferro installed Justin Dearborn as CEO, and they renamed the company Tronc. Last summer, Dearborn fired a handful of top Times editors, including the previous publisher and editor, Davan Maharaj. He then hired Levinsohn, who was placed on unpaid leave in January after National Public Radio reported that he was a defendant in two sexual harassment suits before he joined the Times.

The San Diego paper has experienced its own upheaval and ownership changes. The Union-Tribune, which is celebrating its 150th anniversary this year, became part of Tribune Publishing in 2015. It was owned by the Copley family until 2009. Soon-Shiong becomes the fifth owner in a decade.

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