Tribune Publishing


What: Gannett is walking away from its attempted takeover of Tronc, the publisher of the Los Angeles Times, Chicago Tribune and other major dailies. In a brief statement on Tuesday, the company said that although it had it in discussions with Tribune Publishing, now known as Tronc, it “determined not to pursue an acquisition.” Gannett has not been able to raise funds to finance the deal.
Why it matters: The now cancelled deal would have put together the largest newspaper publisher in the U.S.,with Tronc the third largest newspaper publisher. The newspaper industry is in a consolidation phase due to print advertising revenue declines.

descargaGannett has announced is pulling off its attempt to takeover Tronc, the publisher of the Los Angeles Times, Chicago Tribune and other major dailies as well as Spanish-language newspapers in several markets including Los Angeles, Chicago and San Diego.

Gannett’s target was said to be elusive from the beginning, when it revealed in the spring that it was offering US$388 million for the Chicago company, which it said refused to partake in “constructive discussions.”

Tribune Publishing, as it was known at the time, released an acerbic letter calling Gannett “erratic” and “unreliable,” saying that its executives cancelled meetings without reason and once asked it to make a decision about a proposed buyout within 90 minutes.

descarga-1Tribune Publishing’s Chairman Michael Ferro said in an interview then that Gannett was “trying to steal the company.”Ferro, who owned a stake in cross-town rival Chicago Sun-Times, had himself just become an insider Tribune Publishing after investing US$44.4 million in February.

Tronc Inc. at one point attempted to fend off Gannett by bringing in California entrepreneur Dr. Patrick Soon-Shiong as an investor. He backed chairman Michael Ferro’s plans to shake up the troubled media company with what it called tech-focused initiatives involving artificial intelligence and global expansion in entertainment news and video. The plans were widely criticized.

Tronc maintained that it still had “serious doubts” about Gannett’s ability to finance a potential transaction. The company said it had worked through a purchase price with Gannett in mid-September, but did not disclose what the amount was. Tronc said last week it was told by Gannett that financing hit an unexpected delay.

Both Gannett and Tronc have struggled with sliding ad revenue. Print ad revenues have been falling for years across the industry, and growth in digital ads and online-only subscriptions has not been enough to offset that.

Gannett as Consolidator

Gannett, which recently released 2 percent of its workers, has dealt with those trends by snapping up newspaper companies. This year, the McLean, Virginia company acquired Journal Media Group, the publisher of the Milwaukee Journal Sentinel, Knoxville News Sentinel and other papers, as well as the North Jersey Media Group, which publishes The Record and other papers around that state.

Shares of Gannett Co., publisher of USA Today, rose more than 3 percent in morning trading on Tuesday. Tronc’s stock tumbled more than 19 percent.

“It is unfortunate that Gannett’s lenders made their decision to terminate their role in the transaction without the benefit of Tronc’s third-quarter financials or any future projections,” the company said. “Tronc remained a constructive partner to Gannett as it sought to complete its financing for the agreed-upon purchase price, however, Gannett was unable to do so and terminated discussions.”

What: Tribune Publishing Co. again rejected the  revised Gannett Co., Inc. proposal to acquire all of Tribune Publishing for US$15.00 per share in cash. Additionally, an influential proxy advisory firm, Glass Lewis, urged Tribune’s institutional investors to vote against the Gannett take over at the Tribune Publishing Annual meeting on June 2. In related news , Tribune Publishing received a US $70.5 million investment from Nant Capital in a deal that makes the California-based technology investment firm the company’s second-largest shareholder with a 12.9% stake. Nant Capital is allied with Tribune Publishing’s largest shareholder Michael Ferro.
Why it matters: Gannett is the largest newspaper company in the country. As the industry consolidates large players such as Gannett and Tribune are trying to achieve efficiencies by merging. Obviously, the financial terms of the consolidation/merger are currently argued about between the two companies.

descargaTribune Publishing’s Board has again rejected the Gannett proposal as not in the best interests of Tribune shareholders but invited Gannett to agree to a mutual Non-Disclosure Agreement under which both parties could engage in due diligence and discussions to assess whether a transaction in the best interests of Tribune and Gannett shareholders can be negotiated. There can be no assurances that any such agreement can be reached.

Gannett’s $864 million hostile effort to acquire Tribune Publishing (TPUB) received a second consecutive blow after an influential proxy advisory firm urged institutional investors not to support the USA Today publisher’s “just vote no” campaign against the Chicago-based media company’s directors. The recommendation, which was made by Glass Lewis, in a report obtained by is in response to a campaign launched by Gannett on May 2 urging shareholders to oppose Tribune Publishing’s eight incumbent director candidates in an uncontested election.

Investment by Nant Capital

Tribune Publishing received a US$70.5 million investment from Nant Capital in a deal that makes the California-based technology investment firm the company’s second-largest shareholder, edging past the 4.695 million shares owned by Oaktree Capital Management, which has pushed Tribune Publishing to negotiate a sale to Gannett.

In addition to the US$70.5 million growth capital investment from Nant Capital, LLC, which was founded by Dr. Patrick Soon-Shiong, Tribune has agreed to issue an aggregate of 4,700,000 shares of its common stock to Nant Capital at US$15.00 per share to support the Company’s transformation strategy.

The shares to be purchased by Nant Capital, similar to those purchased in the February 4, 2016, investment by Merrick Media, are subject to a three-year lock up. In connection with the transaction, Dr. Patrick Soon-Shiong has been invited to join the Tribune Publishing Board of Directors as Vice Chairman. He will begin serving on June 2, 2016.

Following the transaction, Nant Capital will own approximately 12.9% of Tribune Publishing’s outstanding shares, making Nant Capital Tribune’s second largest shareholder. Nant Capital has entered into customary standstill arrangements, including limitations on additional share acquisitions and an agreement to vote its shares in connection with the election of directors and any change of control transaction involving the Company proportionally to how all other shares of Tribune common stock are voted.

Tribune Publishing also announced it has entered into a term sheet with NantWorks, LLC for a co-exclusive, non-transferable, fee-bearing license pursuant to which Tribune will receive access to over 100 machine vision and artificial intelligence technology patents for news media applications as well as access to and use of studio space made available by NantStudio, LLC, a subsidiary of NantWorks, LLC.

Under the term sheet, Tribune Publishing will issue to NantStudio, LLC 333,333 shares of Tribune common stock and will be entitled to retain the first US$80 million in revenues derived from the licensed patents royalty free, after which Tribune will pay to NantWorks a 6% royalty on subsequent revenues.

“The Gannett $15.00 per share proposal for all of Tribune is clearly inadequate as a control investment in Tribune and, as ISS has pointed out, our Board ’has grounds to decline to engage’ on Gannett’s proposal,” said CEO, Justin Dearborn. “We remain unrelenting in our pursuit of value whether on a standalone basis or through a transaction, and believe the us$70.5 million growth capital investment announced today from Nant Capital – making Nant Tribune’s second largest shareholder – will support Tribune’s transformation strategy.

Dearborn continued, “We continue to have serious doubts about Gannett’s ability to enter into a transaction – especially when you consider its approximate us$650 million pension and OPEB liability – that makes sense for Tribune and its stakeholders.We are focused on taking the necessary steps to transform our business in response to the massive changes that have overtaken the publishing industry, supporting our outstanding journalists and, above all, creating superior value for our shareholders.”

The Board has set no timetable for concluding the discussions and does not intend to disclose further developments unless and until the Board determines that disclosure is appropriate or necessary.

Goldman, Sachs & Co. and Lazard are acting as financial advisors and Kirkland & Ellis LLP is acting as legal advisor to Tribune Publishing.

Industry observers interviewed by Portada noted that it is only a matter of time until the Los Angeles Times, owned by Tribune Publishing, buys the financially-troubled Freedom Communications or, at least, its most coveted asset, Orange County Register, which publishes Spanish-language newspaper Excelsior. Last Friday, things looked like they were heading in that direction when Tribune Publishing told a federal bankruptcy judge that it was willing to loan US $3 million to fund the bankruptcy case of Freedom Communications in exchange for the right to bid for Freedom’s flagship publication, the Orange County Register, during any future sale process. Why is Tribune Publishing interested in Freedom’s assets and what would a consolidation mean for Hispanic media? Portada takes a look at four key factors.

1. Is Freedom Communications Financially Viable?

Freedom CommunicationsNo, not in its current form and debt levels. For this reason Freedom Communications filed for Chapter 11 protection last week to restore the company’s fiscal footing and dramatically reduce debt incurred under previous leadership in 2013 and 2014. The aggressive expansion led by Freedom Communications’ former CEO and investor, Aaron Kushner (whose deal included the purchase of the Press Enterprise from Belo Newspapers as well as the launch of a new daily for Los Angeles that was later discontinued) was associated with high costs and substantial debt. Current CEO and Publisher Rich Mirman has stepped forward with several local investors to bid to purchase Freedom. Freedom Communications spokesman Eric Morgan said, “Rich is confident his bid to secure the business will be successful — and we will continue to strengthen our position as the leader in providing local news and information in Orange, Riverside and San Bernardino counties in 2016….As Rich alludes to in the letter to employees, we have delivered strong results to the point that Freedom is on pace to turn a modest profit in 2015.”

2. Tribune’s Interest in Dominating Southern California

Tribune PublishingAs an industry consolidator and leader in the Southern Californian print and digital market (The Los Angeles Times, Hoy Los Angeles and recently-acquired San Diego Union Tribune are some of Tribune’s properties), Tribune is very interested in acquiring Freedom Communications’ assets, which include the Press Enterprise based in Riverside, its Hispanic newspaper La Prensa and the Orange County Register, based in Excelsior. The Orange County Register is of particular interest to Tribune due to its strong market position, which is why it is interested in loaning Freedom Communications the money necessary for its bankruptcy case under the aforementioned conditions. Tribune lawyer Jeremy Rosenthal told U.S. Bankruptcy Court Judge Mark S. Wallace that Tribune wants an “opportunity to bid at a fair, open, transparent proceeding” should the Register undergo a sales process. As one observer told Portada, “In Southern California, Tribune now owns the San Diego Union Tribune down to the South and the Los Angeles Times in the North. The Register is sandwiched in-between these larger newspapers and has nowhere to grow. ”

In Southern California, Tribune now owns the San Diego Union Tribune down to the South and the Los Angeles Times in the North. The Orange County Register is sandwiched in between these larger newspapers and has nowhere to grow.

3. Has Freedom Made the Most of the Hispanic Opportunity?

In California, Hispanics now outnumber whites, and Hispanic-targeted media should be a keystone of any media group’s strategy: even more so because most Hispanic print media properties are community newspapers, a sector that has been relatively shielded from the negative revenue trends of the large metropolitan dailies.
But has Freedom really focused and invested in its Hispanic properties? Initially, Freedom unified the La Prensa and Excelsior products into one newspaper called Unidos in Southern California. However, a year later it went back to publishing the La Prensa and Excelsior publications independently. Industry experts tell Portada that on the Hispanic side, Freedom’s move to bring back Excelsior and La Prensa have not worked. They have failed to connect to the Hispanic community and advertisers, primarily because they have not dedicated the necessary people or resources to reaching out to the Hispanic community.
Perhaps certain neglect for Hispanic-targeted editorial products can best be expressed by the fact that the Orange County Register decided to paint over a cultural mural that depicted Hispanics in the Santa Ana community. The mural had been on the wall of what was the Excelsior building for more than 15 years (see photo). UPDATE-COMMENT FROM FREEDOM COMMUNICATIONS: Freedom Communications no longer owns the building and was not involved in decisions to remove the mural. Excelsior is now located directly in Freedom Communications’ corporate offices, in an adjacent building.
Were Tribune Publishing to buy Freedom Communications, it would have very strong Hispanic Publishing assets led by Hoy Los Angeles as well as its weekend saturation product Hoy Fin de Semana, San Diego weekly Enlace and associated publications like Freedom’s properties La Prensa and Excelsior.

4. A Shrinking and Consolidating Sector

Newspaper CouponsPrint media (newspapers, direct mail and on a lesser scale, magazines) properties are consolidating in the hands of a few players (e.g. Tribune, Gannett Newspapers and Valassis; check out the just-announced Valassis acquisition of Clipper Magazine and Printed Deals). As these once large companies’ advertising revenues are decreasing, their profit margins have become smaller. In a shrinking sector, the only way to increase margins is to consolidate with other companies and reduce costs (in fact, hundreds of Tribune Publishing employees are currently weighing if they would accept a buyout offer) and work out of a lower cost structure. Of course, the acquisition and cost-reduction rationale is the strongest when it comes to acquiring properties in the same or adjacent markets (e.g. San Diego and Los Angeles). This is what has been happening over the last few months (e.g. Los Angeles Times‘ acquisition of San Diego Union Tribune for US$ 85 million last May.

5.18.2015: ANALYSIS: Tribune Gets a Major Hispanic Footprint in SoCal after the Purchase of San Diego’s UT
12.05.2014: Freedom Communications announces more layoffs, folds unprofitable pubs
9.19.2014: Aaron Kushner to evaluate whether the Los Angeles Register is viable as a daily
8.4.2014: Tribune Publishing spins off, which newspapers will it acquire?
03. 14..2014: Are Hispanic Newspapers growing? Yes! Here are 3 Examples

What: Tribune Publishing has launched an in-house agency called Tribune Content Solutions  that will create multiplatform campaigns for local and national advertisers.Dan Hickey Takes on Expanded Role as Senior VP of Revenue Development, Innovation and Customer Marketing.
Why it matters: Tribune Publisshing joins other publisher in the race to tap the growing demand for native ad solutions from local advertisers.

descarga (1)Tribune Publishing has launched an in-house agency called Tribune Content Solutions designed to deliver custom-content solutions for Tribune Publishing marketing partners. Dan Hickey, who built Tribune Publishing’s digital marketing services unit since joining in January, has been appointed Senior Vice President of Revenue Development, Innovation and Customer Marketing for the newly branded group. Hickey will report to Michael Rooney, Tribune Publishing’s Chief Revenue Officer.

Tribune Content Solutions leverages the company’s heritage of  storytelling to create campaigns across all platforms for local and national advertisers. Under Hickey’s direction, Tribune Content Solutions’ team of strategists, editors, writers, marketers and technologists offer marketing, custom publishing and digital marketing services designed to motivate consumers.

Hickey_RetouchedIn this role, Hickey also will lead marketing efforts for Tribune Publishing’s national sales group. Prior to joining Tribune Publishing in January, Hickey held a number of strategic revenue development and digital product innovation roles, most notably at the Daily Telegraph in London and leading Meredith Corporation’s digital brands for 12 years.

“Dan has built a strong digital marketing services business with robust native advertising solutions for clients across every conceivable category this year alone,” said Michael Rooney. “In tapping him to lead the newly created Tribune Content Solutions business, Dan will help our various teams deliver innovative new ideas and creative solutions that harness the full power of our company’s unique brands and unparalleled reach.”

“Marketers today are living in a transformative and ever-changing world, and Tribune Content Solutions is uniquely positioned to help marketers tell great stories and produce exceptional localized content that engages audiences across all platforms,” said Hickey. “Our agency’s ability to amplify stories through our trusted local media brands creates a powerful platform for both local and national marketers who desire optimal consumer engagement and results.”

According to Tribune, the company has created native advertising and branded content campaigns for over 70 clients this year.

Tribune is one among the many publishers that are launching their own branded content outfits with the aim of  tapping into growing demand for native ad solutions from local advertisers . Time Inc. launched cross-channel creative shop The Foundry in August. The New Republic launched a new in-house content marketing agency called Novel in July.




What: Last week Tribune Publishing, the owner of The Los Angeles Times, announced the acquisition of the San Diego Union-Tribune, paying US $85 million to entrepreneur Doug Manchester in a deal that also includes 9 weeklies and digital properties owned by the San Diego Union Tribune.
Why it matters: The US $85 million Tribune is spending amount to a relatively high valuation for print properties, reflecting the value of the Southern California print and digital franchise. While smaller than the English-language publications of the Union Tribune, Tribune is also adding the Spanish-language weekly Enlace as well as s a weekly Spanish language lifestyle and entertainment magazine, Vida Latina San Diego. Tribune Publishing now owns a substantial portfolio of Southern Californian properties targeting the Hispanic Population.

Tribune Publishing Company announced it has entered into an agreement to acquire MLIM, LLC, owner of the California State FlagSan Diego Union-Tribune, as well as nine community weeklies and related digital properties in San Diego County. The purchase price is US $85 million, which includes $73 million in cash and $12 million in Tribune Publishing common stock, plus the assumption of obligations for a single-employer pension plan. Tribune Publishing will not be taking possession of the seller’s real-estate assets. The transaction is expected to close in the second quarter of 2015, subject to customary closing conditions.

The acquisition substantially expands Tribune Publishing’s assets targeting the Southern Californian Hispanic population. The San Diego Union Tribune publishes a weekly newspaper called Enlace with a circulation of approximately 175,000, including an edition for the Southwest Riverside County. In addition, it publishes Vida Latina, a free glossy entertainment magazine available throughout the South Bay. Vida Latina has a circulation of 30,000 and mostly targets Hispanic Women in South San Diego County. Another Southern California/Mexican border property managed by Tribune is La Bolsa Azul, a polybag that is door-delivered in Tijuana and Mexicali on the Mexican-U.S. (California) border. In March last year, Tribune announced that Hoy Fin de Semana, the weekend home-delivered newspaper published by Hoy in Los Angeles, Chicago and Philadelphia, would also be distributed within La Bolsa Azul.

La Bolsa Azul, the polybagged door delivered product, is another Southern California/Mexican border property managed by Tribune.

Together with the Los Angeles Times Spanish-language properties (including Hoy and Hoy Deportes weeklies and home delivery saturation product Hoy Fin de Semana), Tribune now can offer advertisers a substantial Southern Californian footprint. Due to their heavy community newspaper element, many Hispanic newspapers have not gone through heavy circulation declines like the big metropolitan dailies, in fact some even have registered substantial circulation increases.

Hispanic NewspapersWhen the transaction closes, Austin Beutner will serve as Publisher & CEO of both the San Diego Union-Tribune and Los Angeles Times and as Publisher & CEO of the newly formed California News Group. “San Diego Union-Tribune will retain editorial independence, providing an authentic voice that reflects the diversity of the state and the distinct values of our communities,” Beutner said. “I also know the Los Angeles Times will benefit with a closer connection to its older sibling down south.” Roaldo Moran, publisher of Hoy Los Angeles, tells Portada that there are no news on any possible integration of the management of the Hispanic properties to report as those internal conversations have not started yet. “Tribune and the Los Angeles Times have a long history of supporting and working to deliver quality news and information to the Hispanic community. I am very familiar with their efforts, I worked for the Los Angeles Times back in 1990 when we were publishing “Nuestro Tiempo”. Tribune’s purchase of the San Diego Union Tribune will enhance and strengthen the Hispanic efforts of Enlace in San Diego. This is a very positive and big step forward for both companies as they work to serve the Hispanic community with quality content,” Hispanic newspaper veteran Mike Cano, now president of President AP&P Solutions tells Portada.

Tribune’s purchase of the San Diego Union Tribune will enhance and strengthen the Hispanic efforts of Enlace in San Diego.

Other companies targeting Hispanics in Southern California through digital and print properties, include impreMedia (La Opinion in Los Angeles). Freedom News Group through La Prensa and Excelsior, El Latino de San Diego and Long Beach’s Impacto USA which is owned by Los Angeles Newspaper Group (Digital First Media).

Join us at PORTADA Mexico!

Get our e-letters packed with news and intelligence!