So, things are getting pretty weird over at the L.A. Times.
In February, nutty tech entrepreneur Michael Ferro bought a controlling interest of Times parent company Tribune Publishing. Within three weeks, he fired Tribune CEO Jack Griffin. Soon after, he promoted Times editor-in-chief Davan Maharaj to a publisher/editor role, an unusual commingling of business and editorial.
Now comes news that Gannett Publishing, the largest newspaper publisher in the country (as measured by total daily circulation), has made an offer to buy Tribune Publishing for $815 meeeeellion, which is, yeah, a lot of money for a company that's steadily losing value (as most newspapers are). That price includes the $390 million or so in debt that Tribune Publishing is weighed down with. And at $12.25 a share, it's 44 percent more than what Ferro paid for his 5.2 million shares a couple months ago.
So if the Gannett deal were to go through, Ferro would stand to make a pretty decent return on his short stint as chairman. But that doesn't mean he's happy about the development.
“I believe 100 percent in my heart that this is completely a manipulation, that they’re trying to steal the company, bum-rush us,” he told the L.A. Times in an interview. “It is ungentlemanly, it is not what we do in this industry. It is not the way we do business.”
Ferro says he's gonna fight Gannett's semi-hostile bid. But although Ferro can delay the sale, it's unlikely he can prevent it.
“The board members really need to have an extraordinary excuse not to sell the company,” newspaper economist Ken Doctor says. “And they really don’t have one.”
Next week, Ferro will try to convince the board that he has some super-secret special plan to make journalism profitable, including something called a “content monetization engine,” which sources indicate is some kind of hovercraft. But barring that, or barring someone else making an even more ludicrous offer, the Gannett sale is likely to go through.
So who is Gannett? Well, it owns USA Today, the third largest paper in the country, which makes really nice pie charts. And it owns more than 100 little newspapers all across the country, papers such as the Baxter Bulletin, the Central Florida Future and the Corpus Christi Caller-Times.
Gannett's business model is basically that it owns a bunch of small papers that get USA Today inserts covering national and international news. That and other synergies (the sharing of ad sales and human resources and whatnot) allow Gannett to operate papers more cheaply than they'd run on their own.
Tribune Publishing owns a bunch of papers such as the Morning Call and the Sun-Sentinel that fit right in with Gannett's strategy. But Gannett has never owned a property like the L.A. Times — a large metropolitan paper, the fourth largest in the country, which fancies itself a competitor of The New York Times. L.A. Times readers aren't likely to put up with a little USA Today insert.
That's led to widespread speculation that if Gannett does succeed in buying Tribune Publishing, it will turn around and sell the L.A. Times to a private buyer.
“If there is any property that Gannett does not keep, it’s the L.A. Times and San Diego Union-Tribune,” Doctor says. “These do not offer the same kind of synergies as the other papers do.” (That's partly because Gannett doesn't own a lot of papers in Southern California.)
Should Gannett's purchase succeed, Doctor puts the chances of the company selling the L.A. Times at about 25 percent.
That, of course, would open the door for local control, something the Times hasn't had since 2000. Last year, the Times' then-publisher Austin Beutner tried to make it happen — with the help of his billionaire friend Eli Broad (who intended to take the Times private) — but Tribune Publishing rejected the offer, after which Tribune CEO Jack Griffin fired Beutner.
Ferro later bought his controlling stake in Tribune Publishing and fired Griffin.
Recently, newspapers such as the Washington Post and the Boston Globe have been reinvigorated by private ownership. Says Doctor: “These wealthy, individual owners have said, 'I see this as a longer-term prospect. I’m either going to absorb losses or accept less profit, but I want to build an enterprise that’s built to last.'”
A number of L.A. civic leaders and boosters have called for the Times to be returned to local ownership.
“The most successful news organization are those that not only provide information to their audience but that become a center of the community,” says Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. “It’s much easier to be the center of a community when you live there rather than 2,000 miles away.”
However, Gannett CEO Robert Dickey has seemed to indicate that he would want to keep the L.A. Times.
“It's not lost on us that the L.A. Times just won a Pulitzer,” Dickey told Poynter. “There's a long history of terrific journalism. We share that value. The new Gannett is incredibly committed to continuing to build upon our ability to give our readers the best possible journalism in their local markets.”
What does that mean for the Times?
“If Gannett were, in fact, to buy the L.A. Times and UT San Diego, they would begin implementing synergies,” newspaper analyst Alan Mutter says. “That’s a nice way of saying they’re going to cut costs.”
Some of that would be on the business side. But film critics, sports coverage and even national politics could be melded — although the cuts could just as easily come from the Gannett side.
“It may be that the L.A. Times acquisition goes to improve other papers and not the other way around,” Mutter says.
And so the Times, which has been more or less abused by Chicago ownership for the last 15 years, finds itself caught between two rather bizarre prospects: life under Michael Ferro's magical thinking or life as a cog in Gannett's merciless middle-America machine.
Or perhaps life under some local rich guy. We all know which of those outcomes most of the Times' reporters are hoping for.