The Los Angeles Times has been sold to a Southern California biotech billionaire for $500 million, marking the first time in nearly two decades that the newspaper has been under local ownership.
Dr. Patrick 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. The deal includes The San Diego Union-Tribune, various titles in the California News Group and the assumption of $90 million in pension liabilities.
The announcement Wednesday means that for the first time in 18 years the Times will be under local ownership.
Soon-Shiong, who is one of Los Angeles' wealthiest individuals and part-owner of the Los Angeles Lakers, takes over in a time of turmoil at the paper. The paper just replaced its top editor, the third switch at the top job in the newsroom in six months.
Publisher Ross Levinsohn is on unpaid leave after revelations that he was a defendant in two sexual harassment lawsuits elsewhere.
Journalists voted last month to unionize for the first time in the paper's 136-year history.
Soon-Shiong also holds a minority interest in the Los Angeles Lakers, acquired in 2011 from Magic Johnson, the team's former superstar and current president of basketball operations. In an interview with the Times last year, Soon-Shiong acknowledged that as a major stockholder, he was unhappy with the way The Los Angeles Times was being run and felt a need to ensure its survival.
"I am concerned there are other agendas, independent of the newspaper's needs or the fiduciary obligations to the viability of the organization," he said at the time. "My goal is to try and preserve the integrity and the viability of the newspaper."
After The Washington Post first reported a potential sale Tuesday, cheers spread through the Times newsroom.
Tronc said the deal will allow it to follow a more aggressive growth strategy focused on news and digital media. Acquisitions will continue to be a big part of its plan, Tronc said Wednesday, and the company announced that it's buying a majority stake in online product review company BestReviews for an undisclosed amount.
The sale comes about a week after veteran Chicago journalist Jim Kirk was named editor in chief to replace Lewis D'Vorkin, whose short tenure was marked by clashes with staff.
Kirk, 52, had briefly served in the job during a management overhaul from August until November, when D'Vorkin joined the paper.
Reporters at the Times were alarmed by recent hiring of several news executives who reported to business executives, and not to news editors. That sparked fears the business side would wield undue influence in editorial matters. Traditionally, the editorial and business sides of a paper work separately to maintain journalistic credibility.
A return to local ownership would restore pride at the Times, said veteran media business analyst Ken Doctor.
The question is whether a new owner will do more than halt cutbacks by reinvesting, as Bezos and Henry did at their newspapers, to set the Times on a new path.
"Given the huge challenges still faced by news publishing in the age of Google/Facebook ad duopoly and still-onrushing digital disruption, even a billionaire has his work cut out for him," Doctor said.
The sale is in keeping with one of two trends in media ownership: big companies getting bigger and wealthy investors taking on newspapers as philanthropic endeavors, said Al Tompkins, a senior faculty member at the Poynter Institute.
In 2013, Amazon founder and CEO Jeff Bezos bought The Washington Post for $250 million. Boston Red Sox owner John Henry bought the Boston Globe for $70 million.
"We find ourselves returning to where we were a century ago when a handful of wealthy owners controlled big influential newspapers," Tompkins said. "Here's the difference: The ownership today does not promise lucrative returns. You take it over knowing it isn't nearly as profitable as it might have been 20 or 50 years ago. Today it's a thinner margin and it gets thinner every day."