The Los Angeles Times has been sold to the biotechnology billionaire Patrick Soon-Shiong for $500m by US publisher Tronc, following months of mounting turmoil at its flagship newspaper.
The cash deal also includes the San Diego Union-Tribune and a number of smaller regional newspapers. Soon-Shiong will also assume $90m in pension liabilities. The 65-year-old South African-born surgeon, who made his fortune with a pioneering cancer drug, is one of Tronc’s largest shareholders.
The deal places a value on the papers being sold at eight times earnings before interest tax, depreciation and amortisation of $73m in the 12 months ending September 30, 2017.
Tronc, which also owns the Chicago Tribune and the New York Daily News, will use the funds to pay outstanding debt and lower pension liabilities.
“We will have a versatile balance sheet that will enable us to be even more aggressive in executing on our growth strategy as a leading player in news and digital media. We have a pipeline of robust opportunities and M&A will continue to be a significant part of our future,” said Justin Dearborn, chief executive.
The LA Times has been hammered by declining advertising and circulation revenue and difficulties building a digital business, and has undergone several rounds of cuts in recent years.
Those woes have been compounded by leadership upheavals. Its editor in chief was replaced last month following tensions within the newsroom, where journalists voted to unionise. Separately, Ross Levinsohn, publisher and chief executive, was put on leave amid an investigation into allegations of inappropriate behaviour during his time at other companies. Levinsohn had been tapped to lead the LA Times last August after the previous management team was ousted.
Soon-Shiong was brought in as an investor at Tronc by Michael Ferro, the company’s non-executive chairman, in 2016 when the company was fending off a takeover attempt from Gannett, the publisher of USA Today. The billionaire paid $70.5m for a 13 per cent stake in the company, formerly known as Tribune Publishing.
Within a year, Soon-Shiong and Ferro were feuding for control, and last year the company did not renominate the billionaire to its board. Soon-Shiong currently owns 26 per cent stake of Tronc, while Ferro controls about 27 per cent through his investment firm, Merrick.
Soon-Shiong is a surgeon who became a billionaire after selling Abraxane, a multibillion-dollar drug he invented, to Celgene in 2010. He is also a minority owner of the Los Angeles Lakers basketball team.
Soon-Shiong was not available to comment. Tronc did not respond to a request for comment.