"LA Times' Woes Go Deeper Than Dollars" by Daniel Guss
@TheGussReport on Twitter - A few days ago, the Los Angeles Times announced that it has eliminated 74 positions in its newsroom, a roughly 13% decrease. It claims that these necessary moves were triggered by the “economic climate” and “industrywide slowdown in advertising sales and subscriptions.”
Undoubtedly, that’s true.
But the Times may forget the other factors that made its dysfunctional marriage to Dr. Patrick Soon-Shiong predictable, preventable and worse than it needed to be, with no end in sight.
Did Dr. Patrick Soon-Shiong Not See Newspaper Fire Sales?
Having spent a good deal of my graduate education studying business valuations, I pointed out several times in 2018 that “Soon-Shiong appears to be grossly overpaying for both entities,” meaning the LA Times (LAT) and the San Diego Union-Tribune (SDUT).
He appeared to not consider decades of plummeting values of other major newspapers without good reason to believe that the LA Times’ business model was any different, let alone better.
In 1993, Mort Zuckerman bought the New York Daily News for $36 million. By 2017, he sold it to TRONC (then-owner of the LA Times) for just $1 plus assumption of its pension and other liabilities.
In 1993, the New York Times purchased the Boston Globe, long considered one of the best newspapers in the United States, for $1.1 billion. By 2013, they dumped it for just $70 million to John Henry, current owner of the Boston Red Sox, with the buyer not even assuming its pension liabilities.
In 2006, the Philadelphia Inquirer and related assets sold for $562 million. By 2012, it sold for just $55 million.
In 2013, when Amazon founder Jeff Bezos (over)paid $250 million for the Washington Post, Craig Huber of Huber Research Partners said, “this newspaper would’ve sold 10 years ago for $2 billion.”
Like the LA Times, each is a Pulitzer Prize winner. Some many times over. But these warning signs were from before Soon-Shiong bought the LAT. Other problems soon (or eventually) surfaced.
The Rent Was Too Damn High
When Soon-Shiong forked over $500 million in 2018 for LAT, SDUT and other assets, he made clear that he wanted to create a multi-media news outlet suitable for the 21st century. Noble as that may have been, if he wanted to do that, he didn’t need to buy two vastly overpriced 20th century assets to do it.
By 2016, less than two years prior to Soon-Shiong’s purchase, the Times’ then-identity-confused owner (Tribune, TRONC et al) sold its DTLA headquarters and other properties to developer Onni Group for $430 million. Ironically, the Times soon found it too costly to stay in the hub of Southern California government and wound up with a new home in El Segundo, along with the mockery of its detractors.
My question is, who led Soon-Shiong to believe that LAT and SDUT were worth $500 million after the real estate was sold?
A tip of the hat to Tribune/TRONC’s business advisors for maximizing the value of its assets to a stunning degree.
Pat’s Purchase Became His Daughter’s Dalliance
If there was any doubt about Soon-Shiong’s commitment to letting the Times’ content creators do their multi-Pulitzer thing, it was best-documented in Politico last year, when the social engineering ambitions (i.e. meddling) of his daughter, Nika Soon-Shiong, had reached a critical mass with some employees.
Whether or not LA likes what the Times publishes and pursues, the most telling words in the Politico story describe Patrick Soon-Shiong as having “ephemeral” attention on the business and his daughter as “meddling,” neither of which are conducive to the Times’ stated mission.
So let’s call it by its proper name: self-censorship by intimidation.
A Fish-Wrap’s Labor Agreement Isn’t Worth The Paper It Is Written On
In 2019, when the Times reported that it reached a new contract with the LA Times Guild, the parties touted long overdue pay raises, benefits and other protections that, depending on who you ask, largely went by the wayside in last week’s layoff announcement.
Good luck reconfiguring what you’ve got, LA Times management, when those who create your words and images feel blindsided by your own words and promises.
So, What Now?
The economic reality of the print/digital news business is that it is rapidly losing a largely disinterested population that is more focused on social media, cable TV news and every crazy with a Substack. :-0
(It helps to have a sense of humor, especially on Mondays…)
Billionaires hate losing money without seeing continually improved business results. Even the richest man in LA has his limits. With tech titans in full control of whose news gets featured, the Times cannot survive forever on its $1-for-six-month digital subscription. Its price thereafter, $125 for an annual digital subscription, is a pipe dream, especially when all anyone needs to do to get another six months is to use a different email account, a different credit card and to clear their device’s cache.
And that assumes that people are willing to pay that $1 for agenda-driven content that focuses as much on marmalade, bike lanes and gender issues as it does on homelessness, crime and the disappearing middle class.
With no known catalysts for change on the horizon, the likely forecast for the Times is more of what they announced last week. That’s how capitalism works, and you don’t need to be a billionaire to understand it.
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(Daniel Guss, MBA, is nominated for four ‘23 LA Press Club journalism awards. He is City Editor for the Mayor Sam network, and has been a featured contributor for CityWatchLA, KFI AM-640, iHeartMedia, 790-KABC, Cumulus Media, KCRW 89.9 FM, KRLA 870 AM, Huffington Post, Los Angeles Daily News, Los Angeles Magazine, Movieline Magazine, Emmy Magazine, Los Angeles Business Journal, Pasadena Star-News, Los Angeles Downtown News and the Los Angeles Times in its sports, opinion, entertainment and Sunday Magazine sections among other publishers.)