Los Angeles Times Layoffs, Asset Sale Are Danger Signs From a Once-Optimistic Billionaire
The sale of the San Diego Union-Tribune and billionaire owner Patrick Soon-Shiong’s subsequent promise to make the Los Angeles Times “self-sustaining” have generated fresh doubt about his commitment to the publication he bought for $500 million just five years ago with talk of a “hundred-year plan” to reinvent Hollywood’s hometown paper.
How time flies. Coming on the heels of 74 newsroom layoffs, offloading an asset like the Union-Tribune last week is a clear sign that Soon-Shiong’s investment in the Los Angeles flagship publication is struggling, and that the owner is taking extreme measures to offset financial losses.
“The fundamental problem here is that billionaires are fickle,” Press Watch editor Dan Froomkin told TheWrap. “They rescue you one day and the next day they lose interest.”
Just how bad is the financial situation at the L.A. Times? In an interview this week with Axios, executive editor Kevin Merida acknowledged what seems obvious, that the newspaper is losing money. (He said this in the context of a story about the launch of De Los, a new L.A. Times digital product catering to a younger Latino audience.)
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Two years ago, TheWrap reported exclusively that the paper’s revenue fell to $350 million in 2020 from well above $400 million the previous year, which California Times President Chris Argentieri shared with the newsroom at the time. Since that time,. the pandemic has decimated the advertising business, and circulation has been a struggle at many, if not most metropolitan newspapers.
But the trend suggests that the hoped-for rescue operation in Soon-Shiong purchasing the L.A. Times from Tribune in 2018 may not be going so well and that his management team has yet to figure out how to make up for the losses through digital subscriptions and ads.
The Los Angeles Times is not for sale, despite receiving “many inquiries,” a spokesperson said. The spokesperson declined to provide detailed financial information. An individual close to management said that Soon-Shiong has continued to invest in the paper, even with the cuts, and that demonstrates his long-term commitment.
This week, the L.A. Times announced that it was nearing 550,000 digital subscriptions, which includes subscriptions through Apple News+ (those subscribers pay for a bundle, which producers far less revenue than a direct subscription). That’s far lower than Soon-Shiong’s target of 1 million subscriptions by 2022, which he set when he bought the paper.
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That figure represents real growth over the 250,000 subs in 2020, but it’s still far smaller than the New York Times’ 9.7 million digital subscribers and the Washington Post’s 2.5 million. Media is going through another wave of financial crisis across the board, with a record-high number of job cuts across the industry in 2023. The L.A. Times hasn’t been immune, as just last month the paper cut 13% of its newsroom, laying off 74 journalists.
An asset sale
The Union-Tribune came in a package deal when Soon-Shiong purchased the L.A. Times from Tribune Publishing in 2018, but it was “always an afterthought,” New York University journalism professor Jay Rosen said. “Now it will be a different kind of afterthought.”
The buyer of the Union-Tribune is part of what many media analysts found disconcerting about the deal. Soon-Shiong, a biotech entrepreneur, sold the Union-Tribune on Monday to MediaNews Group, which has purchased hundreds of newspapers and is owned by hedge fund Alden Global Capital, for an undisclosed amount on Monday.
“Selling to a hedge fund is the worst-case scenario” for a news outlet, Froomkin said. “It is basically the death of a thousand cuts.”
Alden also now owns Tribune Publishing, the L.A. Times’ former owner, having purchased the publisher of the Chicago Tribune in 2021. The hedge fund has garnered a reputation in the media industry for acquiring and gutting newsrooms.
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With the addition of the already struggling Union-Tribune, MediaNews Group strengthens its grip on local news across the Southern California region. Its Southern California News Group includes the Orange County Register, Los Angeles Daily News, Long Beach Press-Telegram, Riverside Press-Enterprise, San Gabriel Valley Tribune and Pasadena Star-News.
Rosen characterized these buyers of newspapers as “financial firms that specialize in extracting profits from a declining asset.”
Within minutes of the sale announcement, Sharon Ryan, MediaNews Group’s top California executive, told Union-Tribune staff that layoffs are imminent as the organization adjusts to new leadership.
Rosen said the layoff announcement “fulfilled a parody of [the new owners’] nature.” Alden didn’t respond to a request for comment. The sale of the San Diego Union-Tribune positioned both publications to succeed, a Los Angeles Times spokesperson said.
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How to be self-sustaining
Analysts agree that there is a profitability and ownership crisis across the local news industry. The question now becomes whether the Los Angeles Times can withstand the current trying to pull it under.
In a statement announcing the sale of the Union-Tribune, Soon-Shiong seemed to reaffirm his commitment to the Times’ future.
“Our intention now is to focus on the ongoing work of transforming the L.A. Times into a self-sustaining institution,” Soon-Shiong said in the email. “Our hometown of Los Angeles and the state of California — really, the West Coast — needs a strong, independent news organization.”
But experts questioned whether becoming a “self-sustaining institution” in a declining news market was a realistic goal. The L.A. Times, in particular, is stretched between fueling the broad ambitions that come from being based in a global cultural capital and funding the accountability reporting involved in covering a large and diverse American city.
On Monday, the same day that the Union-Tribune’s fate was sealed, the L.A. Times launched De Los.
While the launch has been lauded as a success, high expectations set by Soon-Shiong continue to loom over the organization, such as the 1 million digital goal by the end of last year.
The L.A. Times can now move forward without the burden of a declining Union-Tribune, but it’s still not making a profit. Executive editor Kevin Merida told Axios he’s optimistic that the newsroom he runs and the business operation will come up with ideas for viable long-term revenue models.
The question now is whether Soon-Shiong has the resolve to wait for those to evolve.
“It is valid to question the long-term commitment of the family,” Rosen said. “There is no way to know when they will run out of patience.”
Froomkin saw no reason to believe that Soon-Shiong “has lost interest” in the newspaper at this point. However, Soon-Shiong may have to acknowledge that “there needs to be a longer runway before it becomes self-sustaining” — or reconcile himself to funding its losses for a long time to come.
