The owner of the troubled Los Angeles Times, billionaire Patrick Soon-Shiong, is still intent on taking the once-storied newspaper public, but he’s starting with a trial balloon. On Oct. 10, Soon-Shiong began circulating a private placement solicitation asking investors to buy as much as $500 million in private stock.
The plan then is to take the Los Angeles Times public next fall on the New York Stock Exchange under the symbol “LAT.”
The $500 million amount he’s looking to raise is what Soon-Shiong paid for the newspaper in 2018. The glow of a billionaire owner with endless resources faded quickly with his tenure marked by tumult, from waning profitability to layoffs, to a voluntary exodus of talent, to his intervening on editorial decisions like deciding to block an endorsement of Kamala Harris in the 2024 presidential race.
So when he chose to reveal his plans for an IPO to Jon Stewart as a way to “democratize” the paper, his comments were met with chuckles within media. Now it seems his plans for a pre-cursor to his IPO of a private stock sale may be eliciting the same response on Wall Street.
TheWrap could not find one investment banker willing to talk about the offering or the appeal of investing in the Los Angeles Times right now. Others weren’t even aware of the offering. Soon-Shiong hired Digital Offering LLC to assist with the sale, the same firm that Newsmax hired for its public offering in March.
“This seems to me like a way to get suckers to cover part of his exposure while he remains in control. I think the guy is basically clueless about the business and doesn’t know what he doesn’t know, which is always dangerous,” a former senior newspaper executive told TheWrap.
One Los Angeles media-watcher echoed that bleak assessment.
“Soon-Shiong has been like an absentee landlord at best, and when he has gotten involved with the business, he has caused harm,” Gabriel Kahn, a veteran newspaper journalist and professor at USC’s Annenberg School of Journalism, told TheWrap. “So the question is, what are they selling?”
Patrick’s pitch
Those who do invest in the private stock sale are being promised a 7% annual dividend and a 25% discount for conversion to common stock. Soon-Shiong will still control the voting stock.
The top-line pitch from Soon-Shiong is this: “Build the most trusted, technology-powered media company of the next century, where diverse voices are amplified, audiences become owners and a 144-year archive fuels innovative formats worldwide. We’ll write the next 144 years, together.”
The investment is being billed as the LA Times Media Group, which would also include NantStudios and NantGames, virtual production operations whose CEO is Soon-Shiong’s wife, Michele B. Chan.
But the actual 249-page private placement document is full of CYA language of the risks associated with handing over your money.
To highlight a few of these caveats:
- “We will have broad discretion in the use of proceeds from this Offering and may not use them effectively.”
- “We currently have limited accounting personnel with a background in public company accounting, reporting and compliance. We will have to add personnel and devote personnel and financial resources to meet our reporting and disclosure obligations as a publicly listed company.”
- “Certain recent initial public offerings of companies with relatively small public floats have experienced extreme volatility that may have been unrelated to the underlying performance of the Company. Our Class A Common Stock may experience rapid and substantial price volatility, and price decline, which may make it difficult for prospective investors to assess what we believe to be the value of our Class A Common Stock.”
What may be most pertinent to a would-be investor is buried at the very bottom of the document, revenues and profits. For the six months ended on June 29 of this year, it shows a net loss of $21.5 million on revenues of $127.2 million.
Short-term and long-term debt, as of June 29, was $301 million.
A Los Angeles Times spokesperson did not respond to a request for comment. Gordon McBean, the co-founder and chairman of Laguna Beach-based Digital Offering, did not respond to a request for comment.
The Times’ trajectory
Back in 2018, USC’s Kahn offered advice in an open letter to Soon-Shiong upon purchasing this journalistic “jewel,” encouraging the paper’s new steward to invest in the Times, stay out of editorial matters and try not to be a player in Washington. “The Times, thank God, is no longer part of a publicly traded company,” Kahn wrote.
Now seven years later, “Soon-Shiong has shown himself to be completely incompetent at running a newspaper,” Kahn said. He described the Times’ subscription business as “anemic,” and faulted the paper for ceding high-impact (and potentially lucrative) coverage of state government in Sacramento to Politico.
“Los Angeles needs a major aggressive, well-funded news organization. There is a market here. It’s a huge area. And it’s not an impossible feat,” Kahn said.
“It’s not that the paper doesn’t do strong journalism,” he added. “But it’s been caught in the familiar cycle of declining revenue means a smaller newsroom budget means more declines in revenue means an even smaller news budget, etc. We’ve seen that movie, we know how it ends.”
The current day Los Angeles Times is a stark contrast to the one that owner and publisher Otis Chandler, the son of board director and philanthropist Dorothy Chandler, took public in 1964 under the paper’s parent company, Times Mirror, which included other publishing and printing properties. It was a historic move since no major standalone newspaper publisher at that time had turned to the public markets in this way.
Times Mirror grew substantially in the years ahead, adding papers like Newsday and the Baltimore Sun to its portfolio before it was acquired by the Tribune Co. in 2000 for $8.2 billion. The last quarter century since has been one of ups and downs for the LA Times, navigating not only shifts in the industry from digital disruption but less civic-minded owners than the Chandler family.
Of course, the Chandlers did not face many of the pressing market forces that Soon-Shiong must grapple with, such as AI, “which may impair our ability to compete effectively,” according to the offering document.
Such stated risks feel particularly ominous, and present Soon-Shiong with the tough task of convincing investors there’s also the potential for reward.
Read here for the full offering document.