The announcement that billionaire Patrick Soon-Shiong plans to take the Los Angeles Times public was met with a mix of panic and derision inside the building this week. But outside, astute investors point to another media public offering that serves as an appropriate parallel: Newsmax.
Soon-Shiong broke the news on Monday during an interview with Jon Stewart on “The Daily Show,” saying he wanted to “democratize” the newspaper by taking it public, earning applause from the host and his audience. But as details emerged the following day, it wasn’t so simple.
It turns out that Soon-Shiong — whose meddling in the newsroom and cuts to staffing have made him unpopular and a cause for skepticism among much of his editorial team — is likely mimicking a successful bid to raise capital and go public earlier this year by Newsmax, the ultra-conservative cable news network run by Trump devotee Chris Ruddy and a fan of conspiracy theories related to the 2020 election and Jan. 6.
The announcement is just the latest twist in the topsy-turvy saga of the Los Angeles Times, the hometown paper of the second-largest city in the country, but has been beset by multiple changes in ownership and, in the last several years, waves of layoffs and questions about its editorial integrity — largely set off by Soon-Shiong’s own interference.
“This sounds like just another harebrained scheme from Dr. PSS, this time to mitigate his losses,” said one former senior editor who left a year ago.“He has a habit of announcing or starting things that never happen, such as the eSports venue in El Segundo and a rechargeable zinc-air battery.”
Even if Soon-Shiong makes good on this promise, there’s little confidence in the newsroom that the results will be positive.
“If this does play out, what people are thinking is most scenarios are not good,” said a newsroom insider. “Some staffers think this is a move to get rid of the union. And if it does happen — who would the buyers be? The concern is you’re going to get investors who don’t care about quality of journalism, but on getting a return on investment – hedge funds, vulture capitalists, maybe even some right wing types who want to push the MAGA envelope.”
Said a recently exited newsroom leader: “I don’t know who would invest in this. It’s very odd. What is the business model you have to offer? What is the path to profit or sustainability? What is the unique value offer? I’m very puzzled.”
This person added: “If you’re losing money, why would I give you money?”
The LA Times is losing money, about $30 million this year, according to two company insiders. (A report earlier this year in Adweek that the newspaper lost $50 million last year was said by those sources to be inflated.) The newspaper laid off more than 20 percent of its newsroom staff last year.
But not making money didn’t stop Newmax from going public.
Newsmax pulled a two-step raise in March of this year, selling 7.5 million Class B Common shares at $10 per share under something called Regulation A, which gives private companies the ability to sell shares to investors without the regulatory requirements of a standard IPO, capped at $75 million.
Ruddy raised the maximum $75 million allowed under the rules. Within the same time frame, Newsmax closed a $225 million private offering of Series B Preferred Stock. It exceeded the initial $150 million goal thanks to participation from over 8,000 accredited investors, according to multiple reports earlier this year.
The private and public capital raises, which offered a “crowd-financed” solution that blended both institutional and retail participation, took the company public without having to do a full IPO.
Soon-Shiong may well have exactly this maneuver in mind. His Nantworks revealed on Tuesday that he has hired the same investment bank, Digital Offering, to handle the sale. Calls to the CEO of Digital Offering Gordon McBean were not returned by time of publication. The LA Times head of communications responded with an out-of-office email after TheWrap sought comment.
A news release said the billionaire plans to roll the money-losing newspaper into the newly created L.A. Times Next Network, including curated creator platform LAT Next, e-sports and gaming-focused Nant Games, NantStudios Virtual Production and streaming and live-event support company L.A. Times Studios.
The fact that the LA Times is bleeding so much from losses likely won’t matter.
That was the case with Newsmax. In 2024, its revenue rose 26% to $171 million — but its net loss widened to $72.2 million after losing $42 million in 2023. The company also settled a defamation lawsuit in 2024 by electronic voting systems maker Smartmatic for $40 million over its false claims regarding vote alteration and manipulation in the 2020 presidential election.
Nonetheless, the stock is up from its Reg A “IPO” price of $10 per share, and now sells at $14 per share on the NYSE.
According to The Motley Fool, “Newsmax stock is overvalued relative to its growth potential, but it’s attracting short-term traders.”
That may be enough to rescue Soon-Shiong from devastating ongoing losses which he has to cover from his own pocket, monthly.
Soon-Shiong may be betting that his tack to the right since Donald Trump got elected will benefit his media properties overall. Certainly Trump’s election has been an enormous boon to Fox News, whose ratings have spiked upward, and to Newsmax, which successfully raised hundreds of millions and a long list of right-wing podcasts. Trump’s Truth Social raised money in a 2024 SPAC (special purpose acquisition company) offering and is now listed on the NASDAQ.
What it means for a traditionally non-ideological newspaper is another matter.
Meanwhile at the LA Times, the staff was still processing the news.
“It could be bad, I think it’s a toss up. We don’t really know,” said one veteran LA Times staffer. “It does seem like he’s doubling down on having the LA Times belong to him. He believes in LAT Next. It’s his baby. He’s not giving up.”