Republica Press

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REPUBLICA PRESS
Your Business & Political News Source

Soon-Shiong, Patrick

Why Buy a Yacht When You Can Buy a Newspaper?

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Billionaires have had a pretty good pandemic. There are more of them than there were a year ago, even as the crisis has exacerbated inequality. But scrutiny has followed these ballooning fortunes. Policymakers are debating new taxes on corporations and wealthy individuals. Even their philanthropy has come under increasing criticism as an exercise of power as much as generosity.

One arena in which the billionaires can still win plaudits as civic-minded saviors is buying the metropolitan daily newspaper.

The local business leader might not have seemed like such a salvation a quarter century ago, before Craigslist, Google and Facebook began divvying up newspapers’ fat ad revenues. Generally, the neighborhood billionaires are considered worth a careful look by the paper’s investigative unit. But a lot of papers don’t even have an investigative unit anymore, and the priority is survival.

This media landscape nudged newspaper ownership from the vanity column toward the philanthropy side of the ledger. Paying for a few more reporters and to fix the coffee machine can earn you acclaim for a lot less effort than, say, spending two decades building the Bill and Melinda Gates Foundation.

$680 million bid by Hansjörg Wyss, a little-known Swiss billionaire, and Stewart W. Bainum Jr., a Maryland hotel magnate, for Tribune Publishing and its roster of storied broadsheets and tabloids like The Chicago Tribune, The Daily News and The Baltimore Sun.

Should Mr. Wyss and Mr. Bainum succeed in snatching Tribune away from Alden Global Capital, whose bid for the company had already won the backing of Tribune’s board, the purchase will represent the latest example of a more than decade-long quest by some of America’s ultrawealthy to prop up a crumbling pillar of democracy.

If there was a signal year in this development, it came in 2013. That is when Amazon founder Jeff Bezos bought The Washington Post and the Red Sox’ owner, John Henry, bought The Boston Globe.

“I invested in The Globe because I believe deeply in the future of this great community, and The Globe should play a vital role in determining that future,” Mr. Henry wrote at the time.

led a revival of the paper to its former glory. And after a somewhat rockier start, experts said that Mr. Henry and his wife, Linda Pizzuti Henry, the chief executive officer of Boston Globe Media Partners, have gone a long way toward restoring that paper as well.

Norman Pearlstine, who served as executive editor for two years after Dr. Soon-Shiong’s purchase and still serves as a senior adviser. “I don’t think that’s open to debate or dispute.”

From Utah to Minnesota and from Long Island to the Berkshires, local grandees have decided that a newspaper is an essential part of the civic fabric. Their track records as owners are somewhat mixed, but mixed in this case is better than the alternative.

Researchers at the University of North Carolina at Chapel Hill released a report last year showing that in the previous 15 years, more than a quarter of American newspapers disappeared, leaving behind what they called “news deserts.” The 2020 report was an update of a similar one from 2018, but just in those two years another 300 newspapers died, taking 6,000 journalism jobs with them.

“I don’t think anybody in the news business even has rose colored glasses anymore,” said Tom Rosenstiel, executive director of the American Press Institute, a nonprofit journalism advocacy group. “They took them off a few years ago, and they don’t know where they are.”

“The advantage of a local owner who cares about the community is that they in theory can give you runway and also say, ‘Operate at break-even on a cash-flow basis and you’re good,’” said Mr. Rosenstiel.

won a prestigious Polk Award for its coverage of the killing of George Floyd and the aftermath.

“The communities that have papers owned by very wealthy people in general have fared much better because they stayed the course with large newsrooms,” said Ken Doctor, on hiatus as a media industry analyst to work as C.E.O. and founder of Lookout Local, which is trying to revive the local news business in smaller markets, starting in Santa Cruz, Calif. Hedge funds, by contrast, have expected as much as 20 percent of revenue a year from their properties, which can often be achieved only by stripping papers of reporters and editors for short-term gain.

Alden has made deep cuts at many of its MediaNews Group publications, including The Denver Post and The San Jose Mercury News. Alden argues that it is rescuing papers that might otherwise have gone out of business in the past two decades.

And a billionaire buyer is far from a panacea for the industry’s ills. “It’s not just, go find yourself a rich guy. It’s the right rich person. There are lots of people with lots of money. A lot of them shouldn’t run newspaper companies,” said Ann Marie Lipinski, curator of the Nieman Foundation for Journalism at Harvard and the former editor of The Chicago Tribune. “Sam Zell is Exhibit A. So be careful who you ask.”

beaten a retreat from the industry. And there have even been reports that Dr. Soon-Shiong has explored a sale of The Los Angeles Times (which he has denied).

“The great fear of every billionaire is that by owning a newspaper they will become a millionaire,” said Mr. Rosenstiel.

Elizabeth Green, co-founder and chief executive at Chalkbeat, a nonprofit education news organization with 30 reporters in eight cities around the country, said that rescuing a dozen metro dailies that are “obviously shells of their former selves” was never going to be enough to turn around the local news business.

“Even these attempts are still preserving institutions that were always flawed and not leaning into the new information economy and how we all consume and learn and pay for things,” said Ms. Green, who also co-founded the American Journalism Project, which is working to create a network of nonprofit outlets.

Ms. Green is not alone in her belief that the future of American journalism lies in new forms of journalism, often as nonprofits. The American Journalism Project received funding from the Houston philanthropists Laura and John Arnold, the Craigslist founder Craig Newmark and Laurene Powell Jobs’s Emerson Collective, which also bought The Atlantic. Herbert and Marion Sandler, who built one of the country’s largest savings and loans, gave money to start ProPublica.

“We’re seeing a lot of growth of relatively small nonprofits that are now part of what I would call the philanthropic journalistic complex,” said Mr. Doctor. “The question really isn’t corporate structure, nonprofit or profit, the question is money and time.”

operating as a nonprofit.

After the cable television entrepreneur H.F. (Gerry) Lenfest bought The Philadelphia Inquirer, he set up a hybrid structure. The paper is run as a for-profit, public benefit corporation, but it belongs to a nonprofit called the Lenfest Institute. The complex structure is meant to maintain editorial independence and maximum flexibility to run as a business while also encouraging philanthropic support.

Of the $7 million that Lenfest gave to supplement The Inquirer’s revenue from subscribers and advertisers in 2020, only $2 million of it came from the institute, while the remaining $5 million came from a broad array of national, local, institutional and independent donors, said Jim Friedlich, executive director and chief executive of Lenfest.

“I think philosophically, we’ve long accepted that we have no museums or opera houses without philanthropic support,” said Ms. Lipinski. “I think journalism deserves the same consideration.”

Mr. Bainum has said he plans to establish a nonprofit group that would buy The Sun and two other Tribune-owned Maryland newspapers if he and Mr. Wyss succeed in their bid.

“These buyers range across the political spectrum, and on the surface have little in common except their wealth,” said Mr. Friedlich. “Each seems to feel that American democracy is sailing through choppy waters, and they’ve decided to buy a newspaper instead of a yacht.”

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Swiss Billionaire Joins the Bidding for Tribune Publishing

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An octogenarian Swiss billionaire who makes his home in Wyoming and has donated hundreds of millions to environmental causes is a surprise new player in the bidding for Tribune Publishing, the major newspaper chain that until recently seemed destined to end up in the hands of a New York hedge fund.

Hansjörg Wyss (pronounced Hans-yorg Vees), the former chief executive of the medical device manufacturer Synthes, said in an interview on Friday that he had agreed to join with the Maryland hotelier Stewart W. Bainum Jr. in a bid for Tribune Publishing, an offer that could upend Alden Global Capital’s plan to take full ownership of the company.

Mr. Wyss, who has given away some of his fortune to help preserve wildlife habitats in Wyoming, Montana and Maine, said he was motivated to join the Tribune bid by his belief in the need for a robust press. “I have an opportunity to do 500 times more than what I’m doing now,” he said.

Alden, which already owns roughly 32 percent of Tribune Publishing shares, is known for drastically cutting costs at the newspapers it controls through its MediaNews Group subsidiary. Last month, the hedge fund reached an agreement with Tribune, whose papers include The Daily News, The Baltimore Sun and The Chicago Tribune, to buy the rest of the company’s shares at $17.25 apiece.

Choice Hotels International, one of the world’s largest hotel chains, to make a bid on March 16 for all of Tribune, beating Alden’s number with an offer of $18.50 a share.

That bid valued the company at about $650 million. The Alden agreement valued Tribune at roughly $630 million.

Tribune was not swayed by Mr. Bainum’s offer. A securities filing on Tuesday revealed that the company’s board recommended that shareholders approve the Alden bid. At the same time, the Tribune board gave Mr. Bainum the go-ahead to pursue financing for his higher bid.

He has done just that by teaming with Mr. Wyss, who said in the interview that he planned to own the company’s flagship paper while he and Mr. Bainum seek benefactors for Tribune’s seven other metro dailies, which include The Orlando Sentinel and The Hartford Courant.

“He made that bid because he wants The Baltimore Sun,” Mr. Wyss said, referring to Mr. Bainum. “I said, ‘Yeah, that’s fine. And I have to make The Tribune even better than what it is now.’”

the sale of Synthes to Johnson & Johnson for roughly $20 billion. Mr. Wyss and his family — a daughter, Amy, also lives in Wyoming — had the largest stake in Synthes, owning nearly half the shares.

The sale of Tribune, which the newspaper company hopes to conclude by July, requires regulatory approval and yes votes from company shareholders representing two-thirds of the non-Alden stock. The medical entrepreneur Patrick Soon-Shiong, who owns The Los Angeles Times with his wife, Michele B. Chan, has enough Tribune shares to squash the Alden deal by himself. Dr. Soon-Shiong declined to comment on Saturday.

Mr. Wyss said he would be a civic-minded custodian of The Chicago Tribune. “I don’t want to see another newspaper that has a chance to increase the amount of truth being told to the American people going down the drain,” he said.

Alden’s potential acquisition of Tribune has been fiercely opposed by many journalists at Tribune papers. Alden has aggressively cut costs at many MediaNews Group publications, including The Denver Post and The San Jose Mercury News. Critics say the hedge fund sacrifices journalistic quality for greater profits, while Alden argues that it saves papers that would otherwise join the thousands that have gone out of business in the last two decades.

Mr. Wyss, 85, said he was partly inspired to join Mr. Bainum by a New York Times opinion essay last year in which two Chicago Tribune reporters, David Jackson and Gary Marx, warned that an Alden purchase would lead to “a ghost version of The Chicago Tribune — a newspaper that can no longer carry out its essential watchdog mission.” Since that article appeared, both reporters have left the paper.

Mr. Wyss, born in Bern, first visited the United States as an exchange student in 1958, working for the Colorado Highway Department. He was a journalist as a young man, he said, covering skiing for Neue Zürcher Zeitung, a Zurich paper, and filing dispatches on American sports to Der Bund, a Bern paper, when he was studying at Harvard Business School.

He said he believed The Chicago Tribune would prosper under his ownership.

“Maybe I’m naïve,” Mr. Wyss said, “but the combination of giving enough money to a professional staff to do the right things and putting quite a bit of money into digital will eventually make it a very profitable newspaper.”

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New Suitor May Enter Fray for Tribune Publishing

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A deal that would reshape the American newspaper industry has run into complications just one month after an agreement was reached, according to three people with knowledge of the matter. As a result, the New York hedge fund Alden Global Capital may have to fend off a new suitor for Tribune Publishing, the chain that owns major metropolitan dailies across the country, including The Chicago Tribune, The Daily News and The Baltimore Sun, the people said.

On Feb. 16, Alden, the largest shareholder in Tribune Publishing, with a 32 percent stake, reached an agreement to buy the rest of the chain in a deal that valued the company at $630 million. In the deal, Alden would take ownership of all the Tribune Publishing papers — and then spin off The Sun and two smaller Maryland papers at a price of $65 million to a nonprofit organization controlled by the Maryland hotel magnate Stewart W. Bainum Jr.

In recent days, Mr. Bainum and Alden have found themselves at loggerheads over details of the operating agreements that would be in effect as the Maryland papers transitioned from one owner to another, the people said. In response, Mr. Bainum has taken a preliminary step toward making a bid for all of Tribune Publishing, the people said.

Mr. Bainum has asked the Tribune Publishing special committee, a group made up of three independent board members, for permission to be released from a nondisclosure agreement prohibiting him from discussing the deal, so that he would be able to pursue partners for a new bid, the people said.

sale of a majority-owned subsidiary for $160 million.

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