US tech investor Michael Ferro had grand plans to transform newspapers for the digital age. But with the sale of the Los Angeles Times he seems to be retreating from those ambitions. Jane Lewis reports.
“What exactly does Michael Ferro want out of the news industry?” asks Sam Stecklow in the Chicago Reader. “It’s a fair question for the man who controls [the US’s] third-largest newspaper publishing company.” Ferro, a 51-year-old tech entrepreneur, has acquired a string of high-profile titles, yet he “has never seemed particularly enamoured of any of the newspapers he’s invested in”.
Take the Los Angeles Times, which came into his orbit when he became the biggest investor in Tribune Publishing, its parent, in 2016. Shortly afterwards he rebranded Tribune as “the idiotically named Tronc”, says Joe Nocera on Bloomberg, setting the tone for what followed. Under Ferro’s watch “years of job cuts and cost squeezes have been compounded by leadership upheavals and tensions”, says the Financial Times.
The paper’s top editors and publisher were ousted last year. In January its latest editor was replaced after “fomenting so much paranoia and anger in the newsroom during his brief stint that the news staff were on the verge of a full-blown revolt”, adds Nocera. Revenue and income had been in decline for years, but with Ferro, morale went from bad to worse.
So it’s no wonder that some Los Angeles Times’ journalists “even popped a bottle of champagne” when the news broke that Tronc was flipping the newspaper to Patrick Soon-Shiong, a biotech billionaire who is Tronc’s second-largest shareholder, for $500m last month, says Sydney Ember in The New York Times. They will be pleased to be under less “scattershot” ownership. Tronc still controls the Chicago Tribune, The Baltimore Sun and the New York Daily News, but the titles could be a target for Gannett, the biggest US newspaper group, which ditched a bid for the whole firm in 2016. All told, the deal looks like a “retreat”, says the FT.
An early starter
Ferro “has never been afraid to push boundaries”, said The New York Times in 2016. He is “an audacious businessman” with a wealth of ideas who can both “impress and alienate” associates. “Frequently compared to other brash businessmen like Donald Trump”, he showed an “entrepreneurial spirit” from an early age – as a teenager “he outsourced his house-painting jobs to others”.
Ferro’s first real venture made roof coatings, but his “golden ticket” to wealth was Click Commerce – a software firm that he set up in 1996, floated in 2000, and sold for $300m in 2006. (Two years later the buyer wrote down the investment.) He used some of the proceeds to make “a notable bet” on a medical-imaging firm called Merge Healthcare, which he sold to IBM for $1bn in 2015, a 900% return.
Yet his bid to merge tech with media has inspired derision: buzzword-heavy talk about a strategy based on “machine learning” has not produced “a viable new business model that can arrest declining circulations”. So, like other media firms, Tronc is now finding that “getting plutocrats to pay up for trophy properties” is simpler, says the FT. Hence Soon-Shiong joins Amazon’s Jeff Bezos (The Washington Post), investor John Henry (The Boston Globe) and casino magnate Sheldon Adelson (Las Vegas Review-Journal) among the list of high-profile figures to buy up papers.
They might not make the industry turn a profit either, says Business Insider – but all seem less concerned about that than Ferro. For them, “a little red ink may well be worth the price to influence the debate”.