Major Tronc Shareholder Criticizes Company's 'Poor Corporate Governance'

The second-largest shareholder of Tronc, which owns The Los Angeles Times and The Chicago Tribune, among other newspapers, has criticized the company of “poor corporate governance” in a letter sent to Tronc’s board.

Earlier this week, biotech entrepreneur Dr. Patrick Soon-Shiong revealed in regulatory filings that he had increased his stake in Tronc from 16% to 24%, after buying 950,000 shares from the investment firm Oaktree Capital, a longtime Tronc shareholder.

That puts Soon-Shiong just a hairs' breadth away from owning as much of the company as its current largest shareholder, non-executive chairman Michael Ferro, whose Merrick Ventures owns 24.8%.

In the letter from Soon-Shiong sent Monday, his lawyer John B. Quinn says Nant Capital, Soon-Shiong’s investment firm, “is troubled by the company’s corporate governance, or lack thereof,” according to a New York Times report.



He asked Tronc’s board to share the company’s books and records with him. The letter suggests that the mismanagement of the company is a reason for Tronc’s stock trading “at a meaningful discount” to the price Nant paid for its shares. Last May, Nant Capital invested $70.5 million to acquire about 13% of Tronc, then called Tribune Publishing, at $15 a share, fending off a takeover by Gannett.

Soon-Shiong added he was "surprised to learn” Tronc was raising the cap on the stake that Ferro can acquire to 30%, from 25%. According to The Wall Street Journal, Soon-Shiong’s lawyers plan to “request his contract also be amended to allow his stake to also be increased to 30 percent from 25 percent.”

In a statement acquired by the NYT, Tronc said it had reviewed Soon-Shiong’s letter and found it to be “filled with misstatements and baseless innuendo,” and added that it intends to respond to Nant Capital soon.

As of Tuesday afternoon, Tronc stock is sitting at $13.84.

This month, Tronc unexpectedly removed Soon-Shiong from the list of directors that shareholders can elect at the company’s annual meeting in April. He will no longer serve on Tronc’s board.

Tronc also announced that it was buying back the 3.75 million shares held by Oaktree Capital.

Ferro, a technology entrepreneur, wants Tronc to use artificial intelligence and new technology to spice up its journalism. Last summer, he shared his idea for the company to produce 2,000 videos a day using artificial intelligence.

The company’s total revenue last year was down 4%, to $1.6 billion. Advertising revenue for the publishing businesses dipped by 11%, while digital ad revenue was up 1%.
2 comments about "Major Tronc Shareholder Criticizes Company's 'Poor Corporate Governance'".
Check to receive email when comments are posted.
  1. Bob Gordon from The Auto Channel, March 30, 2017 at 4:50 p.m.

    For the past 15 years we have been promoting the concept of Change “Searching the Content Cloud” to “Searching Focused Content Channels”. Looking over the horizon back then we saw the massive amounts of  impressions coming, and most of them impressions placed alongside or within non relevant (at best) to dangerous to the brand content environment...but buying billions of crappy impressions was the way the agencies could make money, while flim-flamming the clients advertiser the in htis new world quality and relevancy of editorial content did not matter to make successful advertising... we all knew that was bull shit but swimming against the mass impressionn stream was virtually impossible. So here we are 15 years later and maybe advertisers will return once again to advertising that promotes the brand  while generating clicks...we are waiting for the automotive insertion orders to flood in...   

  2. Paula Lynn from Who Else Unlimited, March 30, 2017 at 5:16 p.m.

    Start with the name....26 letters are not enough.

Next story loading loading..