An Open Letter to Patrick Soon-Shiong
You bought a jewel, a journalistic bastion that conducts oversight of so many institutions, from public officeholders to corporations and even my own employer (USC). In many ways, the Los Angeles Times and the San Diego Union-Tribune (which, along with a smattering of local papers, is also part of the sale) are what holds this sprawling geography of Southern California together. They are not perfect, but they are essential.
Right now, you are riding into town on a white horse wearing a white hat. But the Times newsroom has seen a succession of new owners over the years, some of them also claiming to be saviors. In 2000, the newspaper joined the Tribune Co., which meant the shots were being called from Chicago. Then Sam Zell came, extolling the virtues of porn and telling everyone that they didn’t know how to do their jobs. He proceeded to push the LA Times into bankruptcy, where it languished for nearly four years.
What could be worse than bankruptcy? Private equity! Oaktree Capital Management and Angelo, Gordon & Co., the next owners, took the company public, but saddled it with debt, stripped it of its most valuable assets and even sold its own building out from under it.
What could be worse than that? Michael Ferro! The guy originally brought in to raise capital for an acquisition, Ferro instead orchestrated a palace coup, which arrived like a tronc in the night. His worst newsroom strategy that was never implemented: creating global entertainment coverage with bureaus in Lagos and Manila. His worst strategy that was actually implemented: hiring Lewis D’Vorkin as editor, whose regime lasted three months and brought newsroom morale to subterranean levels.
But now you are here.
Before you start, as a loyal customer, practicing journalist and academic who studies the role and vitality of the press, I would like to share a few thoughts with you:
#1: You overpaid.
Seriously. You overpaid big time. In 2013, the Boston Globe sold for $70 million. The Washington Post was sold for $250 million. Properly valuing a newspaper asset is tricky, sure, but there is no question that $500 million, plus $90 million or so in pension liabilities, is a hefty, overblown price. Also, you were the last possible buyer left on Earth.
There are two ways to look at this:
Optimistic: You really wanted it and you didn’t care how much it cost. The financial value pales in comparison to the societal impact.
Pessimistic: You don’t know what you bought. This scenario worries me. Your chances of making your money back in the next decade are low, really low. Newspapers are difficult businesses in good times. These days, it’s like piloting the S.S. Minnow through a tropical storm.
#2 Don’t put your checkbook away yet.
That $590 million? That’s just the beginning. This paper has been starved of investment for a decade. In that time, the way people consume news has evolved. Yes, you have a website and an app. But you’re still basically producing an analogue newspaper (albeit a good one) and shoving it out through digital pipes.
You are going to need to invest in new products, new ways of reaching an audience and new ways of making the product relevant to people. I teach college students. They love news, but they never touch a newspaper. Creating these experiences doesn’t just mean bringing new technology to bear. It means rewiring the culture of the newsroom.
You’re a doctor, so I hope you can stand the sight of blood, because this will bleed red ink for a while. I put the need for new investment conservatively at $100 million.
#3 You’re a billionaire! Is that a good thing?
The Times finally has its billionaire. (Eli Broad, Austin Beutner, Nicolas Berggruen all kicked the tires at one point.) There are three great recent examples of billionaires buying newspapers: Jeff Bezos at The Washington Post, John Henry at the Boston Globe and Glen Taylor at the Minneapolis Star Tribune. There are also some bad ones, like Sheldon Adelson’s stealth purchase of the Las Vegas Review Journal and Joe Rickets, who bought, then shuttered, the DNAInfo sites (OK, so technically, that’s not a newspaper).
The Times, thank God, is no longer part of a publicly traded company where investors can’t see past the next quarterly results. I hope that being a billionaire means you are giving the Times the gift of patience. Yes, there is urgency in figuring out how to make the business work, but change won’t happen overnight. You will have to try and fail again — and again — before the path is clear.
Being a billionaire means no-one ever tells you the truth. Every idea you have is “brilliant,” and every problem you encounter can be blamed on someone else. Please resist the billionaire’s inclination to surround yourself with sycophants, particularly when it comes to running a digital publishing business.
#4 Please, please, please, no “synergies.”
Synergy is the poison chalice of every media deal (RIP AOL-Time Warner). It’s the tantalizing lie bankers tout and credulous investors expect in their returns. In practice, it only ever means short-sighted headcount reductions. The Times has already been through that meatgrinder.
When you first bought into Tronc in 2016, the press release contained this tortured statement: your NantWorks healthcare company would license “over 100 machine vision and artificial intelligence technology patents for news media applications…”
I have no idea what this means, but it scares me. Banish this thought. Any notion that your healthcare companies’ technologies can be “harnessed,” “leveraged” or otherwise applied to your newspapers will only summon the demons. They are different businesses. They should be kept independent.
#5 Don’t try to be a player in Washington.
Others may try to tell you that to win the respect of the élite, you will need to be a major force in Washington reporting. Don’t take the bait. You have the strongest news organization in a state of 40 million people that is chronically undercovered (except for Silicon Valley, which is overcovered). The smart thing: Hit ’em where they ain’t. Double down on covering California.
#6 Pledge independence.
Dr. Soon-Shiong, our republic is under attack from forces both foreign and domestic. Our public institutions — the machinery of our democracy — are not as robust as we had imagined.
In the bleakness of these past two years, there has been one bright spot: journalism. It has uncovered crimes and infractions from our elected leaders and our largest corporations. It has shown the value of empathy when so much human behavior feels callous. It has been the check on power that our Founding Fathers envisioned.
Please don’t mess with that. Your healthcare companies have come under plenty of scrutiny from the press. Your response was to blame the messenger. Not a good look for someone who just spent half a billion on the Fourth Estate.
State clearly and unequivocally that you will not interfere in editorial issues. Make it clear that there is a complete separation between all the healthcare stuff and the journalism. (Your note to readers is a step in that direction.) Don’t have any executives work at both companies. And if a reporter at the Times digs into something at one of your hospitals or your companies, let her report it out in full. Don’t squash it. You’re playing the long game here.
You grew up in a repressive society in South Africa. Make this an investment in creating a free one.
Gabriel Kahn is a professor at the USC Annenberg School of Journalism and the editor of Crosstown.