Could Beutner return, with Broad in tow, to the LA Times?
Maybe it’s an L.A. thing, but Austin Beutner, ousted from his position as publisher of Tribune Publishing's California newspaper group, almost seemed to be channeling Arnold Schwarzenegger yesterday: “I’ll be back!”
Knowing that his entry card, his email address and his job as publisher were soon to disappear, he told his morning editor meeting on Tuesday, “This is the last one of these I’ll be doing for awhile.”
Plainly, Tribune Publishing CEO Jack Griffin had had his fill of Beutner’s fast turn as publisher of the L.A. Times, somewhat understandably (“Tribune fires L.A. Times publisher Austin Beutner”). After, all — likely for the right reasons — Beutner wanted to take the company private, believing that was the only long-term route forward, which I’d noted early on.
Public company CEO Griffin didn’t agree. He rejected the offer of Eli Broad — the long-time homebuilder, philanthropist, L.A. civic leader and some-time associate of Beutner — to buy the Times. The affair prompted Griffin to question Beutner’s loyalty. That, combined with budget and strategy disagreements, led to this week’s acrimonious dismissal.
He’s replaced Beutner with Tribune stalwart Tim Ryan. Ryan immediately pledged what all new publishers pledge: “If there’s any charge, it’s to make sure that we take this great newspaper, on whatever platform, and extend it out well into the future.” Ryan gets decent marks from the Sun rank-and-file, for his job of navigating through the last hellacious years, even though News Guild membership has been reduced from 454 to 152 since 2007.
Ryan’s mandate, of course, is to make the Times (and the San Diego UT, which it bought in May) more receptive to Tribune ways and means. Unfortunately, given 2016 budgeting, that means budget cutting will be at the top of the list. He’ll cut all expenses, including the newsroom, as he has done in his eight years as publisher of the Baltimore Sun.
The Sun’s newsroom, which once stood at more than 400 is now down by almost three-quarters. At $70 million, the L.A. Times newsroom is the fourth largest newspaper one in the U.S. — obviously targetable for an expense haircut.
Given all the events, we’d believe that Tribune quickly reasserting its authority provides the likeliest scenario to be played out, right? Well, only maybe.
Eli Broad can claim a net worth of an estimated $7 billion. That’s a lot more cash than Tribune itself has (Media Notebook: “TPUB’s rough quarter”). And he may have more stamina. Let’s recall he circled around the Times when Tribune first floated the idea of selling its papers two years ago. When the Koch brothers surfaced as potential bidders, Tribune decided not to formally offer the papers. Instead, it split off its papers into TPUB, Tribune Publishing, and kept the stronger – broadcast and digital – businesses in Tribune Media.
Why did Tribune management reject Eli Broad’s bid to buy the Times and UT, now grouped in a single business, the California News Group? Tribune cited the tax hit it would take on a sale.
The would-be buyers helpfully suggested a “sponsored split,” a bit of financial engineering that would lower those taxes. They were further rebuffed with that idea.
But, wait, what if Broad — with help from new ownership group partner Beutner, let’s say — presses the case? On Wednesday, Broad acknowledged he’s considering whether to do so.
If the price, terms, and engineering are right, CEO Griffin may have a harder time resisting. TPUB shareholders have already voiced their disfavor with the stock, sending the share price below $11, a drop of more than half in a year.
So, what series of events may push Griffin to reconsider and sell the Times?
One keen observer’s scenario:
“Beutner goes public with Broad to buy LAT. Activist [shareholders] say to Jack: ‘Sell the LAT and reduce debt and make a special dividend to all us shareholders, who have been creamed, with the reduced stock price. Or, we come after Tribune.’ And he knows if they are successful, he's out.”
That’s just one scenario. Let’s recall that while Jack Griffin’s relationship with Austin Beutner has been neither close nor warm, it wasn’t hostile. Given the public accusations surfaced in the leave-taking – much of Beutner’s departing Facebook post here – Beutner may be the last guy he wants to sell to, if he is going to sell – if he has a choice.
For now, the Times returns to the Tribune fold, but money – Broad’s treasure and Tribune’s lack of same – could soon tell another tale.