What Happened to the Sale of the Los Angeles Times? (Update)

Update: The New York Post reported that the sale of the Los Angeles Times to billionaire Patrick Soon-Shiong has slowed, perhaps because he wants more information about the paper’s operation.

Tronc Inc. (NASDAQ: TRNC), the owner of the Los Angeles Times, agreed to sell the paper to billionaire Patrick Soon-Shiong, who is also one of Tronc’s largest shareholders. The deal, for $500 million and the assumption of about $90 million in pension liabilities, was announced on February 7. The Federal Trade Commission and U.S. Department of Justice blessed the deal on March 7, almost two months ago.

Under normal circumstances, the deal should be closed by now. No one on either side of the purchase has hinted why the purchase has taken so long. Certainly, neither side has indicated the deal is in trouble. And speculation about what is happening is only based on a handful of rumors. The deal could close tomorrow.

There could be a number of reasons the deal may be going slowly. Tronc and the Los Angeles Times have some overlapping editorial and publishing systems. These may be hard to tease apart, and the process could be expensive. Soon-Shiong’s experts might not have figured on this when they did due diligence.

There are rumors Soon-Shiong has asked for a lower price, perhaps because the financial performance of the paper has faltered. However, intelligent lawyers on Tronc’s side would not have let an “out” clause for financial performance into the sale document.

Tronc’s board chair and largest shareholder, Michael Ferro, resigned and sold his shares on April 13. The buyer was McCormick Media, which paid $208.9 million for Ferro’s 25.7% of the company through his company Merrick Media. McCormick company officials have to be considering what they think should happen to Tronc going forward. Several stories in the media claim that Soon-Shiong and McCormick have met. Together, they hold over 50% of Tronc’s shares. There is certainly reason for them to discuss what should happen to Tronc going forward. McCormick’s interest may be more in the Chicago Tribune than the rest of Tronc. Col. Robert R. McCormick, the longtime leader of the McCormick family, was editor and publisher of the paper until 1955.

McCormick and Soon-Shiong are critical to what happens to Tronc going forward. Ferro’s protegĂ©, Justin C. Dearborn, still runs the company as board chair and chief executive, and there is no indication that will change. The company owns a number of papers beyond the Los Angeles Time and Chicago Tribune. These include the New York Daily News, Hartford Courant, Orlando Sentinel, Ft. Lauderdale Sun-Sentinel and Baltimore Sun. One theory is that McCormick and Soon-Shiong will want to sell these.

Odds are that the deal to sell the Los Angeles Times will close in the next few weeks, or even days. But the process has taken a long time, which is the primary reason there has been speculation about its future.