Somehow, we never got around to talking about one of the worst names for a spinoff that we can recall. Of course, we are talking about tronc(TRNC). Tribune Media(TRCO) spun it off as Tribune Publishing, but, after Michael Ferro took over, it changed its name to tronc, which sounds like the name of a reptilian villain that threatens to eat a large city. It also produced a widely mocked employee video introducing the name and featuring two visibly uncomfortable employees in a nondescript apartment using buzzwords and explaining the concept of using robots to pick funny cat videos to pair with stories. Or something like that. See if you can tell the real thing from the parody:
In any event, Ferro has apparently long been enamoured with celebrity content
… Michael W. Ferro Jr., a Chicago technology entrepreneur and Tronc’s nonexecutive chairman, who has long been enamored with celebrity coverage. Last year, Tronc bought the domain name LA.com, with plans to publish profiles of celebrities and others with influence on the site.
After Mr. Ferro and others in Chicago bought The Chicago Sun-Times in 2011, he told some reporters that he wanted the newspaper to focus more on celebrity coverage. Mr. Ferro donated his stake in The Sun-Times to a charitable trust last year to assuage antitrust concerns.
Towards that end, it has been reported that tronc is close to a deal to purchase Us Weekly from Wenner Media. Depending on which source you read, the cost would be either between $85 million and $95 million, or over $100 million. Wenner has has poor timing with this asset. In 2006, it bought back 50% of the weekly magazine from Disney(DIS) for $300 million, having sold the stake five years earlier for just $40 million. The acquisition would allow tronc to show significant growth in digital revenue, and add $15-$20 million in annual profit.
Tronc is struggling to define itself. Last year’s distracting battle to ward off an acquisition attempt by Gannett(GCI). It was engaged in a very public fight with shareholder Oaktree Capital Management over the proposed deal, which Gannett ultimately backed away from when its lenders refused to fund it. Last month, Vice Chairman Patrick Soon-Shiong purchased Oakmark’s stake. It is thought that the biotech billionaire was a driving force behind the company’s AI and automation pushes. One would have thought that his increased stake would lead to a larger role at the company. However, the opposite appears to be the case.
Dr. Soon Shiong was not nominated for re-election to the Board this month.
In its proxy, Tronc said: “At its meeting on March 1, 2017, the Board of Directors, upon the recommendation of the Compensation, Nominating and Corporate Governance Committee, did not nominate Dr. Soon-Shiong for reelection as a director of the Company” and it noted that Mr. Soon-Shiong will no longer be bound to vote his shares in proportion with those voted by the rest of shareholders.
It is unclear whether this was related to allegations that Dr. Soon-Shiong used philanthropic donations to steer business to NantHealth(NH) or whether it is related to a disagreement with Mr. Ferro Jr. over the direction of the company. Either way, between the potential Us Weekly acquisition, the questions about competing visions of major shareholders, and the company’s effort to replace humans with robots, there is sure to be plenty of continuing drama in the ongoing saga of tronc.
Disclosure: The author holds shares in DIS
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