If you can store old newspapers in a trunk, then why not store an old newspaper company in a tronc?
The hostile takeover battle that placed Tribune Publishing Co. (ticker: TPUB) in the crosshairs of Gannett Co. (GCI) has taken a turn straight out of “The Name Game.” Tribune Publishing, the parent of venerable media institutions such as Chicago Tribune and Los Angeles Times, is changing its name — to tronc.
That’s right: tronc. All lowercase letters, rhymes with honk. And after the name change was announced late Thursday afternoon, it took minutes for Twitter (TWTR) users to pile on with quips like this: “I believe ‘#Tronc’ is the sound an angry camel makes if you come too close to its calf.”
“It could be confused with ‘Tron,’ my favorite AI game and alternate world,” says Todd Antonelli, managing director of the Berkeley Research Group in Chicago. But the name change, and media pivot that comes with it, “positions Tribune Publishing as relevant anywhere, any way, on any device, always in the digital economy.”
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Adding to the media soap opera is a lawsuit brought on by San Diego real estate firm Capital Structures Realty Advisors, which accuses Tribune of acting against the best interests of shareholders.
The suit also names Patrick Soon-Shiong, the digital entrepreneur who recently bought $70.5 million worth of Tribune stock as part of an apparent maneuver to fend off Gannett. Soon-Shiong — a close friend of Tribune chairman and controlling shareholder Michael Ferro — now owns a 13 percent stake in Tribune through his firm, Nant Capital.
Yet all that intrigue seemingly fell away with the name change news, which overshadowed the contentious vote on a new slate of TPUB directors that dealt a blow to Gannett.
The fallout of that vote — which keeps the present Tribune board in place — has Gannett brass reconsidering their takeover move and whether to up the ante on its stock purchase offer or abandon their efforts. In a statement, Gannett says it is reviewing its bid.
The McLean, Virginia-based newspaper company certainly enticed many when it offered $12.25 a share in April, a month that saw TPUB sink as low as $6.83. Still, Ferro complained that Gannett was trying to “steal the company.” Ferro took over in February, paying $44.4 million for his stake, after a four-year stint as controlling shareholder of the Chicago Tribune’s rival paper, the Sun-Times. At that time, the health-care tech businessman had no media industry experience.
“This is a textbook case of hostile takeovers,” says Christopher Ma, director of the George Investments Institute at Stetson University in DeLand, Florida. “Ferro uses every trick in the book, including private equity, poison pills (a huge liability threatened to a corporate raider), diluted ownership and a manufactured white knight, to fend off takeovers. At least Ferro is technically correct in his defense of ‘shareholder interest’ — except he is that only shareholder.”
In mid-May Gannett came back again, this time dangling $15 a share — an offer also rejected. But Gannett claimed a symbolic victory Thursday, stating that a majority of shareholders independent of Tribune Publishing management followed its recommendation to withhold their votes. More than 50 percent withheld votes for Ferro, according to the nonprofit Poynter Institute.
Meanwhile, industry onlookers scratched their heads over the strange new moniker Tribune’s current leadership unveiled. Short for “tribune online content” (also lower case), tronc “pools the company’s leading media brands and leverages innovative technology to deliver personalized and interactive experiences to its 60 million monthly users,” Thursday’s announcement stated.
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Tronc also unveiled its intentions to transfer on June 20 from the New York Stock Exchange to the Nasdaq — home to tech-savvy companies such as Alphabet (GOOG, GOOGL) and Facebook (FB). Still, any PR brownie points may be wiped out just by the presence of Ferro himself.
When Ferro assumed control of Sun-Times Media in December 2001, he quickly stirred up controversy among the newspaper staff. He kept a mummy made from folded dollar bills outside his office (“I thought it would be funny,” he told Chicago magazine in 2013) and built a candy room for employees even as he axed the entire Sun-Times photography staff.
Now, street shareholders and institutional investors alike are questioning his moves. In addition to Capital Structures, parties pushing for the Gannett deal include Mount Flag, Towle & Co and Oaktree Capital Management — TPUB’s second-largest shareholder. Ferro owns 17 percent; Oaktree owns 14.8 percent and held 4.7 million shares when Ferro took over Tribune leadership.
In a letter filed with the Securities and Exchange Commission last month, Oaktree Vice Chairman John Frank stated: “We see very substantial risk that through pursuing an independent course, Tribune will destroy enormous shareholder value.”
TPUB stock has struggled through a long, hard slide over the last year. Since June 2015, Tribune Publishing is down a third to $11 a share — and would be down more than 50 percent if not for adrenalized investors reacting to Gannett’s takeover talk. Since the company was formed in July 2014 — the result of a split with the newly formed Tribune Media Co. (TRCO) — share price has plummeted from $24.50.
Tronc has, if nothing else, chosen a different path. Nowhere did the words “newspaper,” “paper” or “print” appear in the name change announcement, but “artificial intelligence” was mentioned twice. Soon-Shiong also spoke of “machine learning” in outlining his vision.
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What Tribune’s flesh-and-blood leaders will learn from their actions in the months ahead is, as they say in newspaper parlance, another story.
Editor’s note: Lou Carlozo worked at the Chicago Tribune for 16 years, until 2009.
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Tronc: Can a New Name Pull TPUB Stock From the Ashes? originally appeared on usnews.com
