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Tronc’d

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* Robert Feder has a piece entitled “Tronc cutting its way to ‘meaningful journalism’”..

The bloodbath that wiped out half the editorial staff of the New York Daily News Monday will continue today at other units of Chicago-based parent company tronc. That’s the word from CEO Justin Dearborn, who told employees the cutbacks would “accelerate our company’s transformation into a truly digitally-focused enterprise — one that creates meaningful journalism, delivers it more quickly and more frequently, and develops new approaches to engage our reader.”

* But Tronc execs apparently have no idea how to do that…

When a top executive from frugal newspaper giant Tronc was asked Tuesday about the specific strategy behind draconian cuts to the New York Daily News on Monday, he didn’t have an answer.

On Monday, the company slashed fifty percent of the editorial staff at one of New York’s two remaining iconic tabloids, including dozens of top longtime staffers from virtually every section of the paper.

During a Tuesday meeting with editorial staff that lasted more than an hour, Tronc executive vice president Grant Whitmore and the Daily News’ newly installed editor in chief Robert York occasionally struggled to answer pointed questions about the underlying strategy behind the cuts.

At one point, York asked for 30 days to develop an editorial strategy, which prompted dismay from some staff.

* Back to Feder…

Tronc bought the money-losing Daily News in 2017 for the token price of one dollar in what many saw as a grab for its printing plant and real estate. […]

Insiders say it’s all about getting the company ready for a sale.

* From Tronc…

Revenue for the first quarter 2018 includes $25.9 million attributable to the NYDN (acquired in September 2017) […]

First quarter 2018 was impacted by fees associated with a consulting agreement that the Company entered into with Merrick Ventures LLC, Michael W. Ferro, Jr. and Merrick Media, LLC. Following Mr. Ferro’s retirement from the Company’s Board on March 18, 2018, the Company fully expensed the $15.0 million contract in the first quarter, which included $500,000 while Mr. Ferro was actively engaged in the business. Including this charge, net loss for first quarter 2018 was $14.8 million [Emphasis added] […]

Adjusted [Earnings Before Interest, Taxes, Depreciation and Amortization] for first quarter 2018 was $24.4 million, versus $33.7 million in the first quarter 2017, due primarily to an anticipated negative first quarter 2018 adjusted EBITDA at the NYDN and digital investments.

So, the paper was bleeding some money (hard to tell just how much), but paying off that Ferro contract is what apparently put them under water. And it’s much harder to sell a company when it’s not showing a profit.

posted by Rich Miller
Wednesday, Jul 25, 18 @ 9:36 am

Comments

The US capital markets are awash in money right now. Money is flowing into technology, manufacturing, housing, etc.

There is a reason that capital is not chasing after the newspaper industry. The industry is not going to go away. But it is slowly loosing market share.

Ask any group you are with how many get a daily newspaper (in print or online). The answer will tell you everything you need to know about where the business is heading.

Comment by Downstate Wednesday, Jul 25, 18 @ 9:43 am
Rich, just a minor correction.

Tribune Media (TV/radio/real estate holdings aka the profitable stuff) was the owner of Trib Tower when it was sold off. Not tronc. They were just a tenant.

Comment by Juice Wednesday, Jul 25, 18 @ 9:48 am
–Tronc bought the money-losing Daily News in 2017 for the token price of one dollar in what many saw as a grab for its printing plant and real estate. […]

Insiders say it’s all about getting the company ready for a sale.

Keep in mind that Tronc also sold the Tribune building. –

Tronc hasn’t been in the newspaper business since Zell.

It’s a classic bustout: execs take fat contracts, milk the cash, run up debt, in-and-out of bankruptcy, gut core operations, chop up and sell assets.

You can see why Zell and Ferro were such big supporters of Rauner. Same business models.

Comment by wordslinger Wednesday, Jul 25, 18 @ 9:51 am
Pretty soon there will be one newspaper: The Bezos Post-Globe-Times.

Comment by City Zen Wednesday, Jul 25, 18 @ 9:59 am
“”It’s a classic bustout: execs take fat contracts, milk the cash, run up debt, in-and-out of bankruptcy, gut core operations, chop up and sell assets.”"

Wordslinger says it better. Rauner has these same skills.

This is why business success is not often a predictor of governing success. It depends on the business sector you’re from, and what you did there.

Comment by walker Wednesday, Jul 25, 18 @ 10:26 am
Shia Kapos/Illinois Playbook reported today that a private equity group is targeting Tronc for a takeover in the coming weeks.

Comment by Precinct Captain Wednesday, Jul 25, 18 @ 11:06 am
===hia Kapos/Illinois Playbook reported today that a private equity group is targeting Tronc for a takeover in the coming weeks.

They must think there is something left to loot. This is happening in retail as well where companies are facing a tough climate, but add to that debt created to allow equity to be drained and you get businesses failing that could otherwise survive.

Comment by Archpundit Wednesday, Jul 25, 18 @ 11:10 am
Whatever the front office troncs are doing to get ready for a PE buyer ain’t working, because their stock continues to drop.

I feel for the good journalists at the Trib and elsewhere who are stuck with these tools.

Comment by Arthur Andersen Wednesday, Jul 25, 18 @ 2:10 pm
The print media business model no longer works. They used to sell news and advertisements to their readers and then sell those readers to their advertisers. Now that is all digital.

Corporate raiders do not change the underlying dynamics of the market. In some cases they can redirect resources into market niches that had been ignored. Other times they speed the company to its end, salvaging some assets in the process.

Comment by Last Bull Moose Wednesday, Jul 25, 18 @ 3:26 pm
===Corporate raiders do not change the underlying dynamics of the market. In some cases they can redirect resources into market niches that had been ignored. Other times they speed the company to its end, salvaging some assets in the process.

But if you load up a company with debt that was making money, even if not as much as it used to, you cause it to fail instead of continue at modest profits or even just break even.

Much of the business model of these companies is to load the company up on debt and then extract what they can. This fantasy that the market always ends up in the same place is a fantasy of people who don’t understand markets. Even worse, the business model only works because of tax incentives that didn’t exist even 50 years ago. We’ve created a market for scavenging pieces of companies.

Comment by Archpundit Wednesday, Jul 25, 18 @ 5:12 pm
When an entire industry is disappearing, management does affect which companies exit first. If your business was making coal fired utility power plants, you are in trouble.

Comment by Last Bull Moose when Thursday, Jul 26, 18 @ 9:20 am