Los Angeles Times to go public, owner Soon-Shiong says

Los Angeles Times owner Patrick Soon-Shiong announced plans to take the 143-year-old newspaper public within the next year, aiming for a 'democratized' ownership structure akin to the Green Bay Packers. This strategic shift follows significant financial difficulties, including the layoff of over 20% of its newsroom staff in January and reported annual losses of $30 million to $40 million. The move seeks to address the publication's ongoing turmoil and financial challenges by introducing a novel public ownership model.

Analysis

The Los Angeles Times is planning a public offering within the next year, according to its owner Patrick Soon-Shiong. This strategic move is not driven by strength but rather follows a period of significant operational and financial distress. The newspaper is reportedly incurring annual losses between $30 million and $40 million, a situation that precipitated the layoff of over 20% of its newsroom staff, or 115 employees, in January. Compounding these financial challenges are notable governance issues, including the recent exits of its Executive Editor and Managing Editor, and reported owner intervention in editorial decisions that triggered subscriber backlash. The proposed ownership model, described as a 'democratized' structure similar to the NFL’s Green Bay Packers, is an unconventional approach for a media entity. This structure's viability is untested in this industry and presents a novel risk-reward profile for a legacy publication acquired for $500 million in 2018.

Key Decisions for Investors

• Investors should approach the potential IPO with extreme caution, given the newspaper's substantial annual losses of $30-40 million and fundamental business model challenges highlighted by recent mass layoffs.
• The unconventional 'democratized' public ownership structure requires rigorous due diligence, specifically concerning shareholder rights, governance, and the potential for continued owner influence over editorial independence.
• A clear, credible path to profitability will be the most critical factor to evaluate in any future SEC filings, as the current financial trajectory appears unsustainable.