LOS ANGELES -- Biotech billionaire Patrick Soon-Shiong has agreed to purchase the Los Angeles Times from its parent company Tronc, restoring local ownership and perhaps ending a turbulent period for the storied 136-year-old institution.
Chicago-based Tronc on Wednesday will announce the sale of The Times and the San Diego Union-Tribune to Soon-Shiong's investment firm Nant Capital for nearly $500 million in cash, according to a source familiar with the deal. In addition to the purchase price, the deal includes the assumption of $90 million in pension liabilities.
The sale comes after a particularly stormy period for the newspaper, which has seen three editors in six months, its publisher placed on unpaid leave amid a sexual harassment investigation, and a historic vote to unionize the newsroom.
The deal came together quickly, over the last five days, and took many observers by surprise. Tronc had fended off previous efforts to buy the company outright or peel off the California newspapers. Tronc had insisted that The Times was key to its growth strategy given its proximity to Hollywood, technology hubs and the Pacific Rim.
Soon-Shiong, one of Los Angeles' wealthiest residents and a minority owner of the Los Angeles Lakers, became the latest billionaire to throw a life line to a major newspaper. Amazon founder Jeff Bezos bought the Washington Post in 2013. That same year, Red Sox owner John Henry scooped up the Boston Globe and, in 2014, Minnesota billionaire and Timberwolves owner Glen Taylor bought the Minneapolis Star-Tribune.
The nearly $500-million price tag represented a premium for the struggling media properties. Traditional publications have fallen out of favor on Wall Street amid plummeting print advertising revenue. Marketers have been steering their ad dollars to Facebook, Google, Snapchat and other sites and away from magazines and newspapers.
At the same time, Tronc and other publishing companies have struggled to boost revenue from the readers they attract online. During the last 18 months, the Times has added more than 200,000 digital subscribers but the company's revenue has still fallen.
For Tronc, the sale of its most prominent property marks a retrenchment. The company is expected to use the $500 million in proceeds to pay down debt and further its digital strategy across the remaining papers, which include the Chicago Tribune, Orlando Sentinel, South Florida Sun-Sentinel, Baltimore Sun and the New York Daily News.
The Times has long had a strained relationship with its Chicago-based corporate parent.
For more than a century, The Times was owned by the same family. Harrison Gray Otis gained ownership of the paper in 1884 and he served as publisher until 1917. His descendants, the Chandler family, controlled the Times Mirror Co. until the 2000 sale to Chicago-based Tribune Co.