Tech entrepreneur buys Tribune stake
Investor’s $44.4M infusion grants him say in its fate
CHICAGO — Michael Ferro, majority owner of the Chicago Sun-Times, has become the largest shareholder in Chicago-based Tribune Publishing, parent company of the Sun-Sentinel, Chicago Tribune, Los Angeles Times and other major daily newspapers.
Tribune Publishing sold more than 5.2 million shares of newly issued common stock to Merrick Media, a Chicago-based investmentfirm controlled by Ferro, in a $44.4 million deal announced Thursday.
The purchase gives Ferro, a technology entrepreneur and nascent media baron, a nearly 17 percent stake in Tribune Publishing and a significant say in the direction of the legacy newspaper company as it navigates its digital future. Ferro, 49, will become nonexecutive chairman of Tribune Publishing’s board. The company also owns the Allentown Morning Call, Baltimore Sun, Hartford Courant, Newport News Daily Press and Orlando Sentinel.
“I am excited to beworking with the company’s award-winning brands,” Ferro said in a statement. “I see tremendous upside to create value and put Tribune Publishing at the forefront of technology and content to benefit journalists and shareholders.”
Merrick Media’s holdings surpass Los Angelesbased investment firm Oaktree Capital Management. In November, Tribune Publishing had filed paperwork with the Securities and Exchange Commission signaling Oaktree’s interest in selling its 4.7 million shares.
Under terms of the transaction, Ferro’s firm cannot acquire more than 25 percent of the outstanding shares and cannot sell its stake in Tribune Publishing for three years.
Eddy Hartenstein, who served as Tribune Publishing’s non-executive chairman since its August 2014 spinoff from Tribune Media, will remain on the board.
Ferro will retain an ownership interest in Wrapports, the investment group that bought the Sun-Times in December 2011, but he will relinquish “all operating involvement” with the newspaper, said a Wrapports spokesman.
The deal, completed late Wednesday, more than doubles the amount of cash on hand at Tribune Publishing, enabling the company to pursue strategic acquisitions and its digital transformation, according to Tribune Publishing CEO Jack Griffin.
In 2014, Tribune Publishing acquired 38 suburban Chicago newspapers from Ferro’s Sun-Times Media for $23.5 million, and last year bought the San Diego Union-Tribune for $85 million.
Topping the list of potential acquisition targets is the Orange County Register, where Tribune Publishing is expected to bid against two other potential buyers for the assets of bankrupt California publishing company Freedom Communications.
Ferro’s technology investment track record has yielded some big returns. His Merrick Ventures investment firm bought a controlling stake in Merge Healthcare, a Chicagobased medical software company, for $20 million in 2008. Though the company did not turn a yearly profit under Ferro, he sold it in October to IBM for about $1 billion, including the assumption of debt.
Wrapports bought the Sun-Times and its portfolio of suburban newspapers for about $20 million. His big plans mostly fizzled, and the newspaper and its staff have been substantially downsized amid steady losses. Investors injected an additional $70 million into the operation as of last spring. In 2013, the Sun-Times directed reporters to snap photos with iPhones and fired the paper’s photographers, a move that became symbolic of the head winds facing the newspaper industry. Ferro will now take a hands-off approach with the Sun-Times, stepping downas chairman of Wrapports. Bruce Sagan, 87, a Wrapports board member and publisher of the Chicago-was named chairman of Sun-Times-Holdings.