Tribune Publishing Chairman Michael Ferro on Tuesday criticized Gannett Co. for "trying to steal the company" by pressing for board acceptance of its $400-million takeover bid before the board has a chance to review Ferro's strategic plan for Tribune and before a June 2 shareholders' meeting.
"I believe 100% in my heart that this is completely a manipulation, that they’re trying to steal the company, bum-rush us," he said in an interview. "It is ungentlemanly, it is not what we do in this industry. It is not the way we do business."
Ferro's comments were the latest in an intensifying war of words between his management team and Gannett, which launched its sudden bid for Tribune Publishing on April 12 and made it public Monday.
Gannett offered to pay $12.25 a share for Tribune Publishing, 63% above Tribune's closing price on Friday, before the offer was made public. The price would represent a roughly 44% premium to the price Ferro paid for his 5.22 million shares in February, when he made a $44.4-million investment that gave him a 16.6% stake in the company. Tribune Publishing owns the Los Angeles Times as well as the Chicago Tribune, the Baltimore Sun, and several other newspapers.
Two other top shareholders, L.A.-based Oaktree Capital Management and Pasadena's Primecap Management, own about a 26.6% stake in Tribune Publishing. Neither has spoken publicly about the offer.
Gannett has asserted -- most recently in a letter dated Tuesday from Chief Executive Robert Dickey to Tribune Publishing CEO Justin C. Dearborn -- that Tribune Publishing management has been dodging its overtures. "From the time of my first contact to Tribune, all we have asked for is a substantive response to our proposal," Dickey wrote.
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Ferro and Dearborn have maintained, however, that they are willing to discuss the Gannett offer, but have hired the investment banks Goldman Sachs & Co. and Lazard Freres to review their strategic plan and report on the company's prospects to the board. The firms have no deadline for their report, Ferro said Tuesday.
"We are not avoiding the conversation," Dearborn said in an interview Tuesday. "We asked for some time."
The strategic plan, Ferro said, has several components. One involves building up the strength online and in print of the company's traditional publishing properties -- newspapers that have suffered shrinkage of advertising revenue the same as other newspapers around the country, without a commensurate growth in revenue from their digital properties.
"There’s a tough slog there," Ferro acknowledged, "but then we have two jewels in this company." Those are its largest newspapers, the Los Angeles Times and Chicago Tribune.
I believe 100% in my heart that this is completely a manipulation, that theyre trying to steal the company, bum-rush us.
Michael Ferro, Tribune Publishing chairman
"The L.A. Times is a sleeping giant," he said Tuesday, calling it a "billion-dollar brand .... We are planning on breathing some life into the L.A. Times globally." When he unveils his strategic plan May 4, he said, "we will be talking about how to get the L.A. Times brand … to the world. It’s on a par with the New York Times and other international publications, that no one has properly cared for, and we are going to do that."
The strategic plan also includes a "content monetization engine" that will use artificial intelligence to redistribute Tribune Publishing content to multiple destinations and market the content in a way "we think will revolutionize our content strategy," Ferro said. "We think it'll be a rock-star business" that can "create more revenue ... than you've ever seen." That module will also be unveiled May 4, he said.
Ferro asserted that Gannett's urging of haste is aimed at reaching an agreement with the Tribune Publishing board before it has a chance to assess Ferro's plan and even before the company's next earnings report, also due May 4. He said that in a phone conversation on April 17, just days after Gannett made its initial offer, Dickey said, "Our guys want to move faster."
The following day Dickey sent Ferro proposed confidentiality agreements and a series of questions aimed at launching the due-diligence process that would precede a formal bid.
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"We think time is of the essence," Dickey wrote, "and believe we should move as quickly as possible so that your shareholders, as well as ours, can gain the benefits of this transaction at the earliest possible date." He asked for a response by April 22. Gannett did not immediately respond to a request for further comment on the exchange of letters and calls.
One point of contention involves an April 18 dinner that had been scheduled for Gannett and Tribune Publishing executives during the Newspaper Assn. of America conference in Washington that week. Dearborn and Ferro say Gannett abruptly canceled the dinner, even though it would have been an ideal setting to discuss the acquisition offer. Gannett says the dinner was canceled because it would have included executives who weren't privy to the bid -- "a social dinner" at which "no substantive discussion could have taken place," Dickey maintained in his letter to Dearborn on Tuesday.
Dearborn said that the guest list easily could have been changed or the dinner rescheduled. "We had questions on funding, we had questions about the DOJ [Department of Justice, which would rule on antitrust implications of a merger], we had questions about their intent for our company, our brand, our people."
Ferro said in the interview that he has not "turned down the deal," but simply put in place a process to review it with the board. He also said that "as a shareholder, I'm not excited" by Gannett's offer.
Ferro said, however, that shareholder value is only one of his concerns as the company's chairman.
"I have three constituents I have to look out for in any transaction," he said. "Of course shareholders are very important in good governance, but we also have to look at the communities we serve and our employees. Journalism is a different business. It's not all about the money .... I have to make sure that we serve all our communities...and it is our job to make sure those communities understand that we take our responsibility seriously."
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