The Los Angeles Times’ former publisher and editor, Davan Maharaj, reportedly received a $2.5-million settlement following his exit from Tribune Publishing Co. after revealing to a mediator he had recorded anti-Semitic comments allegedly made by the company’s largest shareholder, Michael Ferro.
The payout, which was unusually large for a newspaper executive, came at a time when the company was laying off employees amid a downturn in advertising.
In 2016, shortly after taking control of the newspaper company, Ferro allegedly complained that his business pursuits were being thwarted by a “Jewish cabal” in Los Angeles that included billionaire philanthropist Eli Broad, according to a report Wednesday by National Public Radio.
NPR media correspondent David Folkenflik reported the remarks were made during a gathering of newspaper executives at a dinner near the Chicago headquarters of the company, which also owns the Chicago Tribune, Baltimore Sun and Orlando Sentinel.
At the time, Ferro was chairman of the company, which he renamed Tronc. Ferro received a controversial $15-million fee for consulting services to the company. He relinquished the chairmanship in March amid allegations of sexual misconduct, which he denied.
Maharaj, through a representative, said the settlement was not being properly portrayed.
"We reject any assertion that Davan received any payments to keep information secret. Tronc and Maharaj agreed on a confidential settlement that reflected almost 30 years of exceptional service to the Los Angeles Times," his attorney Eric George said Wednesday night.
Ferro's spokesman, Dennis Culloton, disputed that Ferro made anti-Semitic remarks. “We 100% deny that those comments were ever said about Mr. Eli Broad,” Culloton said.
In June, the company sold its two California properties — The Times and San Diego Union-Tribune — to Los Angeles biotech entrepreneur Dr. Patrick Soon-Shiong for $500 million. Soon-Shiong remains the second-largest shareholder of Tribune Publishing.
The settlement came this year at a time of management upheaval at The Times and turmoil within the corporate suites, where executives have struggled to hold onto revenue amid a flight of advertisers to the internet.
Maharaj, who rose through the newsroom ranks during a 28-year career at The Times, was one of four high-profile editors who were ousted in August 2017 by Chief Executive Justin Dearborn, a longtime Ferro associate. Maharaj was replaced as publisher by former Fox executive Ross Levinsohn, who lasted in the job just five months. NPR’s Folkenflik was instrumental in Levinsohn’s departure from The Times, after reporting that he had been accused of tolerating sexual harassment at former workplaces.
Maharaj hired an attorney to negotiate a settlement agreement. When the case went into mediation, according to NPR, Maharaj allegedly presented recordings that he had secretly made of Ferro, which would have been damaging to the reputation of Ferro and the company. Tribune Publishing then negotiated the settlement.
Maharaj did not respond to requests for comment. The Los Angeles Times was not able to independently confirm the allegations contained in the NPR report.
A Tribune Publishing spokeswoman, Marisa Kollias, declined to comment, saying: “As a general practice, we don’t comment on employee matters.”
Culloton, the Ferro spokesman, noted that it would not be unusual for a longtime employee to go to mediation to hammer out a settlement.
A spokesperson for Broad did not immediately provide comment.
Soon-Shiong said: “I was so very disappointed to read about the distasteful comments made about Eli Broad. He and Edythe are civic leaders in Los Angeles and they have contributed much in the sciences and the arts to the city and the nation.
“I am so glad that we were able to take over The Times and the San Diego Union-Tribune,” he said. “This is behind us now, and we should move forward.”
Soon-Shiong and Ferro had been involved in a high-profile feud over the publishing company’s direction. One of the nation’s largest newspaper companies, Tribune Publishing is entertaining a sale of its remaining newspapers. Several companies, including newspaper publisher McClatchy Co., are said to have bid for the papers.
Tribune Publishing did not disclose the Maharaj settlement in any of its regulatory filings. Kollias, the spokesperson, said, “We disclose material matters as required by the SEC rules and regulations.”
A spokeswoman for the Securities and Exchange Commission declined to comment on the situation. Companies must disclose "pending legal proceedings," but in this case, reportedly, a lawsuit was threatened but never filed.
Steven Bank, a business law professor at UCLA, said such a payout probably would not be large enough to be subject to requirements that companies report material information to investors, though he said it's possible there are other reasons the company may have been obliged to disclose.