Los Angeles Times receives $10-million PPP loan
The Los Angeles Times has received a $10-million loan through the federal Paycheck Protection Program — money that will help cover payroll and other employee-related costs amid a dramatic plunge in advertising revenue, the company said Tuesday.
The news organization was dealt a significant financial blow last March, when businesses abruptly pulled their advertising spending amid government-mandated shutdowns intended to slow the coronavirus spread. The pandemic upended the company’s finances, which were already strained following an unprecedented rebuilding effort and hiring spree that began in 2018 after biotech entrepreneur Dr. Patrick Soon-Shiong and his wife, Michele, purchased The Times and the San Diego Union-Tribune for $500 million from Chicago-based Tribune Publishing.
The company, which is called California Times, suffered tens of millions of dollars in losses, and hasn’t recovered financially, according to President and Chief Operating Officer Chris Argentieri. Despite the challenges, the two Southern California news organizations have raced to provide readers with news about the pandemic, last fall’s elections and a historic reckoning over race in America.
The Times applied for the maximum amount available to it, Argentieri said.
“The money will be used almost exclusively for employee-related costs, including payroll and employee benefits,” Argentieri said in an interview. “We lost tens of millions of dollars in advertising revenue pretty much instantly in March 2020, and the pandemic continues to take a toll on the public health and take a toll economically. We are still operating with great uncertainty.”
This is The Times’ first federal loan during the COVID-19 pandemic; the news outlet did not qualify for the PPP program last year. Congress initially tailored the program to target small businesses, which meant that businesses with more than 500 employees, including California Times, did not qualify. The two newspapers together employ about 1,400 people.
Last year, lawmakers recognized the devastation of the news industry during the pandemic. A study by the consulting firm Challenger, Gray & Christmas Inc. calculated that newsrooms experienced more than 11,000 job cuts in the first half of 2020 and hundreds of news outlets shut down. Nearly 2,800 smaller newspaper companies received PPP loans in 2020, according to the Pew Research Center. In December, Congress modified rules governing the PPP loan program to throw a lifeline to larger newspapers and local radio and TV broadcasters that also were struggling.
U.S. Sen. Maria Cantwell (D-Wash.) is the author of the provision, which was included in the COVID-19 stimulus package, to allow newspapers with fewer than 1,000 employees in a physical location to qualify for the PPP money. Radio and TV stations now qualify if they have 500 or fewer employees.
“Local news is essential. It makes our communities — and our country — stronger by asking important questions, providing accurate facts, and countering misinformation and disinformation,” Cantwell said in a December statement. “This bill will make more newspapers, TV and radio stations, and public broadcasters eligible for the Paycheck Protection Program so local reporters can keep us informed.”
PPP loans can be forgiven by the government if businesses fulfill the requirements of the program by using most of the money on personnel expenses to stave off layoffs.
The San Diego paper has separately applied for a loan but has not heard whether it will receive the funding, Argentieri said.
When the pandemic began, Argentieri said the organization moved quickly to contain costs, and cut salaries for business executives and discontinued its 401(k) matches for many employees. It renegotiated leases and agreements with vendors. The company also negotiated an agreement with leaders of The Times newsroom guild, and California-based journalists accepted 12 furlough days spread over three months. Washington, D.C.-based journalists also accepted furloughs. The affected journalists then qualified for financial assistance under programs created to compensate workers and incentivize employers to forgo layoffs.
“We are a business that has been dramatically impacted by the pandemic, and we have suffered job losses and furloughs,” Argentieri said. “We applied for this money with the intent of keeping as many people employed as possible. ... We felt it would be irresponsible not to apply for this money.”
“This is welcome news as The Times continues to recover from the pandemic’s economic damage,” Los Angeles Times Guild President Matt Pearce said in an email to newsroom union members. “While hundreds of other newsrooms [accepted] funding under the PPP program, the L.A. Times had been ineligible for this job-protecting federal relief when we were in the depths of the pandemic last year because California Times was too large.”
Even with the PPP money, The Times will not be profitable this year, Argentieri said.
He defended the move to receive government assistance despite having a billionaire owner.
“We are fortunate to have the owners that we have — they have been amazingly supportive throughout this crisis and others before that,” Argentieri said. “But they have been clear that they want The Times and the San Diego Union-Tribune to be self-sustaining enterprises. As managers of this organization, we have an obligation to explore every business avenue to raise capital so that we can become sustainable over time.”
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