The owner of the LA Times Dr. Patrick Soon-Shiong is taking a lot of heat for letting a cost-slashing hedge fund take over the parent of the New York Daily News and Chicago Tribune.
On Friday, Soon-Shiong claimed he had abstained from the controversial vote on whether hedge fund Alden Global should take over Tribune Publishing.
In reality, he left his proxy ballot for his 24-percent Tribune stake blank, sources said. That means his “abstain” vote was counted as a “yes” when it was sent in Thursday evening.
The apparent deception is drawing fire across the publishing world, which has been riveted for months at the drama playing out for ownership of the publisher of nine metro dailies, including the Baltimore Sun and the Hartford Courant, and other smaller papers.
One source called him the “second most despised man in newspapers today behind Heath Freeman” — the president of Tribune’s new cost-slashing owners, Alden Global Capital, which is now the nation’s second biggest newspaper owner.
Soon-Shiong could have sunk the deal if he had written in “abstain” on his proxy statement because only non-Alden shareholders were allowed to vote and the takeover required two-thirds of the votes cast.
By leaving it blank, the special committee composed of the four non-Alden board members were able to count his vote as a “yes.”
“He knew exactly what he was doing,” said Ken Frydman, a former public relations spokesman for the Daily News “which was to vote yes by ‘abstaining’.”
Soon-Shiong paid $15 a share for his stake in 2016 with an eye to acquiring the Los Angeles Times. Alden, which already controlled a 32-percent stake in Tribune, agreed to pay $17.25 for the shares it doesn’t already own.
The only board member to oppose the deal was Tribune CEO Terry Jiminez, who was promptly fired from his $517,000 a year job (not including another $1.7 million in vested stock bonuses) shortly after the Alden takeover was successful.
Oddly, Soon-Shiong was quoted in an article that appeared in the Washington Post the day before the May 21 vote, claiming he had forgotten the vote was scheduled for the next day.
He also said he was going to listen to his advisors and then vote. But as one source who had worked with him noted, “he’s not the kind of guy who takes advice from advisors.”
Another source who is familiar with how health care billionaire Soon-Shiong runs his businesses, said there was no way he was unaware that his blank vote would pave the way for the Alden takeover. “He’s made a lot of money by selling public companies,” said the source.
Soon-Shiong released the statement on his “abstention” through the press contact at the Los Angeles Times, the newspaper that he bought along with the San Diego Union Tribune for $500 million in 2018.
Some critics also called that move into question. “That the guy [Soon-Shiong] used the p.r. person for a newspaper to disseminate lies is totally inappropriate,” said the source.
The statement released by LA Times spokesperson Hillary Manning on Friday shortly before the deal was announced, said. “Dr. Soon-Shiong abstained from voting. For the past several years, Tribune Publishing has been a passive investment, as he has remained focused on the leadership roles he holds across his companies. When he made the investment in 2016, he hoped it would be a pathway to local newspaper ownership in Southern California. In 2018, he and his family were proud to acquire the Los Angeles Times and San Diego Union-Tribune from Tribune Publishing, creating the California Times. Their focus is and will be on the continued rebuilding and revitalization of The Times and Union-Tribune.”
Manning did not respond to requests for comment.
Soon-Shiong stands to rake in about $160 million via his shares at a time when the LA Times is said to be losing $50 million a year.
But that hasn’t stopped some watchers from wondering if he may have missed out on a chance to get an even bigger return. “If Alden did not get the deal, it is doubtful, they would have taken their ball and gone home. They likely would have come back with an even better offer,” one watcher said.