from a Bloomberg broadcast
Though it ultimately takes its orders from Chicago, the fate of the struggling Union-Tribune is being increasingly linked to big-money battles involving San Diego connections.
Last week, Los Angeles biotech billionaire Patrick Soon-Shiong, who has a start-up on Torrey Pines Mesa, bought 12.9 percent of Tribune Publishing in shares newly issued by the company, led by Midwest wheeler-dealer Michael Ferro.
Soon-Shiong announced that Tribune would use some of his high-tech patents to create artificial-intelligence devices and related robots to somehow save Tribune's dwindling publishing empire.
The resulting stock dilution and appointment of the South African–born billionaire as Tribune vice-chairman was widely seen as a gambit by Ferro to ward off a hostile takeover attempt by national newspaper giant Gannett.
Now Capital Structures Realty Advisors LLC has filed suit in Delaware Chancery Court against Tribune chairman Ferro and the rest of his board, trying to block the Soon-Shiong deal.
“Ferro and the board sold 13% of the company to defendant Soon-Shiong for one reason, to consolidate their control over Tribune in the face of mounting pressure from the company’s stockholders,” says the suit, according to a Wall Street Journal report.
“Ferro wasted no time in stacking management and the board with his loyalists,” the suit alleges.
Tribune’s board has rejected Gannett’s offer of $15 a share for the company, and on June 2 Ferro tightened his grip even further when shareholders voted to elect his board slate at Tribune's 23-minute annual meeting in Los Angeles.
The stockholders also approved a change in the company's name from Tribune Publishing to Tronc.
Ferro and chief executive Justin Dearborn "declined to give detailed answers to questions from five shareholders about issues like the company's new digital strategy," according to Marketwatch.
"At Capital Structures Realty Advisors, we develop commercial real estate projects nationwide and provide corporate real estate advisory services focused on supply chain & logistics solutions throughout the United States," says an online profile of the company, chartered in Wyoming.
The principal of Capital Structures, according to the Del Mar firm's website, is Frank Gallagher, identified by a onetime associate as a real estate broker who has been involved in high-profile development proposals here, including a 2008 attempt with the late Richard Chase to build a platform over the 96-acre 10th Avenue Marine Terminal to accommodate a downtown stadium for the Chargers.
The idea was shot down by voters by a hefty margin when it appeared on the ballot as Proposition B in November 2008.
Four years later, La Jolla mega-developer Douglas Manchester, then-owner of the U-T, picked up on the proposal, advocating that the pier be bulldozed to make way for a stadium project, which also failed to get off the ground.
Both developments were avidly backed by Manchester associate John Lynch, who during Manchester's U-T reign served as president and CEO of the newspaper.
In May 2015, Manchester sold the U-T to Tribune Publishing, launching a year of never-ending turmoil at the paper as its parent has struggled with a series of management and control battles that have yet to conclude.