Tronc Inc. (TRNC) , the newspaper owner formerly known as Tribune Publishing Co., is taking another page from its recent history.
In a move that would seem surprising were it made by any other publisher, Tronc has agreed to acquire the New York Daily News, adding New York to its holdings in Los Angeles and Chicago. Tribune's so-called three-legged chair strategy of owning newspapers in the country's three largest cities was at the strategic center of its acquisition of Time Mirror Co. in 2000. Similarly, the Daily News deal is also about cutting costs and selling national advertising, as my colleague Ken Doctor explains, though the real estate component of this deal adds a new wrinkle.
Just two weeks ago, Tronc rekindled memories of its recent past when it replaced the editor and publisher of the Los Angeles Times along with his top deputies on Aug. 21. Just as the Times newsroom was recalling the turbulent days following the Times Mirror acquisition, newspaper folks at Daily News are likely having their own. Tribune owned the Daily News from its birth in 1919 until it tried to break its labor union by forcing a strike in the early 1990s that nearly shutdown the New York City tabloid. Tribune sold the weakened newspaper to British media baron Robert Maxwell, who later fell off his yacht in an apparent suicide. Afterward, it was revealed that Maxwell had been stealing from the newspaper's pension fund.
Boston billionaire real estate developer Mortimer Zuckerman purchased the newspaper in 1993.
Back in 2000, Tribune was eager to regain its presence in New York, prompting CEO Charles Madigan to engineer an $8 billion cash-and-stock takeover of Times Mirror Co. in one of the largest newspaper takeovers in U.S. corporate history. The acquisition came at a time when Tribune was among the country's most prominent media corporations, combining a broad portfolio of newspaper and television holdings, led by the Chicago Tribune and Chicago's WGN.
Madigan confidently predicted that by combining his company's TV stations and newspapers with the Times Mirror's Los Angeles Times, New York's Newsday and other publications, the merged company would leverage shared costs as it sold advertising to national marketers looking for a presence in the country's three largest cities along with a handful of midsize metro areas. This was the era before the ascent of Alphabet Inc.'s Google (GOOGL) , Facebook Inc. (FB) and the turbo-charged Apple Inc. (AAPL) , a time when newspaper publishers like Tribune were media heavyweights. Cash flow was strong, and classified advertising had yet to be cut down to size by Craigslist.
But the deal struggled from the outset. The bursting dot-com bubble coupled with the 9/11 terrorist attacks strained revenue. Madigan's predictions of financial synergies also failed to materialize, overwhelmed by illusions of grandeur and the newfound company's intractable culture clash. The efficient and conservative managers in Chicago were an uncomfortable fit with the ambitious, Left Coast newsroom in Los Angeles.
I worked at the Chicago Tribune from 2003 to 2006, and the resentment from the L.A. Times' newsroom toward their penny-pinching owners in the Midwest was a long-running, always-simmering source of friction. To be sure, the Chicago Tribune newsroom wasn't particularly pleased with the relationship either, often chafing at the pretensions of Los Angeles. As Jim O'Shea, the genial, even-keeled managing editor of the Tribune wrote in his appropriately titled book "The Deal From Hell," the newsroom in Chicago never felt it got "the recognition it deserved from its snooty rivals on the coasts."