Los Angeles Times Owner’s Pitch Deck to Investors Reveals Vision
“We have incurred operating losses in the past, may incur them in the future and may not achieve or maintain profitability in the future.”
Yes, this amounts to distinguishing boilerplate corporate language in the “Risk Factors” section of documents filed by The Los Angeles Times as it is seeking investors in anticipation of an IPO that could take place in 2027 on the New York Stock Exchange under the symbol LAT. But, with a pre-tax net loss of $48 million forecast for 2024, the line also speaks to the urgency of billionaire owner Dr. Patrick Soon-Shiong’s attempt to transform the business of the 144-year-old newspaper, which now employs 615 full-time staff and says it has about 500,000 paying customers combined across its print and digital offerings.
The private placement memorandum says the owner has already invested $750 million in total since being celebrated for scooping up the newspaper from the struggling Tribune Co. in 2018. TimesThe subscription business generated $120 million in revenue last year, while its advertising business generated about $60 million, with “entertainment, banking and finance, fashion, retail and local as the main categories”, and it also raked in $53 million in events, licensing, direct mail delivery and other areas to report total revenue of $237.5 million.
Notably, the newspaper – which publishes seven days a week – generated more revenue from print advertising ($35.5 million) than digital advertising ($24.4 million) last year, highlighting the tightrope ride big publishers face as media executives consider how to manage their revenue mix. (The old adage that “print dollars are being replaced by digital cents” is relevant here. But the conventional wisdom that publishers should go digital-only has been blurred in recent years due to the resilience of print.)
The new vision relies largely on investors seeing the benefits of a mix of assets that includes Times journal itself (described in a pitch deck as a “core of credibility”). It also includes LA Times Studios, which operates as a cable news channel broadcasting on top of the newspaper’s website, using the news outlet’s reporting but presenting it, in the words of the pitch deck, to investors, with “clarity and conversation, packaged with tempo and sophistication.” Studios is also the division that adapts the newspaper’s reporting to feature Hollywood projects, and has seen success with Bravo’s Dirty John and optional items for feature films, including for the film Rosemead with Lucy Liu. Next, Soon-Shiong consolidates into its Nant studios, with campuses in Culver City and El Segundo offering LED and virtual production stages for rental, as well as Nant Games, which produces and packages esports events.
In short: it’s a print newspaper with a historic local monopoly, a streaming news channel that relies heavily on said newspaper’s traffic patterns, a production facility, and an esports producer. The documents also pointed to areas of growth, including LA Times Studios’ plan to create “a technologically advanced medical and scientific journal.” (The idea for the journal may fit with Soon-Shiong’s background – he made his fortune in part through biotechnology – and a good comparison is escapism Statistical newswhich Boston Globe owner John Henry launched in 2015.)
Another key statistic from the pitch deck: 12 million, the number of items that owners are currently digitizing in the hope that “advancements in artificial intelligence will create monetization opportunities for archives through the development of new proprietary products and licensing opportunities.” For investors, this is “Archive Intelligence”.
GenAI is recurring in the literature and Soon-Shiong was optimistic about its use cases. The website already offers AI overview “Insights” at the end of opinion columns that spit out lines like “This article generally aligns with a left-of-center point of view” and AI-generated content provided by Perplexity that summarizes the article in Wikipedia style. In the TimesIn filing documents, the property notes that these add-ons may create “output errors or inaccurate parsing.”
For the basic document itself, the TimesThe “what’s next” goal is listed as: “Expand reporting in Washington and Sacramento,” and the documents note that LA Times Studios is building production facilities in Washington, DC, “establishing a presence on the floor of the New York Stock Exchange and adding production capabilities” in the California capital. Additionally, in the digital realm, “a renewed focus on paywall content can help ensure a high volume of users is maintained” on the site.
The preparatory documents for the IPO also come as the union that represents the newspaper’s non-managerial employees voted “yes” on a strike authorization on October 9 after operating without a new collective agreement for almost three years. The documents note: “We and the union continue to negotiate the terms and conditions of a new collective agreement. »
