Tech wheeler-dealer Michael Ferro may have earned some ridicule last week for rebranding the company that publishes the L.A. Times and Chicago Tribune as tronc — lowercase, please — but he’s an intense businessman known for coming out ahead.
In March, Chicago Magazine named Michael W. Ferro Jr. No. 49 of the city’s 50 biggest movers and shakers, writing, “For better or worse, the fate of print journalism in this town rests largely in his hands.”
Ferro has been a power player in Chicago for years. But in the four months since he took the helm of Tribune Publishing as chairman, he has made it known that he is the one in charge — and no one is going to take that away from him.
It all came to a head last week. He installed his close associates on the company’s board. It also appeared likely that Gannett would continue to pursue its unsolicited takeover offer. He also is changing the company’s name to tronc (with a lowercase t), which stands for Tribune online content. And he moved its stock listing to the Nasdaq to make it seem more like a dot-com-era startup instead of the celebrated newspaper conglomerate that owns the Los Angeles Times and The Chicago Tribune.
Michael W. Ferro Jr.
Previous deals: Sold Click Commerce for $300 million; took control of medical-software firm Merge Healthcare and sold it to IBM; bought the Chicago Sun-Times; gained control of Tribune Publishing.
The risk of Gannett walking away has been a disappointment to many on Wall Street, which viewed accepting Gannett’s deal as a no-brainer. (Gannett, which owns USA Today, has been on a quest to buy papers across the country in an attempt to cut costs.)
Now Ferro, 49, who is frequently compared by people who know him to other brash businessmen like Donald Trump and Sam Zell, will get the chance to prove his assertion that big plans to remake Tribune will turn it into a far more valuable company than Gannett’s offer pegged it at.
“We have a tremendous opportunity at Tribune as we move aggressively to implement the changes necessary to succeed in the current environment,” Ferro said in a statement Thursday.
Ferro is the latest wealthy businessman to think he has the right ideas to save a newspaper industry that has struggled for years with declining circulation and falling advertising dollars. For these men, including Jeff Bezos, who bought The Washington Post in 2013, and casino magnate Sheldon Adelson, who bought the Las Vegas Review-Journal in December, newspapers have become a prized asset.
Ferro is so sure of his plans for his company — which include the combining of the editor and publishers at its newspapers, using artificial intelligence and a pledge to open bureaus for the Los Angeles Times in places like Lagos and Hong Kong — that he rebuffed overtures from Gannett that would have given shareholders a rich premium. Gannett’s revised offer of $15 a share, from the $12.25 a share Tribune rejected in early May, represented a 99 percent premium to the closing price on the last trading day before Gannett went public with its initial offer.
Tribune is not Ferro’s first foray into the newspaper business. In late 2011, a company called Wrapports, led by Ferro and Timothy Knight, a former publisher of Newsday, agreed to buy the Chicago Sun-Times, the city’s second-biggest paper. He emulated a Silicon Valley atmosphere, creating an arcade game room and providing free candy and ice cream.
Some aspects of Ferro, however, can seem decidedly retro. He has been known to publicly comment on women’s physical appearances. While Ferro was making a presentation to the City Club of Chicago several years ago, for instance, he pointed to a picture of a female Sun-Times reporter and said “she’s even better looking in person,” according to a YouTube video of the event. (Zell’s ownership of Tribune was characterized by, among other things, a work environment that many thought was demeaning toward women.)
Ferro wears the uniform of a tech entrepreneur — which is what he was until about a decade ago. He sold Click Commerce, which made software to manage supply chains, to Illinois Tool Works for about $300 million (an investment that ITW had to write down two years later).
That made him a millionaire many times over, and Ferro used his newfound status to take seats on boards across the city, becoming intertwined with the small club of Chicago’s wealthy business elite.
“Michael’s punched his ticket at all these institutions that these movers and shakers are involved in,” said James O’Shea, a former managing editor at the Chicago Tribune who has worked with Ferro. “He does know his way around the city.”
Ferro, known for his salesmanship, persuaded the likes of John Canning, founder of the private equity firm Madison Dearborn Partners, and Andrew McKenna, chairman of McDonald’s, to put capital into his new investment firm.
Merrick Ventures, as it was known, quickly made a notable bet on a company called Merge Healthcare. Ferro took a controlling stake in the company, which made medical-imaging software, and ousted the chief executive, installing his own associate, Justin Dearborn. That was a precursor to a strikingly similar move Ferro made at Tribune, where Dearborn is now the chief executive.
Ferro’s stature among some in the elite Chicago community started to fade after regulators questioned Merge’s related-party transactions. From a financial perspective, the deal was seen as a success. Merge sold to IBM for $1 billion last year, a 900 percent return from the time he invested.
In autumn 2015, Tribune Publishing announced a staff-reduction plan as it faced questions about how to bolster its media properties and raise its stock price. Tension between the company and its California papers was also high. The publisher of the Los Angeles Times was fired after only a year in the job, and there were disagreements about financial projections.
In February, Ferro yet again opened his checkbook — this time for Tribune. At the time, Tribune’s board voted in favor of his $44.4 million private placement at $8.50 a share. Ferro transferred his equity in the Sun-Times into a charitable trust. About three weeks later, Jack Griffin was fired as chief executive and Dearborn stepped in.
Not long after, Gannett saw an opportunity and made its move.
To fend off Gannett, Tribune issued almost 5 million shares to an investor, Dr. Patrick Soon-Shiong, who agreed to side with Ferro on major issues. Together, the two controlled nearly one-third of Tribune shares.