Wrapports' Michael Ferro jumps ship to Chicago Tribune, because some people kind of fail upwards
In a news that came completely out of the left field, Tribune Publishing announced earlier this morning that Michael Ferro, owner of Wrapports (the Chicago Sun-Times' parent company) joined the company's Board of Directors as the "Non-Executive Chairman." He bought 5,220,000 shares the company's common stock for $44 million - which, according to Robert Feder, made him Tribune's largest shareholder.
My first question was "wait a second - isn't a huge conflict of interest?" But it turned out that I wasn't reading Tribune's press release carefully enough. Ferro resigned as the charman of Wrapports - though, according to Feder, he remains its largest investor. And, according to Feder, Sun-Times has been put into a separate holding company chaired by Wrapports investor (and owner of Hyde Park Herald) Bruce Sagan. Wrapports will keep Chicago Reader, Splash magazine, High School Cube video broadcasting service and "other properties."
Presumably, Sun-Times Network will be part of the new Sun-Times holding company. I'm not sure what this will mean for things like Viewsmix, Sports Chatter and CelebChatter - while they were advertised on Sun-Times Network, their copyright information only mentions Aggrego. And since Aggrego probably falls under "other properties," Wrapport probably still controls them.
Whatever may be the case, this is bad news for Chicago Sun-Times. i have complained before that Wrapports may have been using Chicago Reader's profits to prop up the less profitable parts of the company - like Chicago Sun-Times and the Sun-Times Network - so we may never know how profitable it actually was. But now, the cushion is gone. Ditto whatever revenue Aggrego has been getting from Splash. In the past, Ferro justified the existence of his pet project, in part, by saying that it brings money from more upscale advertisers that Chicago Sun-Times couldn't attract[Note 1 (click to open)](Whether that's actually the case is another matter. Spash did reduce its print frequency last year, and, again, being the owner's pet project gives you leeway that other parts of the company may not have). And, as I wrote before, Sun-Times Network shows no sign of making back the money that was put into it.
Feder is convinced that this signals that Tribune will buy Chicago Sun-Times in the observable future. And he's been right about these kinds of things far more times than he's been wrong. Personally, I think it's just as likely that the opposite is true - that Ferro simply knows that he's not going to get his money back, so he's jumping ship a company that is actually profitable. But this may be wishful thinking. Because, as I wrote many times before, I maintain that Chicago Tribune buying Chicago Sun-Times is a very bad idea. As Chicago media history shows, when a newspaper buys another newspaper, the acquired newspaper doesn't stick around for very long (see Chicago Sun-Times and Chicago Daily news, Chicago Tribune and Chicago Today, Pioneer Press and most Lerner newspapers, etc).
Tribune Publishing is pretty upfront about what it plans to do with the $44 million it got from Ferro - it "will enhance the Company’s position for pursuing strategic acquisitions and digital initiatives." So the company is planning to buy more publications. Which, for all we know, could include Chicago Sun-Times.
Finally, I would be remiss not to point out one thing. I know feather-fluffing kind of comes with the territory when someone gives you lots of money, but it was hard not to roll my eyes as this part of Tribune CEO Jack Griffin's letter to employees
Michael [Ferro] is an excellent addition to our Board. An innovative technology and media entrepreneur, Michael has a successful track record developing companies in the midst of transformation.
[...]
Michael is a strong believer in journalism, in the importance of independent news and editorial voices and the value that is derived from the content our talented journalists create.
Which flies in the face of pretty much his entire record at Wrapports/Sun-Times Media. Though I'm not that surprised at the later part. Ferro famously told Chicago magazine that he loved photography... a few months after Wrapports fired of Sun-Times Media's photographers.
I get that Tribune needs the money, but I have to ask - given Ferro's track record with media company, did anybody honestly think that putting him in any sort of position of power at Tribune Publishing was a good idea. Granted, he's not the owner, an, so far, the company has been following Griffin's vision, but I imagine being the largest stockholder is bound to give him some influence.
It looks like the stock market isn't too optimistic, either.
@BruceWolfChi @RobertFeder Tribune Publishing down 23% on the news. https://t.co/IbOGkmhqqX
- Dan Proft (@DanProft) February 4, 2016
But you know how the saying goes. When you get high enough on the corporate ladder, you just kind of fail upwards.
My first question was "wait a second - isn't a huge conflict of interest?" But it turned out that I wasn't reading Tribune's press release carefully enough. Ferro resigned as the charman of Wrapports - though, according to Feder, he remains its largest investor. And, according to Feder, Sun-Times has been put into a separate holding company chaired by Wrapports investor (and owner of Hyde Park Herald) Bruce Sagan. Wrapports will keep Chicago Reader, Splash magazine, High School Cube video broadcasting service and "other properties."
Presumably, Sun-Times Network will be part of the new Sun-Times holding company. I'm not sure what this will mean for things like Viewsmix, Sports Chatter and CelebChatter - while they were advertised on Sun-Times Network, their copyright information only mentions Aggrego. And since Aggrego probably falls under "other properties," Wrapport probably still controls them.
Whatever may be the case, this is bad news for Chicago Sun-Times. i have complained before that Wrapports may have been using Chicago Reader's profits to prop up the less profitable parts of the company - like Chicago Sun-Times and the Sun-Times Network - so we may never know how profitable it actually was. But now, the cushion is gone. Ditto whatever revenue Aggrego has been getting from Splash. In the past, Ferro justified the existence of his pet project, in part, by saying that it brings money from more upscale advertisers that Chicago Sun-Times couldn't attract[Note 1 (click to open)](Whether that's actually the case is another matter. Spash did reduce its print frequency last year, and, again, being the owner's pet project gives you leeway that other parts of the company may not have). And, as I wrote before, Sun-Times Network shows no sign of making back the money that was put into it.
Feder is convinced that this signals that Tribune will buy Chicago Sun-Times in the observable future. And he's been right about these kinds of things far more times than he's been wrong. Personally, I think it's just as likely that the opposite is true - that Ferro simply knows that he's not going to get his money back, so he's jumping ship a company that is actually profitable. But this may be wishful thinking. Because, as I wrote many times before, I maintain that Chicago Tribune buying Chicago Sun-Times is a very bad idea. As Chicago media history shows, when a newspaper buys another newspaper, the acquired newspaper doesn't stick around for very long (see Chicago Sun-Times and Chicago Daily news, Chicago Tribune and Chicago Today, Pioneer Press and most Lerner newspapers, etc).
Tribune Publishing is pretty upfront about what it plans to do with the $44 million it got from Ferro - it "will enhance the Company’s position for pursuing strategic acquisitions and digital initiatives." So the company is planning to buy more publications. Which, for all we know, could include Chicago Sun-Times.
Finally, I would be remiss not to point out one thing. I know feather-fluffing kind of comes with the territory when someone gives you lots of money, but it was hard not to roll my eyes as this part of Tribune CEO Jack Griffin's letter to employees
Michael [Ferro] is an excellent addition to our Board. An innovative technology and media entrepreneur, Michael has a successful track record developing companies in the midst of transformation.
[...]
Michael is a strong believer in journalism, in the importance of independent news and editorial voices and the value that is derived from the content our talented journalists create.
Which flies in the face of pretty much his entire record at Wrapports/Sun-Times Media. Though I'm not that surprised at the later part. Ferro famously told Chicago magazine that he loved photography... a few months after Wrapports fired of Sun-Times Media's photographers.
I get that Tribune needs the money, but I have to ask - given Ferro's track record with media company, did anybody honestly think that putting him in any sort of position of power at Tribune Publishing was a good idea. Granted, he's not the owner, an, so far, the company has been following Griffin's vision, but I imagine being the largest stockholder is bound to give him some influence.
It looks like the stock market isn't too optimistic, either.
@BruceWolfChi @RobertFeder Tribune Publishing down 23% on the news. https://t.co/IbOGkmhqqX
- Dan Proft (@DanProft) February 4, 2016
But you know how the saying goes. When you get high enough on the corporate ladder, you just kind of fail upwards.