“We have incurred operating losses in the past, may incur operating losses in the future, and may not achieve or maintain profitability in the future.”
Yes, that’s singling out boilerplate corporate language in the “Risk Factors” section of docs filed by The Los Angeles Times as it seeks investors ahead of an initial public offering that may take place in 2027 on the New York Stock Exchange under the LAT symbol. But, with a net loss before income taxes of $48 million on the books for 2024, the line also speaks to the urgency of billionaire owner Dr. Patrick Soon-Shiong‘s bid to transform the business of the 144-year-old paper, which now employs 615 full-time staffers and says it has about 500,000 paying customers combined across its print and digital offerings.
The private placement memorandum docs note that the owner has already invested $750 million in total since he was celebrated for picking up the paper from the embattled Tribune Co. in 2018. The Times‘ 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 being leading categories,” and it also picked up $53 million in events, licensing, delivery direct mail and other areas to report $237.5 million in total revenues.
Notably, the paper — which publishes seven days a week — generated more revenue from print advertising ($35.5 million) than it did digital advertising ($24.4 million) last year, highlighting the tightrope walk that major publishers are dealing with as media execs contemplate how to deal with their revenue mix. (The old adage of “print dollars to digital dimes” is apt here. But the conventional wisdom that publishers must march to go digital-only has been scrambled in recent years amid print’s resilience.)
The new vision relies heavily on investors seeing the upside in a combination of assets that includes the Times newspaper itself (described in a pitch deck as “credibility core”). It also includes LA Times Studios, which operates like a cable news streaming channel that broadcasts at the top of the paper’s website, utilizing the outlet’s reporting but presenting it, in the words of the pitch deck to investors, with “clarity and conversation, packaged with tempo and polish.” Studios is also the division that adapts the paper’s reporting to pitch Hollywood projects, and has seen success with Bravo’s Dirty John and articles optioned for features, including for the film Rosemead starring Lucy Liu. Then Soon-Shiong is bundling in his Nant Studios, with Culver City and El Segundo campuses that offer LED volume and virtual production stages for rent, as well as Nant Games, which produces and packages esports events.
In short: That’s a print paper with a historic local monopoly, a streaming news channel that heavily relies on the traffic patterns of said paper, a production facility and an esports producer. The docs also signaled growth areas, including plans for LA Times Studios to create “a technologically advanced medical and scientific journal.” (The journal idea may fit in with Soon-Shiong’s background, he did make his fortune in part through biotech, and a good comparison is the breakout Stat News, which Boston Globe owner John Henry launched in 2015.)
Another key stat in the pitch deck: 12 million, the number of articles that ownership is currently digitizing in the hopes that “advancements in artificial intelligence will create monetization opportunities for the archives through the development of new proprietary products and licensing opportunities.” To investors, it’s branded “Archive Intelligence.”
GenAI recurs across the docs, and Soon-Shiong has been bullish about its use cases. The website already features AI-overview “Insights” at the end of opinion columns that spit out lines like, “This article generally aligns with a Center Left point of view” and AI-generated content provided by Perplexity that summarizes the piece in bullet point Wikipedia style. In the Times‘ filing docs, ownership notes that these add-ons can create “output errors or inaccurate analysis.”
For the core paper itself, the Times‘ “what’s next” goal is listed as, “Expand reporting in Washington and Sacramento,” and the docs note that LA Times Studios is building production facilities in D.C., “establishing a presence on the floor of the New York Stock Exchange, and adding production capabilities” in California’s capital city. Also, in the digital realm, “Renewed attention to front-of-the-paywall content can help to ensure continued high volumes of users” to the site.
The IPO groundwork docs also arrive as the union that reps the non-managerial employees at the paper voted “yes” on a strike authorization on Oct. 9 after operating without a new collective bargaining agreement for nearly three years. The docs note, “We and the Union continue to negotiate the terms and conditions of a new collective bargaining agreement.”
