It was a single weekend phone call three years ago that set Patrick Soon-Shiong on an unexpected path.
It was Michael Ferro, whom he barely knew, calling in spring 2016, telling him he’d make the medtech billionaire a “partner” in Tribune Publishing — if he agreed to invest $70.5 million (at a high price per share) and if he would commit immediately. Many corporate twists and turns later, Soon-Shiong ended up buying the Los Angeles Times and San Diego Union-Tribune for a cool half-billion dollars — acknowledging that he “overpaid” in order to save what he considers a vital southern California institution from rule by cost-cutters.
All that outlay was just a prelude, though: Soon-Shiong told me (in part one of our three-part series on the new L.A. Times) that he’ll take a further $50 million loss in 2019, the result of his investment in hiring and technology. And that seems just a down payment, given how far the Times still has to go — its 157,000 digital subscribers remain far behind The New York Times’ 3.4 million and The Washington Post’s more than 1.5 million — to beef up for the decade ahead.
Nine months into the Soon-Shiong era, the publishing world has lots of questions about what’s going on at the Times. The biggest: Can Patrick Soon-Shiong do for the Los Angeles Times what Jeff Bezos has done for The Washington Post? One’s the consumer marketing genius of our time, having built Amazon into a reinventor of retail. The other is a successful medtech innovator, at work on curing cancer, making next-gen batteries, and now reforming the news industry. That’s not to mention the solar-powered scooters or alternative polymers — the range of projects he’s involved in wowed a crowd in L.A. just last week, getting him described as a “rockstar” at a regional government event.
Might the new L.A. Times work closely with the new Post — two independent operators who share a lot of the same vision? That seems unlikely. Soon-Shiong had inherited the Post’s fast-syndicating Arc platform, but is now moving to build his own. Its new GrapheneCMS, launched Wednesday at Soon-Shiong’s San Diego Union-Tribune, becomes the company’s first new content management system.
Yesterday we relaunched the website for @sdut, one of California’s largest metropolitan daily newspapers. The update includes faster page-load times, a cleaner design and a better mobile experience. Find out more here: https://t.co/FZwQqSIp8w #SanDiegoUnionTribune #CMS pic.twitter.com/alDEov7Olp
— Perfect Sense (@PerfectSenseDig) March 27, 2019
For Soon-Shiong, though, it’s not all about tech. He’s renovated a new Times building, bringing his employees a place “where they can have sun, they can have light, they can have joy in their work.” It’s an unusual mission statement for a newsroom many have considered one of the toughest to manage in the country, but it comes from a deep-pocketed owner who also considers himself the healer-in-chief of an “abused” newsroom. Soon-Shiong’s vision is vast; here, he explains in depth how it all fits together. This interview has been edited for length and clarity.
Ken Doctor: You’ve refocused right away on reader revenue. Your staff told me you are up to 157,000 digital subscribers.
Patrick Soon-Shiong: The only interest to be considered is the interest of the patient. Nothing else matters. So the only interest to be considered is the interest of the readers, our audience, our community — where interest could be educational interest, entertainment interest…
Doctor: And food, where you starting to make quite an investment, as well as big investments in talent overall.
Soon-Shiong: Yes — but the idea that only our paper can find things of interest is ludicrous. I hope I don’t get beaten up for saying something like that. So we need to collaborate. So I’m looking at all [of the things we can do]. Because the only way we can survive right now is to band together [with partners]. That’s our strength against a Google and a Facebook that literally just packages everything and turns it on the media, and they use themselves as a platform. And they’re quite literally destroying [the press].
Soon-Shiong: And the next is streaming.
Doctor: What sort of streaming?
Soon-Shiong: Don’t know yet, but probably esports and things like that.
Soon-Shiong: To be honest with you, I don’t even think about it as a business. I think about what is good to survive, how the newspaper can survive — [looking] for media tools to engage with you.
Doctor: Almost 160,000 digital subscriptions is a good number, the highest of any regional paper in the country. For the last couple of years, we’ve looked to The Boston Globe as the leader with about 100,000.
Look, I’ve been in this newspaper [business] less than one year. On June 18, I bought the paper. It will be one year soon. I am so committed to enhancing the value of what you bring to the readers. Now the question is: Who’s our demographic? We have to, we must start fighting for the 16-year-olds all the way to the 30-year-olds, because that’s not our demographic. They don’t watch TV. They don’t read the newspaper. They don’t listen to news. They don’t read news.
Doctor: So esports is the way in to them?
Soon-Shiong: Esports, music, food — whatever interests them. Arts, culture, fitness, health.
Soon-Shiong: Which “Times”? Our Times? [laughs]
Doctor: The New York Times.
Soon-Shiong: Right. We’re the other way around. We’re more like 50 percent advertising revenue, right? So that’s where we have to change that model.
The newsroom as temple of knowledge
Doctor: Where did you start, after you took over the paper?
So my next priority now is I’m creating an entire floor in the building in which we’ll have podcast, digital, TV, linear TV, over-the-top TV, streaming, storytelling.
Doctor: So is this a lab? Is it an innovation center?
This floor, the fifth floor, is going to be a transmedia floor. The story is developed by the newsroom, off that floor. And now think of that floor as the printing press, because that’s how you’ve been thinking before. You’ve got a 2:00 deadline, a 5:00 deadline, right? But you no longer have a 2:00 and a 5:00 deadline, because that story can go into a podcast. It can go into video. It can go on TV. Social media. It could go anywhere. But the team needs to say: Wow, this is a big story. It needs to go out now.
Doctor: It’s a multiplier, in part.
Soon-Shiong: No, it is a form of distribution that’s being modernized.
Doctor: The people on this floor — they’re collaborative with the newsroom, but you don’t expect the people who are journalists to do this stuff?
Soon-Shiong: Correct. Because the journalists should be the storytellers. They tell the story. If it’s a story about french fries, then they can deal with that down on the fifth floor.
Doctor: In 2050, people still love french fries. It’s true. How many people work on that floor by the end of the year?
Soon-Shiong: We’re only going to populate that floor this month. Walk that floor, and you will sort of see the strange configuration. There will probably be 150 people on that floor.
Doctor: That’s 150 new people?
Soon-Shiong: No, we’re also organizing current people onto that floor. There will be 100 new people.
Doctor: And are they hired yet?
Soon-Shiong: No. There’s 20 new people now.
Doctor: It would make sense to me that with transmedia, it would in part be separate. But it also needs to be partly embedded. That’s one of my takeaways from The New York Times and the Post. They have big “separate” operations but they also embed engineers, analytics, and visuals people right into the newsroom.
Soon-Shiong: I want every editor to have a seat on that floor. Every editor at the Times.
Doctor: So they can move back and forth?
can we please hire the intern https://t.co/6jgJVXGkSd
— Matt Pearce ? (@mattdpearce) February 15, 2019
So I hired this intern. I said, “Norm, please hire this intern.” [That’s Norm Pearlstine, Times excecutive editor.] She just came from RISD, and she’s 23 years old. She was with us for one month. She challenged our food critic, where he put out his analysis of the best French fries, and she says, “I disagree with you. The best French fries is In-N-Out.” It got a million views.
— L.A. Times Food (@latimesfood) February 12, 2019
— L.A. Times Food (@latimesfood) February 12, 2019
And now we’ve got a whole campaign saying “hire the intern.” I think that’s emblematic of how we should not only not be fearful of change, but we should embrace it. How wonderful, where the fight is not about any politics, but about french fries!
Doctor: So that floor — is it going to going to be part of the newsroom?
Soon-Shiong: Now is that the newsroom?
Soon-Shiong: That is the newsroom, right? So it…maybe? So this demarcation…as long as we have integrity, honesty.
Doctor: That’s what’s important, right?
Soon-Shiong: Right. Integrity, honesty, truthfulness.
Doctor: Well, and that’s why people have had a hard time interpreting you. Because you’re an outsider. Journalists are culturally conservative, as you’ve found out, I’m sure. And it’s hard for them to translate. Now when you say “a temple,” some would go, like: “Well, he’s going to let the advertising people decide what to do.” That’s how some of them hear that, right?
Soon-Shiong: Yeah, but that’s absolutely not the case. Because if my interest was the advertisers, I’d be Google and Facebook.
Doctor: Your interest is with the readers. And you hired Norm.
Soon-Shiong: I hired Norm, and we’ve hired…Did you realize that if [Tronc had held onto the L.A. times] we were on a trajectory, the day that I took the paper over, for the newsroom to be down to 300 people? There were around 400 and they were letting these people go. I knew it was going to happen. We’ve taken it from that potential number to 500 or so in less than eight months. In the newsroom. As I said, my only and highest priority was actually to strengthen this newsroom.
Doctor: Those are impressive numbers.
Soon-Shiong: I see these newsroom people as my scientists. I completely protect my scientists. These are the human capital of the future. Right? Just like with bioinformatics [a key driver of Soo-Shiong’s medical technology career building]. These newsroom people are the scientists. Nobody values their work, because Google and Facebook take their work for free. The readers think they shouldn’t pay for it. So my next job is to say that their work is valuable. So the newsroom shouldn’t fight me on that — they should actually say, “This is fantastic. Somebody’s standing up for us.”
Doctor: They understand your commitment, I think, and people in the field get your commitment. It’s that they don’t understand the way you think differently than most people in the newspaper business, which is really interesting. And where you’re going with it is very interesting. When you talk about journalists as scientists — well, they’re really knowledge builders, right?
Soon-Shiong: Correct. They investigate.
Doctor: They’re beyond just information. That’s knowledge.
Soon-Shiong: Correct. And investigation. They are completely key to the well-being of the community.
Doctor: Yeah. And that is the goal of the L.A. Times — the well-being of the community, right?
Soon-Shiong: Exactly correct.
Doctor: If you think about the role of a newspaper in the 2020s, that’s where we are — a focus on community betterment. “Newspaper” in quotes, right, but we don’t really have another word for it.
Soon-Shiong: Right. You should call it news media, though.
Soon-Shiong: Media. Because your medium is no longer just paper.
Soon-Shiong: I look upon the world [in a certain way because] I’m practicing medicine at a global level. So this is just another form of practicing. It’s not medicine, but it is practicing medicine for your intellectual well-being, right? And for your mental well-being, and for your sense of inspiration and [to deal with a] sense of angst, which the country has at the moment.
Doctor: Have you tried saying that in the newsroom?
Soon-Shiong: No. Will they get that?
You’ve been in the newsroom less than Austin [Beutner] was. [Beutner was the Times’ publisher from 2014-15, who also believed in the civic-betterment mantra, but was considered an interloper by some in the newsroom.]
Soon-Shiong: Because I want them to get comfortable that I’m not going to interfere.
Doctor: It’s smart. And hiring Norm was very smart on that same level.
In the next year, I need to now educate internally with a level of authenticity and integrity that I’m here to help save and grow — more than “save” because I will not allow this organization to fail. Not because of any ego, because I think it’s so dangerous for the well-being of the community. I want us to write stories that are important.
Doctor: So you’ve got almost 160,000 digital subscribers. [In print, the L.A. Times also sells 220,000 papers daily and 421,000 on Sundays.] So what would your goal be in 2022 or 2023?
Soon-Shiong: I would like to be, realistically, in the millions. It’s the way we survive. Two to four million.
The Times newsroom as an abused child
Doctor: You’re starting not quite from the beginning, but closer to it. You are following the models of The New York Times and the Financial Times. You have to have, first of all, enough really good content. But then you have to have the analytics behind it, and the conversion mechanisms, and all of that. But first, as you have done, you’re starting with the newsroom. Describe to me what you found and what that has meant to you in this first year.
Soon-Shiong: What I found was, truly…I said to them: “It’s like an abused child, a beaten child.” They were truly in the mode of being a victim. And it takes a while to get out of that mode.
Doctor: And that’s why you have to tread so carefully, too, because you can do something unintentionally that will trigger them, to use the modern word.
I’m not against a union one way or the other — but what it does is it creates now this whole us-against-them, which is not the goal. Right? Because the goal, for me, is this is one big family where we actually have to survive together and grow together and actually take shared responsibility. So when I talk about productivity, I don’t mean productivity in terms of, you know, the number of things you write. That’s not important. It’s the quality of your writing and the quality of the story and the quality of the engagement.
That boils down, now, to analytics, exactly what you just said. I don’t think — what I found — that they analyzed anything. So that’s the first thing I found with regard to the newsroom. With regard to the technology, I found it was non-existent. Not even…to fix. Just non-existent. I worried about the systems to the extent that I was worried: Could I run this paper with these systems that are so archaic?
We are the largest printing press west of the Mississippi, I think. And we do the print for ourselves. We print for The New York Times, The Washington Post, The Wall Street Journal, and the San Diego Union-Tribune. And the integration from the reporter to the printing press is archaic. That was another thing I found. We had adopted, before I came on board, Arc, and that took a huge toll because we were like the beta for Tribune.
Doctor: And you were in midst of having to move from the longtime Times building downtown in the middle of it all.
Soon-Shiong: And I had to force them to undo that lease. But they [Tronc, then run by Michael Ferro] wouldn’t allow me into the newsroom.
Doctor: It’s theater of the absurd. It really was. That’s when you made the decision to buy the building in El Segundo.
The first thing I said was I wanted to do is take this building and make a hole in every floor, every concrete floor, to create stairs, because they need to collaborate. So you walk the stairs inside. And then I needed to create a facility where people would go in to work and collaborate and have the most sophisticated, digital, connected fiber infrastructure to data centers. And then I needed to do all of this in two months, for 700 people.
So what I learned then, number one, was there’s no infrastructure, no fiber connectivity, no technology, no statistics, no monitoring, no knowledge of the level of engagement and who they’re engaging.
Doctor: How surprising was that to you?
Soon-Shiong: It was not. Not surprising.
Doctor: Because you’d been interested in the Times for a while. Was it worse than you’d thought, though?
Soon-Shiong: Yeah, it was worse than that. Well, the newsroom was telling me that, in the L.A. Times building, they would be careful where they sat because there were cockroaches and rats.
Soon-Shiong: Right. So I need to bring them out where they can have sun, they can have light, they can have joy in their work.
Doctor: Yeah. That’s not in many mission statements of newspapers I know.
Soon-Shiong: So now I talk to you about my life as a doctor. I’m here to try and heal. Truly, I’m trying to heal them.
Doctor: So what kind of healing will we see over the next year?
Soon-Shiong: Well, what I’m pleased to say — if you go there now, the morale is positive. I think so, at least. I walk around. People smile and say hi. And I want everybody to know that we’re in this together. We truly are in this together. There’s no us and them.
Who owns the new IP?
Soon-Shiong: So if we’ve taken this place from 300 to 500, and our advertising dollars are dropping annually by 15 percent, and I’m spending huge amounts of capital in order to grow podcast, TV, streaming, live streaming. And when somebody says, “Okay, the work that we do, if you put it on TV, it comes to me as an individual rather than to us as an organization,” I don’t think it is sustainable or fair to everybody else.
Doctor: I have not read the details of the dispute. Are you trying to do a sharing of some kind?
Soon-Shiong: So the question that came about was IP on books. Apparently, in your industry, it’s always been a given that if the person writes a book, they get a percentage of the revenue. We said that’s fine. We agreed to that. So having agreed to that, I think the next question was — and I’m not sure, because I’m not involved in these negotiations directly — “No, no. We want IP on essentially everything that…even what you do on TV.”
Doctor: So you kept the book compensation.
Soon-Shiong: We conceded, for books.
Doctor: That’s interesting. I wonder what the New York Times is doing, with say podcasts.
Doctor: As opposed to an individual’s work, which a book is more?
Soon-Shiong: Correct. Correct. So that’s why I need you to survive. We need to look at this as what I call a shared responsibility and a shared mission, right? Is this a shared mission? I’m certainly not doing this as a profit-making tool.
$50 million loss…and counting
Doctor: It’s going to cost you a lot of money.
Soon-Shiong: I paid a half a billion dollars [what he paid Tronc for the L.A. and San Diego papers] and invested another $100 million in the building.
Doctor: After the buy and the building, what is it costing you, with all the new hiring and tech reinvestment?
Soon-Shiong: Well, I’m just telling you right now, this year we’re going to lose $50 million.
Doctor: And I take it you’re willing and you’ve got capacity to — as long as you’re on the trajectory of rebuilding that you want, you’re willing to continue to make that investment over the next several years?
I’m showing you our investment. We’re putting our money where the mouth is. I’m investing in buying and in hiring. Now is the time for us to act together as a unit. But I need data. I need predictive modeling. I need to put data up every day, every minute.
Doctor: Where are you at in that process of being able to produce that predictive data, that feedback loop?
Soon-Shiong: For predictive modeling, I’m back to my bioinformatics team. I have the most sophisticated predictive modeling scientists. Now, they may not have been in this world, but I’ve already pulled four or five of them into the fifth floor.
Doctor: And predictive modeling is the core of what you’ve always done, right? [For instance, it’s part of how Soon-Shiong’s companies have sought cancer cures.]
Doctor: And what you’re trying to do is connect the investment in content, engagement, et cetera, to business results.
Soon-Shiong: Correct. And I’m trying also to engage in different vehicles. So while we started with Spectrum — and by the way, our ratings, I don’t know if you’ve discovered it yet, but the first week, we beat out all local TV. [That’s an internal number, the Times says. No official ratings data is yet available for the program, which launched last month.] And by the way, we built that set in two months from nothing. My job is to make these reporters stars.
Doctor: Personalities. You’ve lived in L.A. for how long now?
Soon-Shiong: Since 1980.
Doctor: So you think of all the great columnists at the L.A. Times over the years. This is not like some new idea. You come in and you say, “We’re going to make stars.” Columnists drove newspapers for a hundred years.
You would have the story — the front page, anywhere — and you would do this with your camera, and a video would play from CNN about that story. We were so ahead of our time. The question was: Would anybody use a camera on a phone [for this]? I’ll send you the little teaser. That was my beginning of saying: Listen, that’s machine vision. We had invented and developed the first machine vision technology on a cellphone that could actually see anything beyond a QR code or independent of the image and text. So that is what I said I wanted to bring to the space: transmedia.
That first call from Michael Ferro
Doctor: And were you thinking back then that you’d like to own the L.A. Times?
Soon-Shiong: No. I wanted to create technology. Because to me, that was a vehicle.
Doctor: Well, when did you first think of buying into the Times or newspapers?
Soon-Shiong: I’d met him once before.
Doctor: How did he make the connection?
So he called me on a Friday night and said, “Listen, I know you wanted to be in the L.A. Times, and Gannett is trying to do this [buy Tribune in a hostile takeover], but really what I’d like you to do is come and be my partner.” Before he had actually bought the huge piece of Tribune, I was speaking to Oaktree [Capital] about buying the L.A. Times.
And [Ferro’s] story was: “Patrick, you’ll be co-equal with me. You’ll be on the board. I don’t care about titles. You can be co-chairman, vice chairman. Everything I got, you got…but I just want you to buy it at the price of Friday.” [Tribune Publishing’s stock price had been pumped artificially high because of Gannett’s takeover attempt. Its share price had more than doubled in less than two months.]
I said, “Okay, fine, but really what I want to do is bring technology in to modernize this, and I’ll start with the L.A. Times.” Absolutely critical. “Should I fly out now?” “You don’t need to fly out. I’m flying out myself Sunday. Just send your lawyers in.” And I signed it that weekend.
Monday…I had no idea that this would be big news. Newspapers love to write about newspapers, I can see.
Doctor: Well, and Gannett was involved.
Soon-Shiong: Right. So there my name comes out. But then I getcalled in to do an interview. “So tell me about Tronc,” they ask.
Doctor: And your ideas got conflated with kind of like: Here’s this weird scientist who says his stuff is going to feed this weird thing called Tronc. Right? That’s what happened, I think
Doctor: Even the old L.A. Times, in the days of more than 1,000 in the newsroom, didn’t really tap all of what L.A. was about. And you know that.
Soon-Shiong: That’s why I want to tap that. I want to tap L.A. I want to tap California. And that’s what we can differentiate ourselves. The New York Times is invading here. I get it. They get more subscribers here than in New York.
Doctor: Let me ask you about northern California. So in the Bay Area, we have Digital First Media, which is everywhere other than San Francisco, which is owned by Hearst. Do your plans include doing something for people in the Bay Area, or California-wide? Where are you thinking?
Soon-Shiong: We could create the California Times and you could create synergies up and down — because while people think Silicon Valley, it’s all coming down here. A lot of stuff is coming down here. And what we have here is so innovative, right? There’s Tesla here. There’s solar. Everything is here. So we’ve not done a good job, as the L.A. Times, actually, of taking control of that.
Doctor: As a technologist, what’s in your longer-term vision about technology infrastructure for the news industry?
Doctor: So you are ready to expand on many fronts, and you’ve got eight floors of space just for the Times.
Soon-Shiong: Eight floors. And then I’ve got 100,000 square feet next door.