How biotech billionaire Patrick Soon-Shiong's Los Angeles Times investment went wrong

By Lukas I. Alpert

Soon-Shiong believed investing in the paper was a civic duty, but after years of steep losses, his appetite for spending seems to be running out

It's been nearly six years since biotech billionaire Patrick Soon-Shiong wrote a check for $500 million to buy the Los Angeles Times and began an investment in what he called "the next generation of publishing."

But the next generation of publishing turned out to look an awful lot like the old one - a mix of shrinking revenue and readers, and a struggle to maintain a position as the key source of information for the area the paper covered.

Now, despite his great wealth - estimated at $5.4 billion by Forbes - Soon-Shiong's appetite for absorbing the tens of millions of dollars in losses he has already incurred seems to be waning. On Tuesday, the paper began laying off 115 people, close to 20% of its staff, just months after it dismissed 70 staffers.

The latest layoff round has sent shockwaves through the news organization Soon-Shiong had promised to revive, with unionized staffers organizing a walkout last week, and the paper's top editor and two top deputies all resigning.

"He is willing to continue injecting substantial funds into the L.A. Times for some years to come, but he is only willing to fund a deficit to a certain level, which the paper has far exceeded," said a person familiar with Soon-Shiong's thinking.

At its worst, the Times - when the paper included the San Diego Union-Tribune - lost as much as $50 million a year, according to people familiar with the matter. Even with the sale of the Union-Tribune - and its large pension liabilities - last summer to a newspaper group owned by hedge fund Alden Global Capital, the Times ended the year as much as $30 million in the red, the paper reported.

Messages sent to Soon-Shiong weren't immediately returned. In an interview with the L.A. Times, Soon-Shiong said he had invested around $1 billion in the paper since he bought it.

Soon-Shiong is not the only billionaire who has struggled to turn a one-time media giant around. Amazon.com Inc. (AMZN) founder Jeff Bezos has reportedly lost $100 million on the Washington Post and Salesforce Inc. (CRM) founder Marc Benioff lost around $20 million on Time magazine last year.

In the beginning, Soon-Shiong had high hopes for his foray into publishing. The 71-year-old doctor said he was committed to turning the long-struggling paper into a major journalistic force once again.

"I have made a decision to invest what it will take to make sure that the Los Angeles Times remains a viable business for at least another 100 years," he told the Wall Street Journal less than a year after acquiring the Times.

He set an ambitious goal of achieving 5 million digital subscribers, a gargantuan rise from the 150,000 the paper had at the time. It proved to be too much of a hill to climb. The Times was hovering around half a million digital subscribers last year.

Soon-Shiong's vision for the Los Angeles Times as a kind of superregional news source - with its primary focus on being the paper of record for California's 40 million residents, rather than on trying to compete directly for a national audience with the New York Times or Washington Post - limited its ability to reach the broadest audience, industry watchers said.

Soon-Shiong's fortunes had long been tied to Los Angeles, and he believed that he owed it to the city to help sustain its most prominent news source.

Born and raised in South Africa, Soon-Shiong came to the U.S. in 1980 to serve as a resident at the University of Southern California Medical School, where he also later taught.

In 1991, he left the school to start a company called VivoRx to work on developing diabetes drugs. He later developed the drug Abraxane, which received Food and Drug Administration approval for the treatment of metastatic breast cancer, lung cancer and pancreatic cancer.

He would make billions when the company, Abraxis BioScience Inc., was sold to Celgene Corp. in 2010.

His focus on science and scientific research remained even after his dalliance with publishing. During the pandemic, executives at the Times said Soon-Shiong largely removed himself from operating the company, instead spending his time trying to develop a vaccine for COVID-19.

In 2021, Soon-Shiong explored the possibility of selling the paper, but quickly changed his mind when he was unable to find a ready buyer, people familiar with the matter said at the time. Soon-Shiong and his family at the time denied exploring a sale.

-Lukas I. Alpert

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01-23-24 1552ET

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