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Tuesday, Jan 31, 2023

Soon-Shiong’s Other Media Deal: Sale of Tronc

Patrick Soon-Shiong is in the thick of another blockbuster media buy – the sale of former Los Angeles Times’ owner tronc Inc. to New York-based investor Will Wyatt.

A Times spokeswoman confirmed last week that Soon-Shiong – who acquired the Times and other publications that make up what’s now called California Times Group in June – is involved in negotiations to sell Chicago-based tronc to Wyatt’s Donerail Group.

Soon-Shiong’s role stems from the approximately 25 percent stake he retained in tronc, which still owns the Chicago Tribune, New York Daily News, Baltimore Sun and other newspapers.

The past several months have brought many reports of deals for tronc that have since evaporated, said Ken Doctor at Harvard University’s Neiman Journalism Lab, whose been tracking the situation closely. Doctor said a deal with Donerail looks likely, and could be hammered out in the next two to six weeks to take tronc private. He also said that Soon-Shiong’s stake in tronc gives him enough leverage in the negotiations to “essentially block the deal” or add caveats, such as altering a transition services agreement that allows the Times to use some tronc’s back-office and operational services.

Soon-Shiong has repeatedly clashed with tronc’s biggest shareholder, Michael Ferro. Soon-Shiong has said Ferro slowed down the California Times Group acquisition even after he had stepped down as chairman of tronc’s board in March amid sexual misconduct allegations.

Ferro still holds 25.5 percent of tronc’s stock, slightly more than Soon-Shiong’s stake, which was valued at around $140 million as of last week.

Donerail Group, meanwhile, is shrouded in mystery, with little public information available on the company aside from the fact that it was founded by Wyatt, who until June was listed as manager of New York-based hedge fund Starboard Value.

Starboard was often an activist investor, and agitated for mergers and acquisitions including Yahoo Inc.’s 2016 sale to Verizon Communications Inc.

Messages left with Donerail Group and tronc were not returned.

Two Bit Investors

Two Bit Circus Inc. will shift their main office from Lincoln Heights to the Arts District as part of opening the Two Bit Circus Micro Amusement Park on Mateo Street, a much-hyped bar that opened on Sept. 5 with Los Angeles Mayor Eric Garcetti and veteran science guy Bill Nye on hand.

The new space includes a newfangled escape room, an interactive movie theater, virtual reality sets, and old-fashioned arcade games.

Two Bit Circus has raised $22 million in funding through two rounds – one in 2016 and another that closed in January of this year. The roster of investors features established firms, including Santa Clara-based Intel Capital, and newer entities such as three-year-old Jazz Venture Partners in San Francisco, a self-described “leading venture capital firm focused on technologies that extend the boundaries of human performance.”

Two Bit Circus representatives also said that the company has received an undisclosed sum from CJ CGV, a South Korea-based entertainment and theatrical conglomerate that is the 5th largest movie exhibitor in the world.

Two Bit Circus’s chief executive Brent Bushnell is the son of Chuck E. Cheese founder and Atari co-founder Nolan Bushnell.

Two Bit Circus started in 2012 by building booths and putting together programs for corporate events and retreats. Specialty items for clients have ranged from a cloud that rains for tequila for the Mexico Tourism Board to a virtual reality set that gives customers the chance to compete with avatars representing professional football players.

But the company’s primary focus is now on the Arts District, Bushnell said.

The plan, he said, is to make money from patrons at the place on Mateo Street paying to play various games that Two Bit Circus either created or obtained through content creator partnerships.

“What we have built here is basically a big platform – it’s like a huge iPhone,” Bushnell told the Business Journal. “There is a lot of great content looking for an audience.”

Bushnell said Two Bit Circus is not simply capitalizing on entertainment trends, but actually seeking to adjust consumer behavior.

“We have hit a nadir of social interaction,” Bushnell said, describing young adults who spend time in bars and other public spaces glued to their iPhones.

The Two Bit Circus games will nudge customers to “go play together and explore the world,” creating at the very least he said, with a smile, “interesting stuff for Instagram.”

Clippers Ship to Inglewood

Los Angeles Clippers owner Steve Ballmer, often captured on TV cameras exuberantly rooting for his team, transferred some of that enthusiasm to a press statement Aug. 31 that thanked the California legislature for expediting the environmental review process for a proposed stadium for his team in Inglewood.

“We are now one step closer to bringing the world’s best basketball arena to a community that deserves the best,” Ballmer said in response to the state legislature passing Assembly Bill 987, a measure that sets a limit of 270 days on the amount of time that the state can evaluate challenges to the project’s environmental impact review once it’s filed.

The Clippers don’t plan to move to Inglewood until their 2024 lease with the Anschutz Entertainment Group Inc.-owned Staples Center runs out. The Clippers have vowed to privately finance their site, but haven’t said what it will cost, or what might be in store for the venue on the approximately 315 days there aren’t Clippers home basketball games.

Staff reporter Matthew Blake can be reached at mblake@labusinessjournal.com or (323)556-8332.


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