In this segment from the MarketFoolery podcast, host Chris Hill and Motley Fool Funds' Bill Barker consider why Tronc (NASDAQ:TPCO) would even want to buy the company that runs its flagship's chief print rival in the Windy City. The newspaper industry in general is still not on solid ground as it transitions from a focus on print to digital, and Tronc isn't doing it as well as some of its rivals. Is there any benefit to this acquisition?
A full transcript follows the video.
This video was recorded on May 16, 2017.
Chris Hill: Tronc is back in the news, the online publishing company with one of the worst names in the public markets, the parent company of the Chicago Tribune. Tronc has signed a non-binding financial agreement to buy, I think I'm pronouncing this correctly, Wrapports Holdings, which is the parent company of the Chicago Sun-Times. So, the parent of the Chicago Tribune is looking to buy the parents of the Chicago Sun-Times, which begs the question, why in God's name would they do that? It's not like Tronc has big piles of money sitting around.
Bill Barker: Economies of scale.
Hill: Really? That's why? And they're so sure of this move that they took the bold step of signing a non-binding financial agreement? This just strikes me as, among other things, sad. Like, look, you want to go out and buy your rival newspaper? Go for it.
Barker: I really feel like Tronc did something personally to you, your enmity toward them.
Hill: A lot of it has to do with the name.
Barker: Most of it. Almost all.
Hill: Almost all of it has to do with the name.
Barker: Some 90% has to do with the name, because their crimes against you other than adopting the name Tronc are pretty limited, aren't they?
Hill: They're basically nonexistent.
Barker: The Chicago Bulls have taken out your Celtics a couple times over the years.
Hill: Not this year. Honestly, here's what bothers me: As someone who has spent his adult life in various realms of the media world --
Barker: You're sort of an expert on the media.
Hill: I wouldn't say I'm an expert, but --
Barker: Listeners out there, by the way, this is the way to always put somebody on the defensive. When you're looking for advice, just go like, "You're sort of an expert on ... " And then immediately, people -- non-Donald Trump people -- disclaim their expertise on almost all topics that you would approach them about, claiming they're an expert.
Hill: Going back to Memorial Day weekend, which is coming up, this is absolutely a great move to pull at a barbecue or a party at some point, when you're standing with a group of people. Just like, "Jim, you're kind of an expert on biochemistry. Let me ask you a question." And then just watch Jim's face.
Barker: Even if it's their job. But you are sort of an expert on the media.
Hill: Uh, I wouldn't --
Barker: See? There you go. "Uh ... "
Hill: Expert, I wouldn't go that far.
Barker: It's your full-time employment.
Hill: Well that, yeah. But as I think we both know, just because you're fully employed in one job doesn't make you an expert on that job.
Barker: That's what I'm saying.
Hill: But in the case of Tronc, I guess I'm just bothered, among other things, beyond the name, I'm bothered because I am generally a fan of media. I appreciate when media is well done and well executed and well managed. That's why it's great to see entities like The New York Times and The Washington Post pull off -- at least, they appear to be in the process of successful pulling off -- the transition from the printed newspaper business to the digital business. The fact that Tronc is going about things in such a ham-handed way, I think, offends my sensibilities. And again, have some guts. You want to buy your rival newspaper? Do that. But don't come to me with this weak, "Well, we're going to sign this piece of paper, but we can get out of this, right? It's non-binding? Great, we'll do that."
Barker: Alright. I only brought it up today because I knew you would like to vent. I don't have any real insights on what they're up to today. In Philadelphia, we had the experience of the two major papers being all under one roof. So it's not that unusual to me. We'll see whether it works. It may be the case that there just isn't room for two local papers in even a market as big as Chicago. New York still does it. We'll see for how long. But New York is kind of an entity unto itself. The normal rules of economics don't always apply there. What's the No. 2 paper in LA? I'm afraid I don't know it.
Hill: I believe it's the LA Daily News, but I was about to mention LA. In New York City, you have the New York Times,the New York Post, and Newsday. The LA Times is so much bigger and more relevant than the Daily News -- sorry for anyone listening who may have some connection to the LA Daily News. But, you can live in New York City, and there are legitimate reasons to subscribe to all three of those newspapers. And I think, just from a smile standpoint, it's going to be a sad day if the New York Post ever goes under. What's on the cover and the back cover of the New York Post? I always want to know that.
Barker: There's a lot of gold on those covers.
Hill: There's always gold.
Barker: There was a good one today.
Hill: Was there?
Barker: Yeah. It was Leaker-In-Chief, wasn't it?
Hill: Yes, or maybe that was yesterday. Also, the back page at the Post, for anyone who's a sports fan, that's always a good one to check out.