LOS ANGELES – Jack Griffin has been ousted as chief executive of Los Angeles Times owner Tribune Publishing Co. and replaced by a longtime associate of the company’s new top shareholder.
Griffin’s unexpected departure appears to have been engineered by Chicago entrepreneur and investor Michael Ferro, who less than three weeks ago became the largest shareholder and chairman of Tribune Publishing.
Taking Griffin’s place is Justin Dearborn, former chief executive of Merge Healthcare, a Ferro-backed, Chicago-based information technology firm acquired by IBM in October for $1 billion. Dearborn has worked for Ferro since at least 1997.
Tribune Publishing issued the announcement early Tuesday morning but provided no details explaining the change in leadership. A company spokesman declined additional comment.
“The board thanks Jack Griffin for his significant contributions and wishes him the best of luck in his future endeavors,” Ferro said in Tuesday’s statement.
Tribune Publishing shares were up 26 cents, or 3.5 percent, to $7.60 Tuesday morning.
Griffin’s ouster was first reported late Monday by media industry analyst Ken Doctor, who said Griffin did not see the firing coming.
“I have tremendous respect for the mission of this business and for the dedicated employees that serve this organization with distinction,” Griffin said in a statement. “With the progress and foundation that has been laid, the timing is right for a new leader to come on board and lead Tribune Publishing through its next phase of transformation.”
Griffin brought Ferro into Tribune Publishing not quite three weeks ago, hoping to use a cash infusion from the Chicago investor to back a purchase of Freedom Communications, the bankrupt owner of the Orange County Register.
In a deal announced Feb. 4, Ferro invested $44.4 million to buy 5.22 million shares of newly issued Tribune Publishing stock. That gave him a 16.6 percent stake in the company, displacing Los Angeles-based investment firm Oaktree Capital as the largest shareholder.
In a conference call with Tribune Publishing employees, held the day the investment was announced, Ferro, who is also part owner of the Chicago Sun-Times, promised to take an active role with the company, saying he was putting his reputation on the line.
He bought shares in a private placement negotiated with Griffin and Tribune Publishing management, not on the open market. What’s more, as part of that deal, documents filed with the Securities and Exchange Commission show Ferro agreed that he would vote in line with recommendations made by board committees as to board nominations and corporate governance matters.
“It looked like Griffin had found a way to further his strategy – that he had found a business partner,” Doctor said. “It was not anticipated that there would be a transition and that Griffin would step down.”
Griffin and Ferro had done business before, with Tribune buying several suburban Chicago newspapers from Ferro’s Sun-Times in October 2014. But Doctor said it was clear Griffin did not know who he was dealing with.
“Jack Griffin played an extremely bad hand at corporate poker,” Doctor said. “Mike Ferro is described as a guy with big ideas who is used to being the leader in whatever he does. Why would Griffin have expected this go to any different?”
Doctor said Ferro over the past few weeks held meetings with top Tribune Publishing executives and convinced the company’s board to jettison its chief executive.
“They gave him quick approval to fire Griffin,” Doctor said.
Dearborn, who previously worked for Ferro’s firms Merrick Ventures and Click Commerce, echoed some of Ferro’s earlier comments about Tribune Publishing’s future in Tuesday’s statement.
“I believe Tribune Publishing has a significant opportunity to leverage technology to increase the value of its content and distribution channels,” he said. “Although this is a different medium than my last technology company, it has the same challenge on how to create the highest value for our content.”
On the Feb. 4 conference call, Ferro said the publishing company needed to use “things like big data and artificial intelligence so that we monetize all of the data we have.”
Griffin was named chief executive in March 2014 when Tribune Publishing was in the process of being spun off from Chicago-based Tribune Co. Like most in the newspaper industry, Griffin has faced big challenges as print ad revenue and circulation declined.
He came under scrutiny last September after firing Austin Beutner, then publisher of the Los Angeles Times, because of a clash over whether the LA Times and San Diego Union-Tribune should remain part of the company.
Though Ferro earlier this month called the Times the “crown jewel” of Tribune Publishing, it’s not clear where he stands on that question or on the company’s bid to buy the Orange County Register.
Shares in Tribune Publishing have lost more than 70 percent of their value since they began trading publicly in mid-2014. Ferro bought in at $8.51 a share.
News of that deal, and a concurrent announcement that the company will indefinitely suspend dividend payments, sent Tribune Publishing shares tumbling. They closed at an all-time low of $5.68 on Feb. 10, though they’ve since rebounded slightly.
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