Three weeks after welcoming Michael Ferro as the largest shareholder and nonexecutive chairman of Tribune Publishing, Jack Griffin is out as CEO.
Griffin, who has guided Tribune Publishing since its August 2014 spinoff, has been replaced by technology executive and longtime Ferro associate Justin Dearborn, the Chicago-based newspaper company confirmed Tuesday.
Dearborn, 46, had been CEO of Merge Healthcare, a Ferro-controlled medical technology company that was acquired by IBM in October.
“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,” Dearborn said in the news release.
Ferro became Tribune Publishing’s largest shareholder in early February, when his investment firm, Merrick Media, bought a 16.6 percent stake in a $44.4 million deal. Ferro also is the majority owner of the Chicago Sun-Times, but has said he has given up “all operating involvement” with that newspaper upon becoming nonexecutive chairman of Tribune Publishing’s board.
Tribune Publishing owns the Chicago Tribune, Los Angeles Times and other major newspapers. When Ferro’s acquisition was announced, Griffin called Ferro “a tremendous admirer of our brands at the Tribune … so it’s a winning combination for our company.”
Dearborn did not return a call seeking comment. A Tribune Publishing spokesman declined to comment beyond the news release Tuesday.
The ouster of Griffin came as a surprise to some industry analysts, who saw Ferro’s cash infusion as supportive of Tribune Publishing’s strategy and leadership, which had come under fire in recent months as the company’s valuation plummeted.
“I didn’t see this coming at all,” said financial analyst Hamed Khorsand, who follows the company for BWS Financial. “You bring in an ally and then he fires you.”
Dearborn, who has no media experience, takes the helm of the legacy newspaper company as it struggles to reverse years of industrywide revenue declines and transition to a digital-first medium. He has a long track record with Ferro, the two having worked together on Internet software company Click Commerce, investment firm Merrick Ventures and most recently Merge Healthcare, a Chicago-based medical software company that was sold to IBM for about $1 billion, including the assumption of nearly $198 million in debt, according to Dealogic.
In June 2008, Merrick Ventures bought a controlling stake in Merge, which had been reeling from an earlier accounting fraud scandal, for $20 million, including a $15 million loan. Dearborn was installed as Merge CEO the following month.
Although Merge didn’t turn a yearly profit under Ferro’s and Dearborn’s leadership, the development of an artificial intelligence initiative to analyze medical diagnostic records caught IBM’s eye last year, leading to the sale of the company.
Merrick’s 23.5 percent stake in Merge was valued at nearly $190 million in the IBM transaction.
When Ferro bought into Tribune Publishing, he pledged to be actively involved with his new investment, and the quick change at the top of the company is evidence of that. In addition to installing Dearborn as CEO, Ferro has named digital media executive Malcolm CasSelle
as president of new ventures.
Under terms of the Feb. 3 transaction, Ferro’s firm cannot acquire more than 25 percent of the outstanding shares and cannot sell its stake in Tribune Publishing for three years.
“The board thanks Jack Griffin for his significant contributions and wishes him the best of luck in his future endeavors,” Ferro said in a statement Tuesday.
Ferro declined to comment beyond the press release, with a spokesman citing a quiet period until Tribune Publishing reports its fourth-quarter and full-year earnings results March 2.
Griffin was initially hired as a consultant to streamline the publishing assets in advance of the Tribune Publishing spinoff from Tribune Media, which retained higher-margin broadcasting assets and real estate holdings. He arrived at Tribune Publishing after holding executive roles at Parade Magazine and Iowa-based Meredith Corp. In 2010, he became CEO of Time Inc. He was pushed out after less than six months by the chief executive of their parent company, who cited differences in leadership style.
At Tribune Publishing, Griffin’s tenure has been marked by strategic acquisitions, cost-cutting measures and a steadily falling share price, all of which have contributed to takeover rumors as the company’s market capitalization fell below $200 million.
In September, Tribune Publishing fired Austin Beutner as publisher and CEO of the Los Angeles Times and the San Diego Union-Tribune, unleashing waves of criticism from West Coast civic leaders. Tribune Publishing approved buyouts for approximately 7 percent of its eligible 7,000 employees across its media portfolio in November.
Griffin’s acquisition strategy brought the Union-Tribune, the Sun-Times suburban papers and two Maryland papers into the Tribune Publishing fold. Ferro’s investment was intended to give Tribune Publishing the cash infusion it needs to compete for the bankrupt assets of the Orange County Register, seen as a crucial acquisition for its California News Group. Tribune Publishing submitted a “stalking horse” opening bid on Feb. 12, with the bankruptcy auction set for March 16. The assets, including real estate, are expected to fetch between $40 million to $65 million, according to media analyst Ken Doctor.
“I’m proud of all that we have accomplished to reorient the company and position these premium brands for the future,” Griffin said in a statement.
It is unclear if the new leadership will affect the acquisition strategy.
Addressing employees on Feb. 4, the day the acquisition was announced, Ferro said he wants to use “big data and artificial intelligence” to get Tribune Publishing to tap into the billions of dollars Google, Facebook and other Internet giants are making off of its content. While Ferro has yet to elaborate on his plans, Katie Risch, senior vice president at Chicago-based Centro, which works with Tribune Publishing on its digital advertising, said most newspapers are not monetizing their readership data fully.
Risch said publishers can significantly “extend their audiences” by selling advertising beyond their own websites and building their databases with nonreaders that “look like” their own audiences, the same tactics employed by Google for its market-leading ad network.
“I believe Tribune Publishing has a significant opportunity to leverage technology to increase the value of its content and distribution channels,” Dearborn said in a statement.
Dearborn has been working with Ferro since 1997, when he joined Internet startup Click Commerce as general counsel. Click, an online sales platform for manufacturers launched by Ferro, was sold to Illinois Tool Works for $292 million in 2006.
Prior to Click Commerce, Dearborn worked at Motorola before it split into two companies. He specialized in intellectual property transactions and also held management positions in Motorola’s semiconductor and government groups. He has a bachelor’s degree in accounting from Illinois State University and a law degree from DePaul University, according to SEC filings.
Megan Crepeau contributed.
rchannick@tribpub.com
Twitter @RobertChannick
