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Developer buys San Diego paper

The controversial Doug Manchester gets the Union-Tribune for about $110 million, planning a 'fully integrated' media firm

November 18, 2011|By Walter Hamilton, Tiffany Hsu and Tony Perry
  • The San Diego Union-Tribune was last sold for less than $35 million in 2009. San Diego activists have expressed concern about the tumultuous business background and conservative political leanings of new owner Doug Manchester.
The San Diego Union-Tribune was last sold for less than $35 million in 2009.… (Sandy Huffaker, Getty Images )

Reporting from Los Angeles and San Diego — Less than three years ago, the San Diego Union-Tribune was a struggling newspaper sold at a cut-rate price by its longtime owner.

The newspaper is changing hands again, but this time in a deal worth about $110 million to a high-profile real estate developer who pledged to inject new life and relevance into the 143-year-old institution.

Doug Manchester, a well-known but polarizing San Diego-based developer who refers to himself as "Papa Doug," announced Thursday that he is buying the paper and its website from Platinum Equity, a Los Angeles private equity firm.

The deal returns the Union-Tribune to local ownership and, some say, improves its chances at long-term survival as the newspaper industry staggers under a sagging economy and thinning circulation as readers increasingly seek digital content.

Manchester's company, MLIM, is betting that it can expand the paper's website and related digital enterprises.

"We have a vision for a fully integrated media company," said John Lynch, MLIM's chief executive, who called the paper a "historic business, a jewel of San Diego."

"We're not just buying a newspaper," he said.

The sale sparked conflicting emotions among local readers and community activists, who expressed concern about Manchester's tumultuous business background and conservative political leanings.

Manchester, 69, grew up in Coronado and earned a finance degree at San Diego State University. He is among San Diego's most successful developers and has erected some of the most prominent hotels in the region.

But Manchester is "easily one of the most controversial figures in recent San Diego history," said George Mitrovich, president of the City Club of San Diego.

Manchester has clashed regularly with neighborhood advocates, and his litigious and uncompromising business style has been chronicled in the Union-Tribune itself.

Hospitality consultants say his developments, such as the $375-million five-star Grand Del Mar resort, suffered in the economic downturn. Critics of the high-rise hotels he built near the San Diego Convention Center say they create an unfair barrier to public access to the shoreline.

Manchester has also drawn fire for his support of Proposition 8, the gay-marriage ban that Californians passed in 2008. Manchester donated $125,000 to the petition drive that got the measure on the ballot, prompting a boycott of his Manchester Grand Hyatt San Diego hotel by gay rights groups.

"To have him own the paper is jaw-dropping — it's very disappointing and sad," said San Marcos resident Edward Philbrick, 43, a subscriber since 1994. "If he's brash enough now not to worry about how his beliefs are going to hurt his businesses, what's going to keep him from changing the slant in the news?"

Lynch said Manchester will not use the Union-Tribune as a mouthpiece to further his business or political interests. Lynch, a longtime radio station owner and former Pittsburgh Steelers linebacker, also said the purchase was not meant as a "real estate play" for Manchester to expand his property holdings.

The Union Tribune building in San Diego's Mission Valley has an assessed value of $41.4 million.

"He does quite well," Lynch said. "I don't think he needs to buy a paper to communicate his political persuasions."

The Union-Tribune sale was a victory for Platinum Equity, which bought the paper for less than $35 million in May 2009. The firm declined to comment on the deal.

Platinum acquired the paper after a $20-million offer from Tribune Co., owner of the Los Angeles Times, fell through because of concerns over costs of pension liabilities and the environmental cleanup of a paper mill.

In a series of cost-cutting moves, Platinum eliminated hundreds of jobs at the Union-Tribune and modernized its production processes.

This year the company bought the DiscoverSD.com website in a bid to attract a younger demographic and launched Vida Latina San Diego, an entertainment magazine directed at Latino readers.

Still, the Union-Tribune's average daily circulation slipped 2.4% to 219,347 as of September, down from 224,761 a year earlier, ranking it 25th among newspapers nationwide, according to the Audit Bureau of Circulations. The bureau has recently made changes to its rules that it said may affect comparisons from year to year.

Advertising revenue for the newspaper industry, about $24 billion this year, is less than half what it was in 2005, according to Alan D. Mutter, author of the Reflections of a Newsosaur blog. The business, he said, is in a "state of severe contraction" and "decay."

What with industry pressures and the paper getting its second owner in as many years, longtime readers such as Sue Schaffner are concerned about the Union-Tribune's future.

"This doesn't bode well," said Schaffner, 53, of Normal Heights, who has subscribed to the paper for at least 25 years. "I'm worried that it'll be shut down, that Manchester won't be able to keep it viable. It'd be tough for anyone."

Lynch said there are no immediate plans for a fresh round of layoffs.

"The paper is doing well and I think we can make it grow," he said.

But whether Manchester's move foreshadows a newspaper revival remains to be seen.

"It is heartening to publishers around the country that somebody wants to buy a newspaper," Mutter said. "But it doesn't necessarily suggest millionaires and billionaires around the land will be lining up."

walter.hamilton@latimes.com

tiffany.hsu@latimes.com

tony.perry@latimes.com

Times staff writer Roger Vincent contributed to this report.

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