L.A. Times Sale
Operation: Stop Bruce Karsh From Selling Tribune to the Koch Brothers
David Freedlander reports on the effort to stop the billionaires from buying the ailing Tribune Company.
The roster of press barons presiding over the contemporary American landscape is short. There are the Sulzbergers, the Murdochs, Mort Zuckerman, Mike Bloomberg, S.I. Newhouse, a few others. But there is another figure, one who gets far less attention than his fellow media moguls and who has become in the past few months perhaps the most consequential newspaper owner in the country.
Bruce Karsh, president of Oaktree Capital Management, is something of a reluctant Citizen Kane. His firm acquired the largest stake of the venerable Tribune Company newspapers last year, just as the newspapers were mired in bankruptcy and under the wobbly leadership of entrepreneur Sam Zell. The acquisition attracted little notice at the time, but Karsh, who according to Forbes is worth more than $1.6 billion and known by colleagues as one of the most astute investors of distressed debt in the nation, is about to find the spotlight. That’s because, according to rumors, Oaktree is looking to offload its stake in the Tribune properties, and the billionaire Koch brothers, who have helped bankroll a slew of conservative causes and have become the left’s biggest bogeymen in the process, are thought to be interested in buying.
That’s turned Karsh into a glaring target for labor unions, liberal activists, and media advocates, who are desperate to keep the Brothers Koch—and their much feared Tea Party agenda—out of the newspaper business, particularly the Tribune’s crown jewel, the Los Angeles Times.
Last month, about a hundred activists marched on Karsh’s home in Benedict Canyon, an exclusive neighborhood in Beverly Hills, in a protest organized by one of his neighbors, urging the private-equity investor to not sell to the Kochs. Or at least, they marched as far as they could get.
“I couldn’t even find the entrance to [his house],” said Phillip Knight, one of the organizers. “And I spent several days looking for it on Google.”
The group got as close as it could, but after a while, “there just isn’t any more sidewalk,” Knight said.
Karsh has vaulted into the headlines after a career spent far from them. Even some of the best-connected L.A. political powerbrokers and media mavens say they have never met him and are only vaguely aware of the billionaire in their midst. Several suggested that in a city so obsessed with starpower and status, being a billionaire doesn’t count so much, even if you give away more than $100 million, including $85 million to Duke University, and several hundred thousand dollars to politicians of both parties, and own your city’s biggest newspaper.
Of course, the Los Angeles Times doesn’t have quite the same sway it once did in the city.
“It used to drive everything,” said one local political insider. “Very few people talk about it anymore. I can remember that whatever the Times wrote in its second section became the subject of the City Council that day. Those days are gone.”
“I think at least 95 percent of Angelenos don’t know and don’t care what is happening with the L.A. Times,” said Richard Riordan, a former mayor of Los Angeles.
Riordan got Karsh his first job in Los Angeles, back when the future billionaire first moved to town after a stint as a clerk to then Court of Appeals judge Anthony Kennedy, now a Supreme Court justice. The new gig was working as an assistant to Eli Broad, the billionaire businessman and philanthropist who is, ironically enough, now trying to put together a deal with former L.A. deputy mayor Austin Beutner to buy the Times.
“And he has gone on to bigger and better things and become a billionaire,” Riordan said. Many in Los Angeles who know Karsh say that despite the Mitt Romney vulture-esque reputation of the business, Karsh and Howard Marks, the cofounders of Oaktree, “are among the most decent people you could meet.”
Even those who are marching on his home seem to agree.
“Bruce Karsh is a thoroughly decent human being. He is a genuinely good guy,” said Rick Jacobs, head of the Courage Campaign, a progressive political organization that is organizing the opposition against a sale to the Kochs. “To use an old Latin phrase, he is a real mensch. And he is obviously an incredibly good investor.”
Jacobs described Karsh as something of an accidental media mogul and thus something of an unfortunate focus of attention for Jacobs and his allies.
“I don’t believe he or Oaktree ever imagined themselves in this situation,” he said. “He is the anti-Donald Trump. These people are fundamentally very substantive, serious, and generous, and I really believe [they are] trying to do the right thing for everybody.”
Oaktree has more than $80 billion in assets, becoming one of the leading companies worldwide in distressed debt. That’s due at least in part to Karsh’s sharp instincts. Most of its clients now are state pension funds, endowments, and the like, and so the firm has a fiduciary responsibility to maximize profits. Taking over Tribune from Zell wasn’t motivated by saving the media, or the power and prestige that comes with owning a media fiefdom; it was just a good deal.
“It isn’t as if Bruce set out one morning to became a leader of a major media company,” said Jacobs. “He is an investor, and as a very smart investor and as a very accomplished investor, he found himself chairman of the board of the Tribune Corporation. If you asked him, I suspect he would say that [owning a newspaper chain] is not really what he wants.”
Karsh declined to be interviewed for this story, but how he feels about the media beyond its benefit to clients may matter greatly if the Kochs are to be kept out of Los Angeles. If the brothers bid substantially more than any other entity for the Times or for the Tribune, then most agree it would be very difficult for Oaktree to sell to someone else. But if the bids are close, the organizers of the anti-Koch forces in Los Angeles think they can make enough noise to persuade Karsh to find another buyer. If the Koch bid comes with its share of protest—with reporters threatening to walk off the job and public pension funds saying they’ll withdraw from Oaktree—it may look far less attractive to other board members.
Meanwhile, another persuasion campaign is under way. According to two people with knowledge of the effort, there is currently a plan to make a religious appeal to Karsh, who through his family foundation has been a generous donor to Jewish temples and causes in Los Angeles.
“That’s what this is all about—to get every liberal Jew in L.A and get some rabbis out there and say to them, ‘You just can’t do this,”’ said one person behind the effort. “They are climate-change deniers. We wouldn’t allow Holocaust deniers to buy the L.A. Times. Why would we let climate-change deniers?”
People close to Karsh, though, say he doesn’t talk up his Jewishness much, and they doubt he would be persuaded by such an appeal.
“I think it is fruitless, and I think it could backfire,” said former mayor Riordan. “I would be angry, if I were them.”
Instead, Riordan suggests that if the anti-Koch forces want to put the Times in local hands, they should appeal to the Kochs through the paper’s staffers.
“The vast majority of reporters, I call them ‘70s liberals,” he said. “The last people they want to see own this are the Koch brothers. And if I were the reporters, I would be trying to appeal to the Koch brothers and say, ‘Look, you are not welcome in this town.’”
It is unclear, however, whether that kind of resistance has really spread in the newsroom. At an in-house awards ceremony last month, a Times columnist asked the newsroom how many would quit if the Kochs took over. More than half raised their hand and cheered. But it is one thing to make noise at an off-the-record event with your colleagues; it is another to agitate for changes, especially for a staff that has been so battered by Zell’s ownership and the bankruptcy proceedings.
“Honestly, they will raise their hands and say whatever when they have a few drinks in them, but I don’t see the whole newsroom leaving aside their livelihoods,” said one staffer. “Nobody is up in arms, to be honest. This place has gone through so many different changes and so many changes in leadership, and a long, drawn-out bankruptcy. People are beaten down.”
Added the staffer: “The newsroom hasn’t done anything except raise their hands at a dinner. There is no collective organizing or action. It’s a very L.A. think—it’s all about me.”
Still, the paper has been regularly covering its potential sale, including one protest organized by a number of labor unions and progressive groups out in front of its headquarters. One reporter, trying to get to work, was handed a poster from one of the protesters that read “NO KOCH HATE.” Somewhat cheekily, the reporter hung the sign in the newsroom, but a few days later, an editor ordered it taken down.