Tribune Publishing, which owns The Los Angeles Times and the Chicago Tribune, said Thursday it has prevailed at a bankruptcy auction to acquire “substantially all of the assets of Freedom Communications,” including the Orange County Register/ for $56 million, moving to control the second largest daily newspaper in the Los Angeles region while facing opposition from federal regulators.
The deal includes another daily newspaper owned by Freedom, the Press-Enterprise of Riverside, Calif., and Freedom’s real estate assets in Riverside and Santa Ana, Calif., where the Register is based. It would give Tribune three of the largest daily newspapers in the Los Angeles area, and will trigger an antitrust review by federal regulators. Tribune also owns nine other daily newspapers, including the San Diego Union-Tribune.
Tribune Publishing’s bid is subject to bankruptcy court approval at a hearing that is scheduled for March 21. But after the bid was announced, the Department of Justice filed a civil antitrust lawsuit to block the acquisition and seeking a temporary restraining order to prevent the sale from proceeding.
Filed in federal district court in Los Angeles, the DoJ complaint says the Los Angeles Times and the Register together account for 98% of newspaper sales in Orange County. In Riverside County, the Times and Freedom’s newspapers make up 81% of English-language newspaper sales. "Tribune’s acquisition of its most significant competitor would give it a monopoly over newspaper sales in each county and allow it to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers," it said. .
“If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange and Riverside Counties will suffer,” said Assistant Attorney General Bill Baer of the Justice Department’s antitrust division. “Newspapers continue to play an important role in the dissemination of news and information to readers and remain an important vehicle for advertisers. The Antitrust Division is committed to ensuring that competition in this important industry is protected.”
Tribune's interest in Freedom's assets was widely known. In November, Tribune, based in Chicago, offered $3 million to fund operations and the bankruptcy case of Freedom merely days after the privately held company filed for bankruptcy protection and made assets available to bids from interested parties.
Tribune's competitors for Freedom's assets included an investor group led by Freedom CEO Rich Mirman and Digital First Media, which owns two dailies in Southern California, the Los Angeles Daily News and Long Beach-Press-Telegram.
If it completes the deal, Tribune doesn't have to assume the Register's pension plan, the Register reported. The liability would be taken over by the Pension Benefit Guaranty Corp., the federal agency that guarantees pension payments.
“The successful bid for the business of Freedom Communications will allow the Orange County Register and the Press-Enterprise to continue providing a distinct local voice in their communities and deliver premium news and information to consumers across Southern California,” said Justin Dearborn, CEO of Tribune Publishing.
Tribune's aggressive bidding comes merely weeks after the company's management and ownership were overhauled. Michael Ferro, the Chicago businessman who owns and controls the Chicago Sun-Times, paid $44.4 million for a 16.6% stake in Tribune Publishing, in a move that gave him control over the city's two largest newspapers. After buying Tribune, Ferro said he has "relinquished all operating involvement" with the Sun-Times.
Ferro joined Tribune Publishing's board of directors as non-executive chairman, but has been active in stirring changes at the company. About three weeks after he bought the stake, Ferro replaced Tribune's CEO Jack Griffin with his longtime business associate, Dearborn.
Freedom is familiar bankruptcy courts. It filed for bankruptcy protection in 2009 and emerged from it several months later after three investment companies — Alden Global Capital, Angelo Gordon & Co. and Luxor Capital Group — bought the company.
Local businessman Aaron Kushner bought Freedom and the Register in 2012 for about $50 million and later paid an additional $27.3 million to buy the Press-Enterprise. Betting big on the sustainability of print readership, he began expanding the Register's operations, eventually launching the Los Angeles edition of the Register. With losses mounting, Kushner left the company last year in March.
Mirman, a former casino marketing executive who joined the company in October, 2014 as interim publisher and CEO of the Register and the the Press-Enterprise, replaced Kushner as CEO of Freedom and began running daily operations.
