The owner of the Los Angeles Times was selected as the top bidder for the Orange County Register and Riverside Press-Enterprise during a bankruptcy auction that stretched into late Wednesday night.
If the $56-million purchase of Freedom Communications is approved at a hearing in bankruptcy court on Monday, it would mark a deep expansion in Southern California for Tribune Publishing Co.
The company, which last year purchased the San Diego Union-Tribune, is looking to expand its reach in Southern California and save money by streamlining some business operations at a time when newspapers struggle to remain profitable.
"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,” Tribune Publishing Chief Executive Justin Dearborn said Thursday in a statement.
Tribune beat out two other bidders vying for Freedom, including Digital First Media, a national newspaper chain whose holdings include the Los Angeles Daily News and eight other Southern California newspapers.
An insider group, which includes Freedom co-owner and Chief Executive Rich Mirman and Orange County developer Mike Harrah, withdrew from the process Wednesday evening after hours of negotiations and just before the auction’s official start.
The group complained about the fairness of the process, including how their bid was valued, according to an email from their attorney obtained by The Times.
The attorney, Leonard Shulman, said the group is considering whether to protest the auction.
"We are going to evaluate all our options," he said.
Other objections could come from the U.S. Justice Department’s antitrust division, which sent a letter to a Freedom attorney on Tuesday indicating it would intervene if Tribune Publishing won Freedom’s assets.
“The division believes that the acquisition of Freedom assets by Tribune Publishing Company poses a serious risk of harming newspaper readers and advertisers in Orange County and Riverside County,” Assistant Atty. Gen. William Baer, head of the antitrust division, wrote in the letter.
If the government seeks to block the deal, Tribune may argue that the government’s concerns are rooted in a lack of understanding about today’s newspaper industry, said Daniel Lazaroff, professor emeritus at Loyola Law School.
He noted that consumers and advertisers have more choices today than decades ago, including websites and cable news stations. “If this was 25, 30 years ago, the anti-competitive potential would be much greater,” he said.
A Tribune Publishing spokeswoman said the company is prepared to defend the legality of the sale.
Tribune’s bid does not assume the liabilities of Freedom's pension plan. The company would gain Freedom's two newspapers and real estate in Santa Ana and Riverside.
Freedom filed for bankruptcy protection after losing more than $40 million over two years.
The company made headlines with aggressive expansion of its print publications after new owners Aaron Kushner and Eric Spitz acquired the operation in 2012. But that bet failed and Freedom shut two of its new dailies in Los Angeles and Long Beach.
Kushner has since left the company, although Spitz remains a company chairman and was part of the Freedom insider group that lost out to Tribune.
The sale of Freedom's assets is expected to close by the end of the month.
By: Andrew Khouri (LA Times).
Review: Emerging Market Formulations &
Research Unit, Flagship Records.
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