Stalled negotiations in bid for OC Register stall again

Europe is always doing something. And this time, that something is being blamed for delaying the sale of the Orange County Register.

According to the Wall Street Journal, MediaNews Group's $350 million bid to buy the Register and the rest of Freedom Communications's newspaper holdings stalled because of instability in the markets caused by the European debt crisis.

Talks stalled earlier this year over price, but apparently MediaNews, through a number of cost-cutting actions, offered enough money to get Freedom on board. The Journal says talks might resume in a few weeks, if the markets calm down a bit.

LA Times cutbacks, papers for sale, and other speculation

I'm told a memo was circulated this weekend among Los Angeles Times staffers asking for volunteers to take buyouts as a way to lessen or avoid layoffs at the paper.

The Chicago Tribune, the Times's sister paper, laid off 20 people on Friday, "many of them" from the newsroom, WBEZ reported.

Times employees are in a state of anxiety, as LA Observed pointed out last week, as rumors of layoffs swirl amid continued efforts by owner Tribune Co. to crawl out of bankruptcy. Investors are impatient and layoffs are a quick way to improve the financial picture in the short term.

So, is this about boosting profits and satisfying debt holders? Or should we believe the Wall Street Journal's speculation that the Times could be being readied for sale - with a smaller payroll making for a more attractive sales price?

And since we're speculating... Could the Tribune be raising cash as a way to up its bid for the Orange County Register? The Register's publisher announced Friday that he'll at the end of September, which would indicate a deal is in the works. MediaNews Group had emerged as the top bidder for the paper, but negotiations broke down last month. This was followed by a flurry of layoffs in MediaNews's Southern California newspapers - a sign the chain is looking to up its ante.

MediaNews acquires another newspaper - no, not that one

MediaNews Group is still in the merger business. The Denver-based newspaper chain has acquired The Gardner News, a family owned newspaper that circulates in central Massachusetts and southern New Hampshire. Terms of the deal are confidential.

MediaNews is the leading contender to buy the Orange County Register, though talks between MediaNews and Register-owner Freedom Communications recently stalled over price.

Merger talks between MediaNews and OC Register break down

A disagreement over price has stalled merger talks between MediaNews Group and the Orange County Register. MediaNews, which owns nine newspapers in Southern California, had put together a financed deal to buy the Orange County newspaper, but Register owner Freedom Communications wants a better offer for its flagship property, the Wall Street Journal reports.

Freedom owns eight television stations and more than 100 daily and weekly papers, according to the Journal. It's probable MediaNews only wants the newspapers - and possibly only the Register - and that could mean Freedom wants more time to negotiate better deals for the remainder of its assets.

It's also possible bids from Platinum Equity, which owns the San Diego Union-Tribune, or Los Angeles Times-owner Tribune Co., might have given Freedom a new sense of its value. However, regulatory hurdles stand in the way of any merger with these companies.

From the Journal:

A March deadline for bids on Freedom's assets came and went before the unsuccessful discussions with MediaNews. Freedom is now in talks with other possible buyers, the people said. 

-snip- 

People familiar with Freedom's finances said the company's newspapers could fetch about $350 million, or roughly four times their earnings before interest, taxes, depreciation and amortization. Freedom's television stations could be worth about $400 million, or about eight times such earnings, these people said. 

Those figures fail to take into account corporate overhead expenses, and pension and tax liabilities, said some people familiar with the negotiations.

Bidding deadline for Freedom Communications approaches

Bids to buy Freedom Communications, the publisher of the Orange County Register, are due by tomorrow, the Wall Street Journal reports.

Bids for assets of the Irvine, Calif., media company, which owns the Register as well as other newspapers and local television stations, are due Thursday, the people said. Possible bidders include Denver Post publisher MediaNews Group Inc.; Tribune Co.; Gores Group; and Platinum Equity, owner of the San Diego Union Tribune, these people said.

-snip-

It remained unclear what prospective bidders might offer for Freedom's assets and which pieces each might pursue. The entire company won't likely fetch more than $1 billion, said people familiar with the matter.

Possible layoffs in Orange County (updated*)

I'm told the Orange County Register laid off at least one newsroom employee, a photographer, yesterday and LA Observed has reported that buyouts and possible layoffs were brought up at the paper's staff meeting Thursday. I'm also told that bought-out employees are being asked to sign an agreement not to go work for competing media outlets. More when/if I get it.

*Update: Here's a posting on sportsjournalist.com that appears to explain what happened at the Register. Boiled down, nine laid off from the newsroom:

The ax dropped at The Orange County Register again on Thursday as nine associates in the newsroom were laid off. Another six from elsewhere in the building are expected to be let go in the near future. 

Sports was hammered, losing three -- two writers and one copy editor -- Curtis Zupke (Ducks, golf), Chris Tobolski (preps) and Alan Petersen (copy desk). 

The other six were a photog, news copy editor, advertorial writer, two Web editors and another desk editor who already announced his upcoming retirement. 

Layoffs were solely OCR, not Freedom-wide. Apparently there is a rumor that the OCR newsroom was the second largest in the state, behind only the L.A. Times and ahead of bigger papers in San Diego and the Bay Area. So corporate slashed based on that.

There's nothing said about a non-compete agreement.

Times media critic talks about possible SoCal media mergers

Los Angeles Times media critic James Rainey looks at the various merger options before the owners of Southern California's newspapers, as the currently bankrupt and recently bankrupt look for ways to hook up to save money.

The chase seems to center on Freedom Communications, owner of the Orange County Register, which has put itself on the market. Most of the hedge-fund money is on the Register merging with MediaNews Group, also recently bankrupt and owner of the nine LANG newspapers. The same group of investors, led by Alden Capital Group, already own major stakes in the two companies.

Alden also owns a piece of the Times, and Rainey reports that the currently bankrupt Tribune Co. has kicked Freedom's tires. But Tribune's internal troubles and potential anti-competition complaints would seem to make this wedding a little more difficult.

What's ahead for MediaNews - and what's left behind

In the best of possible worlds, the shakeup at MediaNews that left company president Jody Lodovic without a job and CEO Dean Singleton with a (severely?) diminished role would serve as an object lesson in how moral cheapness leads to downfall; a final judgment on mass consolidations and layoffs divorced from any sense of journalistic mission, ethics or service; karma for all the dedicated journalists told their dedication was a childish distraction, and for all the readers told they must accept lower and lower standards under the same brand name.

But, I doubt such lessons will be learned. There are now two forces at work in MediaNews, and neither of them is reflection. The first will accelerate change, which is inevitable. The second will shape the change, which is worrisome.

The first force results from the removal of Singleton as CEO. The new directors are no less interested in moneymaking than he and no more interested in quality journalism. Yet, they come without the baggage and ego that clouds strategic decision-making.

The second force results from the removal of the baggage and ego that at least served as a check on the most drastic consolidation plans. The new board is not going to try to preserve a newspaper company, as Singleton has. This could be a benefit to innovation, creating a potential for a sane and creative digital strategy (which is sorely lacking in MediaNews). But this also removes a check on pain.

Martin Langeveld, a former MediaNews executive now at Nieman Journalism Lab, has an excellent post about what to expect, and he makes a convincing argument that Singleton no longer much of a hand in in the company:

While Singleton may have ideas for strategic consolidations, without Lodovic he lacks the necessary financial engineering savvy, and without control of the board, he can’t make anything happen. The new title for Singleton looks and feels like a face-saving ambassadorial position.

In other words, it is time to look beyond Lean Dean. He is not the future.

So, who is in charge and what do they want? Alden Global Capital is the group that now has board control of MediaNews, and the investment company has a deep financial interest in a number of other distressed newspaper companies, many of which might be ripe for a leveling consolidation. Again, from Langeveld:

Clearly, Alden is the outfit with the most skin in the game, having investments in MediaNews, Freedom, Philadelphia Media, Journal Register, Freedom, Tribune and Postmedia. (Incidentally, as a further extension of this network, JP Morgan Chase, which has been involved in the Tribune, Freedom and Journal Register reorganizations, is the largest stockholder at Gannett, with a 10.2 percent “passive” investment.)

With all these interrelationships among investors and “distressed” newspaper firms, it’s not hard to see why Dean Singleton might say that achieving some kind of “consolidation” will be a full-time job. Still, it seems unlikely that Singleton will get to pull the strings, when the money behind the interlocking investment structures is controlled by billionaire Randall Smith, Alden’s founder, who built his fortune through investments in junk bonds and distressed properties. Alden acquired most of its newspaper stakes through its Alden Global Distressed Opportunities Fund, which it launched in 2008 and which is now worth nearly $3 billion. Alden has offices in New York, Dallas, Dubai and Mumbai, along with a tax-haven presence on the Channel Island Jersey.

The beginning of the consolidation process is likely to be here in Southern California, with some form of merger between MediaNews Group's Los Angeles Newspaper Group and the Orange County Register, owned by Freedom Communications. But Alden also has a stake in the Tribune Co, which owns the Los Angeles Times. This could lead to a distribution partnership that serves as a basis for mergers in other parts of the country.

Again, Langeveld:

For example, in New England, a combination of MediaNews, Journal Register and Tribune would have properties in Connecticut, Rhode Island and Massachusetts — totaling about 25 percent of circulation in those states, on a par with the current California partnership. On a countrywide basis, the companies in which Alden appears to have a stake and some degree of influence, as detailed above, have about 15 percent of all circulation and if fully merged, would be about 10 percent bigger than the current champion, Gannett.

Hopefully, we'll see more reporting on Randall Smith, the billionaire owner of Alden, and get a sense of where he wants to go.

Freedom for sale

Freedom Communications, owner of the Orange County Register, is up for sale; the company emerged from bankruptcy just eight months ago. Freedom reportedly plans to sell itself in a chunk, rather thank breaking pieces off. So who wants to buy a medium-size media company? A merger with MediaNews Group wouldn't be out of the question...

Four today

1. On Facebook, just like everywhere else, sex sells. Social Media Scientist

2. Jonathan Gold of the LA Weekly wins the Craig Claiborne Distinguished Restaurant Reviews award from the James Beard Foundation. Eater

3. How the Hoiles family lost the Orange County Register. OC Register

4. The Arizona Republic goes front page with an editorial against the state's new immigration law. AP

OC Register shrinks again

According to the SportsJournalists.com message board, the Orange County Register eliminated 30 positions this month, including 10 from the content side. Of those, seven were open positions that were eliminated. Three people were fired, including UCLA sports reporter Al Balderas.

From poster "playthrough":

This comes shortly after the fourth-quarter economic targets were achieved and everybody received bonuses. But in 2009, there was a one-week furlough and a 5 percent pay cut. And, currently, the entire floor of the building that houses the Content staff is undergoing a significant remodeling projected rumored to be in the $500,000 range.

Also, Freedom's bankruptcy, which previously had received court approval, is supposed to be finalized next week.

Keep in mind that the posted information comes from an anonymous source. I decided to link to it since the message thread includes a memo from OC Register editor Ken Brusic that mentions furloughs and possible layoffs. If I get any further information or corrections, I will post them prominently.

This week in bankruptcy news

Freedom Communications, owner of the Orange County Register, has filed a reorganization plan in a Delaware court and expects to emerge from bankruptcy at the end of March. From the Register:

Under the plan, Freedom’s secured debt would be reduced from $770 million to $325 million. Unsecured creditors would split an initial $32.2 million but would be able to pursue a lawsuit against the company board and insurance companies in an effort to recoup up to $25 million more.

The Hoiles family, which has owned the flagship Register newspaper since 1935, would have no ownership. The lenders have already named a new board of directors that will take over when the company emerges from bankruptcy. According to the court filings, Osborne will be the post-bankruptcy CEO. He has been interim chief executive since last summer.

MediaNews Group, meanwhile, will file its bankruptcy plan sometime in early March and already an affiliate of the Tribune Co. has filed a preemptive challenge. From the Denver Business Journal:

According to the objection, GreenCo paid $2.4 million in 1998 for an irrevocable option to buy all of the assets and business operations of the Los Angeles Daily News, which is owned by MediaNews Group. The option, which was due to expire in 2010, has never been exercised, and GreenCo says it’s owed at least $8.4 million under the terms of the contract.

Closing time

Freedom Communications has decided to close the East Valley Tribune in Mesa, Arizona after failing to find a buyer. The newspaper employs about 140 people and had already trimmed staff and a reduced its printing schedule to try to trim costs.

The Tribune won a Pulitzer Prize for local reporting this year.

Freedom, which is the parent company of the Orange County Register, filed for bankruptcy in August.

(found via LA Biz Observed)

Four in the evening

1. Fear the shield: An attorney and former judge says a federal shield law for reporters is more trouble than it's worth. Boston Globe

2. Legislation by ballot: Californians pass legislation and even amend the state Constitution through the ballot box. So why aren't more of the campaign documents related to those ballot measures made public? Joe Mathews says they should be. Fox & Hounds

3. Good for what Ailes you: Fox News CEO Roger Ailes met with White House political boss David Axelrod to look for common ground. Politico

4. Executive-suite privilege: Freedom Communications, owner of the Orange County Register, isn't interested in sharing its business records publicly. Ironic, no? Editor and Publisher

Would MediaNews want a little Freedom?

So, what are the chances that Dean Singleton's MediaNews Group tries to buy up some or all of the Freedom newspaper chain?

Freedom filed for Chapter 11 bankruptcy protection earlier this week, a move that will all but eliminate the legacy ownership stake held by the Hoiles family in favor of a board appointed by the company's major lenders, including JPMorgan Chase.

Banks, as Alan Mutter points out in this Colorado Springs Gazette article, aren't in the business of running newspapers. They'll want to unload the chain - in whole or in pieces - as soon as possible. The list of potential buyers has shrunk to almost zero given the state of the newspaper industry, but MediaNews has at least two reasons to want Freedom.

First, MediaNews has its headquarters and its flagship, the Post, in Denver, and so might want to absorb Freedom's properties in Colorado. Mutter had this to say about Singleton's interest in Freedom's Colorado papers:

Mutter said Denver Post owner MediaNews Group would be a logical buyer because it could hold down expenses by combining operations with the Post. The Gazette already delivers the Post in the Pikes Peak region, and the two papers share news stories.

MediaNews Chairman and Post Publisher Dean Singleton said he’s always interested in Colorado properties, but has had no talks with Freedom officials about purchasing The Gazette.

“We’d have to wait and see how things play out,” said Singleton, whose company also has been reported to have its own massive debt load.

Second, Freedom owns the Orange County Register, once a prime target in the Southern California newspaper wars and a missing link in Singleton surround-the-Los-Angeles-Times advertising/circulation strategy. In 2003, Singleton showed his interest when he and Gannett partnered to try to take over Freedom.

While plunging circulation and ad revenues have cooled the wars, MediaNews has reached out to partner with the Register on several fronts (and to varying degrees of success). For instance, the papers share sports stories and the Register prints Singleton's San Gabriel Valley newspapers.

The Los Angeles Times might want to bid the Register if Freedom is sold off in pieces, but Times owner Tribune Co. is itself ensconced in Chapter 11 and might not have the financial nimbleness needed to compete.

Bankruptcy is rad

The way the interim CEO at Freedom Communications talks about bankruptcy, it's a wonder more newspaper companies aren't rushing to the courthouse:

I consider this to be good news, not bad news," said Burl Osborne, Freedom's interim chief executive. "It's not about liquidation or going out of business. It allows the company to operate more effectively." ...

"This gives us a green light to operate the business as usual," said Mark A. McEachen, Freedom's chief financial officer.

Freedom, which owns the Orange Country Register, filed for Chapter 11 bankruptcy protection yesterday.

Bankruptcy behind the Orange Curtain

The parent company of the Orange County Register filed for Chapter 11 bankruptcy protection today, adding more uncertainty to the future of Southern California's newspapers.

By filing for bankruptcy, Freedom Communications hopes to cast off about $445 million in crushing debt. As a result, Freedom's founding family, the Hoiles, will turn over operations of the company's 33 dailies, 70 weeklies and eight television stations to a board chosen by its lenders.

From the LAT (which is owned by the bankrupt Tribune Co.):

Under the plan, Freedom's lenders would forgive $445 million of debt for the company. That would leave Freedom with $325 million in debt. ...

The Register, which in the 1980s and 1990s fended off a determined effort by The Times to invade Orange County, saw its circulation fall by a third in the new millennium, dropping from more than 363,500 in 2000 to about 231,000 this year.

The Register intends to continue publishing throughout the bankruptcy proceedings. Presumably this includes normal press operations - Dean Singleton's three San Gabriel Valley newspapers are now printed at the Register's printing plant.

The Wall Street Journal first reported that the Register would file for bankruptcy this week.

Orange County Register owner to declare bankruptcy

Freedom Communications, the parent company of the Orange County Register, is expected to file for Chapter 11 bankruptcy this week, the Wall Street Journal reports.

From the WSJ:

With annual revenue of about $700 million, Freedom owns the Register and more than 30 other daily papers and eight TV stations. Earnings before interest, taxes, depreciation and amortization -- a popular measurement for leveraged companies -- have declined about 75% over the past five years to about $50 million. ...

Freedom's lenders, which hold roughly $770 million in debt, are expected to take control of the company as it operates under bankruptcy protection. They include J.P. Morgan Chase & Co., SunTrust Banks and Union Bank of California.

The Register was started in the 1930s by R.C. Hoiles and the Hoiles family has had a majority ownership of the paper ever since. That would change under bankruptcy:

Family members representing about one half of the Hoiles clan sold their stake in the company as part of the recapitalization more than five years ago. The stake of the remaining half likely would be wiped out by a bankruptcy filing.

(via LA Observed and Romenesko)

OK in the OC

In an interview with his own business section, Orange County Register Publisher Terry Horne is downright optimistic in his assessment of the paper's future, to the point that he declared: "we’re not thinking about having to downsize anymore."

Horne added:

The Register was profitable in 2008 and is profitable in 2009. In this economic environment, the fact we’ll have double-digit operating margins this year speaks to the strength of the Register’s position and its link to the community. There is zero chance the Register will close its doors. Orange County will have a newspaper. Those people who say newspapers are dead are wrong. What’s happening is newspapers are changing. Those that don’t, will die.

(via Romenesko)

OC Register cutting wages

FishbowlLA just reported that the Orange County Register, owned by Freedom Communications, plans to institute a 5-percent wage cut companywide.

*Updated 6/30: A few more details on the wage cuts from the OC Register:

Workers at the Orange County Register will get a 5% cut in pay effective July 13 as part of an across-the-board reduction being implemented by its parent company, Irvine-based Freedom Communications Inc. ...

Freedom is laboring under $700 million in debt, which it took on in 2004 to pay members of the family-owned company who wanted to cash in their shares.

Over the last couple of years, Freedom has implemented a range of cuts including voluntary severance, layoffs and ending the company’s matching contribution to the 401-K plan. During the second quarter, all employees had to take a five-day unpaid furlough.

Burl Osborne, Freedom’s incoming interim chief executive, said the executive team considered and rejected other actions, including additional furloughs in the last two quarters of the year and further layoffs.

“There is no best way,” he said. “This, I believe, is the least worst way. No one is enjoying this.”