Tribune Publishing took legal action today confirming speculation that it hopes to buy Freedom Communications and its Orange County Register out of federal bankruptcy court.
At a hearing, the Wall Street Journal reported, Tribune offered to contribute $3 million to the bankruptcy in exchange for a right to bid on the property when the proceedings are completed. Under the proposal Tribune would get the $3 million back if Freedom’s assets are sold to someone else.
When Freedom filed for bankruptcy over the weekend, CEO Richard Mirman announced that he and a partner hope for an expedited process that will allow them to control the company.
It’s up to the court, acting in the interest of creditors, to decide whether a competitive bid rather than an agreed-in-advance sale would be best.
Tribune owns the Los Angeles Times and brought the Union Tribune of San Diego earlier this year. By getting the Register, it would have the dominant paper in each of the three huge Southern California counties.
The signal of interest comes on the eve of Tribune Publishing’s third quarter earnings report and conference call with analysts Thursday. Fired L.A. Times publisher Austin Beutner and other civic and financial interests have been agitating publicly during the last six weeks for Tribune to sell the Times and Union Tribune to local interests.
So Tribune CEO Jack Griffin is under intense pressure to show positive results for his year-old strategy and document prospects for growth. Griffin would have been asked about acquisitions anyhow, but today’s action lays the ground for a more detailed discussion of the benefits to the company of landing the Register.
Recent years have seen a number of “pre-packaged bankruptcies” in the newspaper industry in which creditors agree to leave management in place after the bankruptcy reduces debt. But there has also been at least one contested outcome when two hedge funds won the right to bid against a local group as Philadelphia Media Holdings, which owned the Inquirer and Daily News, emerged from bankruptcy. (The hedge funds prevailed but later sold to a different local group).
Mirman, a former casino executive who took control from the flamboyant and over extended Aaron Kushner a year ago, has spent that time getting the enterprise in shape to be sold. He claims that Freedom now operates profitably (though laden with debts it cannot pay).
As Griffin has explained his own strategy, Tribune would likely be looking to bring more efficiencies from centralization and scale while offering a more attractive ad buy with the three markets combined.
Tribune and Mirman’s group might have another rival bdider company should there be an auction. Besides the Register, Freedom owns the Press Enterprise of Riverside, acquired from A.H. Belo in 2013.
Gannett (which already owns the Palm Springs paper) might see those three properties as complimentary. And like Tribune Publishing, Gannett is on record as saying it wants to bulk up with acquisitions and, after its agreement in October to purchase of Journal Media Group, is not yet done buying.
