Editorial: A Bang and a Whimper

EditorialMay16website

Last November, we predicted Chicago’s Tribune Publishing was on its way to building a media empire in Southern California (bit.ly/1Se7uNU). With the Los Angeles Times and San Diego Union-Tribune already in its portfolio, Tribune now set its sights on the Orange County Register and Riverside Press-Enterprise, both owned by Freedom Communications.

I won’t rehash the turmoil that occurred at the Register and its parent company over the last couple of years, but ultimately last fall, Freedom filed for its second bankruptcy in a decade, and a three-way bidding war began for the Southern California papers. On one side was Freedom CEO Richard Mirman and his group of investors, then there was Denver-based Digital First Media, and of course, there was Tribune.

I wasn’t surprised when Tribune won the auction with a $56 million cash bid. What did surprise me was the lawsuit from the Department of Justice, stating “serious” antitrust issues. As reported in the Register, William Baer, assistant attorney general in charge of the antitrust division, wrote in a letter to Freedom: “If Freedom selects Tribune as its purchaser, the division will exercise its antitrust law enforcement responsibilities to ensure that the transaction does not deprive newspaper readers and advertisers in these areas of the benefits of competition.”

As a result, Tribune’s quest to conquer Southern California was put to a stop when Freedom decided to go with Digital First Media’s $52 million bid instead (the final purchase price ended up being around $50 million). Media analyst Ken Doctor revealed in a Politico article (politi.co/1Se8Bgv) after DFM sold the 14 acres surrounding the Register’s building in Santa Ana, Calif. for $34 million to developer Mike Harrah (Harrah already purchased the Register’s building from Freedom in 2014), the real price tag for both papers was probably around $16 million.

When you consider the fact that former publisher Aaron Kushner purchased the paper in 2012 for $50 million and then the Press-Enterprise from A.H. Belo Corp. in 2013 for $27 million, $16 million for both publications sounds like loose change.

And just like that, the bidding war had come to an anticlimactic ending.

Gordon Borrell, media analyst and CEO of Borrell Associates, told me back in November, “It doesn’t make a lot of sense in the long run (to buy a daily newspaper). Unless you’re making a play for the customer base, if you’re going to push more digital products and offerings…It would be smart to sell those digital products in the new markets.”

And if your new owner is named Digital First Media, I’m sure digital is going to play a big part in your company’s next chapter. Unfortunately, DFM’s first big play was laying off the Register’s editor and 70 other employees, and news operations were turned over to the newly-formed Southern California News Group (formerly known as DFM’s Los Angeles News Group).

Meanwhile in Northern California, DFM’s cluster of newspapers, the Bay Area News Group, also went under a restructuration as it folded six newspapers into two publications in early April. We spoke with Sharon Ryan, BANG president and publisher, in this month’s issue about the strategy, and Ryan told us it will reduce production costs and help the group allocate more resources toward creating original content. Ryan also serves as DFM’s executive vice president of the company’s Western region and will most likely be involved with the new acquisitions.

But with DFM’s history of consolidation, buyouts, and layoffs (and let’s not forget how DFM itself was once up for sale not too long ago), one can only hope the future of newspapers in Southern California will be prosperous.

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Published: May 6, 2016

One thought on “Editorial: A Bang and a Whimper

  • May 6, 2016 at 5:05 am
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    So Justice threatened antitrust action because of lack of competition and choices for advertisers if Tribune had bought these properties and now the new owner has stifled competition and given advertisers fewer choices by closing a number of newspapers, laying off staff and consolidating. Nice work Washington.

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