Digital First Media, the nation’s second largest newspaper company and one of the larger providers of local news, submitted a bid Friday to acquire the Orange County Register, the Riverside Press-Enterprise and other assets of the bankrupt publishing company Freedom Communications.
Friday was the deadline to submit “stalking horse” bids, which are initial bids made on a bankrupt company’s assets. Bids for the Register and Freedom’s other assets could start at $40 million, according to court documents filed by the company with the U.S. Bankruptcy Court in Santa Ana.
Digital First is the parent company of the Los Angeles News Group, which owns nine Southern California newspapers, including this one.
Tribune Publishing Co., the Chicago-based parent company of the Los Angeles Times and the San Diego Union Tribune, also submitted a bid Friday, according to a spokesman. A third group, led by Freedom CEO and Publisher Rich Mirman and Santa Ana developer Mike Harrah, had planned to make a bid, although one was not submitted Friday.
Mirman explained his rationale in a letter distributed to Freedom employees the previous day.
“After weighing its advantages and drawbacks, we decided not to submit a stalking horse bid,” Mirman wrote. “We believe our interests are better served in letting the auction determine a fair price, rather than prematurely anticipating the ‘right’ price.”
Mirman said the decision doesn’t reflect any change in the group’s desire to pursue the company’s assets, nor does it mean it won’t actively participate in the bidding process.
“We continue to be optimistic about the prospect of winning the auction,” he said.
Ron Hasse, LANG’s president and publisher, confirmed Digital First was submitting a stalking horse bid and said he believes Digital First has a distinct advantage over its competing bidders.
“We have a proven track record of profitability,” he said. “That is important in that we can invest in the future of our business. It’s something that Freedom management has been unable to do.”
Hasse also noted that Tribune Publishing’s bid has raised antitrust concerns, which arise when a company’s acquisition could cause it to overly dominate a market, thereby stifling competition.
Tribune’s spokesman said Friday the company would not comment on the bidding process and declined to reveal the amount of Tribune’s bid. Freedom officials could not be reached.
Hasse also declined to say how much DFM was bidding.
Nevertheless, he said, Digital First ownership of the Orange County Register and its assets would create the biggest benefit for Southland readers.
“It would be extremely helpful for readers in Orange County and Riverside County,” Hasse said. “Digital First ownership is the best way for them to maintain their independence and local voices. That’s what LANG is all about.”
A court-run auction among qualified bidders will be held March 16 and a hearing to approve the winning bid is set for March 21. The sale is expected to close March 31.
Freedom filed for bankruptcy in November after an ill-fated expansion plan cost the company $40 million.
Boston investors Aaron Kushner and Eric Spitz took over the company in July 2012 and bet heavily on print products. The pair expanded newspaper sections, added magazines and bought the Riverside Press-Enterprise for $27 million the following year.
They also launched the Los Angeles Register in April 2014, which folded just six months later. With losses mounting, the company implemented layoffs, buyouts and staff furloughs.
Mirman took over day-to-day operations in October 2014 and became the company’s top executive six months later.
