Freedom Communications Inc., owner of the Orange County Register, filed for bankruptcy protection Sunday, and its chief executive said he plans to lead a bid to acquire the troubled newspaper company.
The Santa Ana-based newspaper firm, which also owns the Riverside Press-Enterprise, filed for Chapter 11 reorganization in U.S. Bankruptcy Court's Central District of California.
The move is the latest episode in the turmoil that has beset the newspaper market in Southern California, where civic leaders have urged a return to local control at the Los Angeles Times after its Chicago-based owner fired Times publisher Austin Beutner in September.
In announcing the bankruptcy filing Sunday, Freedom said its chief executive and Register Publisher Rich Mirman, along with other local investors, plan to reorganize the company’s finances and assume ownership.
"I am confident our bid will be successful, and the company will emerge with a solid financial foundation and well-positioned for future success," Mirman, a former casino marketing executive, told employees in a letter. "The goal is to strengthen our position as the leader in providing local news and information for Orange, Riverside and San Bernardino counties."
Others, however, could emerge as bidders, including Tribune Publishing, owner of the L.A. Times, media consultant Alan Mutter said. Tribune has made acquiring newspapers in nearby markets a stated goal and in May, it purchased the San Diego Union-Tribune and, with The Times, formed the California News Group.
"I always thought it would be a possibility that the Los Angeles Times would want to integrate all the papers from L.A. to San Diego," Mutter said.
A Tribune spokesman did not return an email seeking comment.
Freedom released few details about the local investor group that wants to buy Freedom's assets out of bankruptcy. It did say that in addition to Mirman, the group includes developer Mike Harrah, who purchased the Register’s headquarters for $ 27 million last year.
The Register reported that the bankruptcy plan would end the ownership stake of former Freedom CEO Aaron Kushner, but not that of his partner Eric Spitz.
After acquiring Freedom in 2012, Kushner and Spitz made an aggressive bet on print that drew national media attention. They opened two new dailies — the Los Angeles Register and Long Beach Register — and acquired the Riverside Press-Enterprise.
But in a tough climate for newspapers, their bold expansion crumbled. Layoffs followed and the Long Beach and Los Angeles papers were closed. Mirman took control of the company after Kushner, a former greeting card executive, and Spitz resigned from their executive posts in March.
In a letter to employees, Mirman said that despite recent improvement in Freedom’s finances, "the business is struggling to cover its financial obligations and is overloaded with debt."
Mutter said Kushner made a mistake by emphasizing print, not digital, at a time that readers are increasingly moving online for their news.
"There was all these sort of shoot-from-the-hip initiatives that puzzled everybody that thinks they know anything about the state of the newspaper business," Mutter said.
Freedom is far from the only newspaper company facing challenges. Tribune Publishing itself is currently in the midst of a round of employee buyouts.
Freedom said advertisers and subscribers "will not be impacted by the reorganization."
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