The publisher of the Orange County Register says it will sell its bankrupt newspaper group to Digital First Media after the U.S. government moved to block the sale of the southern California media company to the owner of the Los Angeles Times.
Lawyers for Freedom Communications Inc., the publisher of the Orange County Register and the Riverside Press-Enterprise, said they would ask a bankruptcy judge Monday to sign off on the sale of its assets to Digital First Media. The request comes after the U.S. Department of Justice won a court order to temporarily block the sale to Tribune Publishing Co., publisher of the Los Angeles Times and San Diego Union-Tribune.
U.S. District Judge André Birotte Jr. in Los Angeles late Friday approved the government's request for a temporary restraining order, putting the brakes on Tribune's proposed purchase of Freedom for $ 56 million, which was about $ 5 million more than Digital First's runner-up bid $ 51.8 million.
"Newspapers—indeed, local ones—are important to a healthy democracy," wrote Judge Birotte, acknowledging that his ruling meant Tribune could lose out on acquiring the Register and Press-Enterprise. "However, this private harm does not outweigh the public interest in the preservation of competition, especially given the government's likelihood of success on the merits," the judge said.
Freedom's lawyers say they're turning to Digital Media, which owns more than a dozen California daily newspapers and websites including the Los Angeles Daily News, after they were unable to strike a deal with Tribune following the injunction blocking the sale.
"Simply put, the Tribune was asked to provide to [Freedom], the same protections it was believed had been obtained during the auction," lawyers for Freedom said Saturday in a court filing. "The Tribune refused."
A representative for Tribune wasn't immediately available for comment.
Freedom will ask Judge Mark S. Wallace of the U.S. Bankruptcy Court in Santa Ana, Calif., to approve the sale to Digital First at hearing Monday morning.
The dispute over Freedom caps several days of post-auction legal wrangling and highlights the difficulties traditional news organizations are facing in the digital age. Freedom, once a family-owned media powerhouse whose holdings numbered TV stations and a variety of newspapers, is in its second stint in bankruptcy in less than a decade.
Faced with an unprecedented drop in advertising revenue and steadily declining circulation, a number of U.S. newspapers have been forced to cut editorial positions, close foreign bureaus and even cease publishing daily print editions in bids to survive.
Many, including Tribune itself, along with the publishers of the Philadelphia Inquirer, the Baltimore Sun, the Minneapolis Star Tribune and Chicago Sun-Times, have sought chapter 11 protection in recent years.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com and Stephanie Gleason at stephanie.gleason@wsj.com
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