Digital First Media was cleared to purchase the owner of the Orange County Register and Riverside Press-Enterprise by a bankruptcy judge Monday.
The $ 52.3 million offer prevailed over a competing bid from the parent company of the Los Angeles Times, which faced an antitrust battle in its effort to build a media empire stretching from the Mexican border to Los Angeles.
Although Tribune Publishing’s $ 56-million cash bid was the highest for the assets of Freedom Communications, the Santa Ana publishing company asked U.S. Bankruptcy Judge Mark S. Wallace to approve a sale to Digital First.
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Freedom said anti-trust litigation from the federal government would bar Tribune from closing a sale before Freedom ran out of financing. An attorney for Tribune Publishing did not object to a sale to Digital First.
“We are confident that we would prevail at a trial on the merits,” Jeremy Rosenthal, an attorney for Tribune Publishing, told the court. But “we do not have that time.”
The sale to Digital First is expected to close by March 31. The company owns more than 50 newspapers nationwide and has a reputation for cutting costs and running a lean operation.
Earlier this month, Digital First announced it would consolidate several newspapers in the eastern San Francisco Bay, including the Oakland Tribune, into a new daily named the East Bay Times. It also will fold the San Jose Mercury News and the San Mateo County Times into a new paper called the Mercury News.
Tribune's bid hit a roadblock Thursday when the U.S. Department of Justice sued to stop a sale hours after the L.A. Times owner was selected the top bidder at an auction. A day later, a U.S. District Court judge approved a temporary restraining blocking Tribune from moving forward.
The Justice Department argued the sale would harm competition and allow Tribune, which also owns the San Diego Union-Tribune, to raise prices to advertisers and subscribers in Orange and Riverside counties.
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U.S. District Judge Andre Birotte Jr. said in his ruling late Friday that the government showed “a likelihood of success on the merits of its claim.”
He noted that “local newspapers continue to serve a unique function in the marketplace: they are the creators of local content. It further stands to reason that local advertisers in search of print advertising would choose to advertise with local news providers.”
Tribune and other media and antitrust experts have criticized the government’s argument as outdated, given the many choices consumers and advertisers have in a digital age.
A sale to Digital First marks the end of Freedom Communications’ long run in Orange County.
In 1935, Freedom founder R.C. Hoiles, the libertarian son of an Ohio farmer, scooped up the then-Santa Ana Register, three decades after a group of Santa Ana businessmen founded the paper.
The Hoiles family owned the Register for decades. Family control lasted until 2010, when Freedom emerged from a bankruptcy and Wall Street investment firms took the helm.
Two years later, former greeting-card executive Aaron Kushner and investor Eric Spitz purchased Freedom and soon made headlines with an aggressive expansion of the company's print publications.
But the bet failed and Freedom shut two of its new dailies in Los Angeles and Long Beach. It filed for Chapter 11 bankruptcy protection in November after losing more than $ 40 million over two years.
Reach me by email at andrew.khouri@latimes.com or on Twitter @khouriandrew
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