Burdened by debt after a failed expansion, the owner of the Orange County Register filed for bankruptcy and its chief executive promised to mount a bid to acquire the troubled newspaper company.
Struggling after more than $40 million in losses over the last two years, Freedom said Richard Mirman, its chief executive and Register publisher, is now leading a local effort to reorganize the company and buy it through a court-approved auction.
"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."
Freedom said advertisers and subscribers "will not be impacted by the reorganization."
The move is the latest episode of turmoil in the newspaper market in Southern California. Civic leaders have urged a return to local control at the Los Angeles Times after its Chicago owner,
Freedom's bankruptcy filing now puts the Register in play. The company released few details about the local investor group that wants to buy it. But it did say that the group includes Mirman, who would expand his stake, co-owner Eric Spitz and developer Mike Harrah, who bought the Register's Santa Ana headquarters for $27 million last year.
The Freedom bankruptcy, its second in a decade, has the potential to make the company stronger by cleaning up its balance sheet and placing it in the hands of local owners already familiar with the business, said Gabriel Kahn, co-director of the Media, Economics and Entrepreneurship program at USC's Annenberg School for Communication and Journalism.
"That doesn't make the job easy," Kahn said, "but easier than it otherwise might have been."
Mirman acknowledged his bid isn't a slam dunk, telling the Register that "it's the court's obligation to seek out the highest bid."
Indeed, other suitors may emerge, including Tribune Publishing, owner of the Los Angeles Times, media analysts said. Tribune has made acquiring newspapers in nearby markets a stated goal, creating the California News Group after buying the San Diego Union-Tribune.
By wrapping up the major newspapers from San Diego to Los Angeles, Tribune Publishing could gain significant cost savings by sharing printing, editorial and advertising operations, media analyst Ken Doctor said.
"From a synergy point of view, the Register is a linchpin of the Southern California roll-up strategy," Doctor said.
A Tribune spokesman did not return requests for comment.
The Orange County Register reported that the bankruptcy plan would end the ownership stake of former Freedom CEO Aaron Kushner, who along with Spitz bought the company in 2012.
After acquiring Freedom, Kushner and Spitz went on a hiring binge and 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. Scores of layoffs and buyouts followed, and the Long Beach and Los Angeles papers were closed.
"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," media consultant Alan Mutter said.
Mirman took control of the company after Spitz and Kushner, a former greeting card executive, resigned from executive duties in March. Freedom spokesman Eric Morgan said Mirman refocused on its "core markets" and brought "a sharp focus back to digital," leading to an increase in monthly Web page views.
In his note to employees, Mirman said Freedom is on pace to generate a profit this year, but despite that improvement, "the business is struggling to cover its financial obligations and is overloaded with debt."