Tribune Publishing's purchase of the Orange County Register and Riverside Press-Enterprise is doomed if the U.S. Department of Justice obtains a temporary restraining order on antitrust grounds, the owner of the Los Angeles Times argued Friday.
The publishing company's $56-million cash offer for the two newspapers owned by bankrupt Freedom Communications was selected as the highest bid at a Wednesday auction. The federal government sued in U.S. District Court the next day to block the sale, arguing it would harm consumers and advertisers.
Tribune, in a response filed Friday morning, said that Freedom will run out of financing March 31 and that any delay in closing the sale would force the Santa Ana newspaper publisher to accept a rival lower bid or liquidate the papers.
Tribune attorneys described a restraining order as a "death-knell" to the bid, which would cause harm not only to Tribune but to Freedom's creditors and the public.
A U.S. Bankruptcy Court judge is scheduled to consider approval of Tribune's offer for Freedom at a Monday hearing in Santa Ana. There has been no hearing set to consider the request for the restraining order, which is being decided by a different judge.
"The [Justice] Department has the leverage," said Warren S. Grimes, an antitrust professor at Southwestern Law School. "The bankruptcy judge is not likely to wait for a trial."
One solution could be for Tribune to agree to certain conditions on its purchase, said William Markham, an antitrust attorney in San Diego. Tribune could agree to operate the Register and Press-Enterprise separately from The Times, allowing the newly acquired dailies to still set their own subscription and advertising prices.
Or Tribune could acquire only one of Freedom's papers, but not both.
But such scenarios may not be palatable to the government or Tribune Publishing, which is looking to extend its reach in Southern California and save money by streamlining business
operations at a challenging time for the newspaper industry. The company identified $24 million in potential "cost synergies" across several departments.
If Tribune has to make too many concessions, "It may defeat the very purpose," Markham said.