Hoiles’ Plan Seen as Benefit to Media Chain : Proposal Left the Register With Majority Owners

The majority owners of Freedom Newspapers Inc. would have benefited if they had given in to dissident shareholder Harry H. Hoiles’ demand for a third of the chain’s assets six years ago, according to a memorandum revealed in court Thursday.

The families’ of Hoiles’ sister and late brother would have benefited because their share of the divided assests, including the Orange County Register, would have been more profitable than their share of the entire operation, according to a memo introduced in the trial of Hoiles’ lawsuit to dissolve the $1-billion media chain. The memo was written by a member of an appraisal firm hired by Freedom Newspapers in 1981 to establish a value for the company.

The Register, which provides 48% of the operating revenues of the Irvine-based media chain, is the chain’s most valuable asset and was considered at the time to have the greatest potential for growth.

Hoiles, who had been publisher of the chain’s second-largest paper, the Colorado Springs Gazette-Telegraph, for 30 years before returning to company’s headquarters in 1975, had wanted that paper as part of any share of his assets. His proposals on splitting the assests in 1981 indicated that he was willing to give up interest in the Register in order to get the Colorado Springs paper and his share of the assests. In addition to those two papers, Freedom owns 27 smaller daily newspapers and five television stations.

Hoiles and his family own a third of the closely held company, as do the families of his sister, Mary Jane Hoiles Hardie, and his late brother, Clarence H. Hoiles.

The appraiser’s memo “shows that there would have been no economic loss to the corporation by giving Harry a third of the papers,” said his trial lawyer, Vernon W. Hunt Jr. of Santa Ana, after the Orange County Superior Court trial ended its first week. “It was just an administrative matter of splitting them up.”

But Leonard A. Hampel of Costa Mesa, attorney for the Hardie and Clarence Hoiles families, said that the appraiser’s opinion was only a “judgment call” and does not take into account the company’s most recent growth, which has made Freedom into the nation’s 14th largest media chain.

Hoiles claims in his lawsuit, filed nearly five years ago, that the other two branches of the family froze his family out of management and destroyed the value of his family’s stock through their actions.