Hoiles Acknowledges Talks With Times Mirror

Harry H. Hoiles, the dissident Freedom Newspapers heir who has accused his relatives of breaching their fiduciary duties to the family-owned media chain he is suing, had his own ethics questioned Monday when it was revealed that he empowered his lawyers to divulge privileged information to Times Mirror Co., Freedom’s major competitor in Orange County.

In testimony in the eighth week of trial on his suit to dissolve the $1-billion chain, Hoiles acknowledged that his lawyers met three times with Times Mirror representatives in August and September, 1981, to talk about selling his family’s one-third interest in Freedom Newspapers.

But he insisted during cross-examination in Orange County Superior Court Monday that he was only testing the market to see if anyone was interested in buying the stock. He said he had no real intention of selling out.

The families of Hoiles’ sister, Mary Jane Hoiles Hardie, and his late brother, Clarence H. Hoiles, also own about a third each of the Irvine company.

Hoiles said he relied on the advice of Los Angeles lawyer Richard K. Quan, one of his courtroom lawyers now, in deciding to send Quan to meet with Times Mirror officials.

One of the meetings Quan had was with Robert F. Erburu, then president and now chairman of Times Mirror. Erburu acknowledged the meetings in a brief telephone interview Monday but would not comment further because company officials may be called as witnesses in the trial.

Under cross-examination by Leonard A. Hampel, attorney for the majority shareholders, Hoiles admitted that he armed Quan with the power to divulge certain information about the company.

“I authorized him to release some information, but he didn’t,” Hoiles testified. “I’m not sure it (the information) included operating profits. It included gross income.”

While circulation figures are generally public information, Hoiles acknowledged that gross income and operating profits--the privately held company’s term for net income--are jealously guarded secrets.

Hoiles insisted that he did not want Times Mirror, whose Los Angeles Times competes with Freedom Newspapers’ flagship property, the Orange County Register, to learn any income figures.

When challenged by Hampel on his fiduciary duties as a director, Hoiles testified that he was not advised about what, if any, fiduciary duties he had to tell fellow board members about his negotiations or about revealing corporate information to a competitor.

Hoiles said Times Mirror was interested in buying his stock in an effort to purchase the entire company.

But he also said he knew the Los Angeles media chain could not buy the Register because of concerns over the antitrust laws.

Hampel said that Times Mirror was interested in seven of the other 28 Freedom Newspaper dailies. He suggested that Hoiles wanted those seven papers--including Freedom’s second largest, the Colorado Springs Gazette Telegraph--as part of the assets he proposed to take with him in withdrawing from the company. Hoiles, who served as publisher of the Colorado paper for 30 years, denied the suggestion.

The meetings with Times Mirror officials took place after Hoiles lost family support to succeed his late brother, Clarence, as chief executive and after the majority abolished that position in favor of a ruling troika.

“I was still shocked and humiliated at what had happened to me, and I was looking for advice,” Hoiles said about the talks with Times Mirror.

But, he added, his attorney told him little about the specifics of the talks at the time they were held.