Daily Pilot Expands Base, Launches New Edition : Newspaper: New owners push circulation with a special Thursday paper delivered free to 35,000 potential subscribers.

The Orange Coast Daily Pilot, whose new owners are trying to reverse a long decline in readership, has expanded its circulation to include the Laguna Beach area and launched a special Thursday edition that will be delivered free to 35,000 households in Newport Beach and Costa Mesa as well as to regular subscribers.

The 15,000-circulation daily will begin distributing free copies in the Laguna Beach area this weekend, said Gerald Adcox, general manager. The new six-section Thursday Pilot, launched this week, will replace weekly community newspapers previously distributed by the Pilot in Newport Beach and Costa Mesa, and will include local news sections for those two communities and for Corona del Mar.

As recently as 1986, the Pilot’s circulation exceeded 30,000, but it has been in sharp decline since then, in part because of the fierce battle for newspaper readers between the much larger Los Angeles Times and the Orange County Register. The Pilot was purchased from Adams Communications last December for $9.5 million by a group of investors led by former Chicago Sun-Times Publisher Robert E. Page.

Page Group Publishing has filed a lawsuit against Adams in Superior Court in Santa Ana for allegedly inflating the Pilot’s circulation numbers and concealing the fact that some of the paper’s production equipment was in bad repair. Page claims that circulation at the Pilot turned out to be closer to 15,000, not the 17,000 he was led to believe when he bought the paper.

Page’s suit seeks $818,000 in lost income, $600,000 for the replacement of broken equipment and cancellation of a debt obligation to Adams of $1.5 million. Adams has denied the allegations.

As part of the circulation campaign, the Pilot has launched an outdoor advertising campaign. A redesign of the paper, which has undergone a number of editorial changes since William Lobdell took over as editor in February, is also in the works.

And Page is moving to gain some economies from his ownership of both the Pilot and the Glendale News Press, a small daily in Glendale. Much of the News Press is now being printed at the Pilot facility in Costa Mesa, and Adcox said all News Press printing will be transferred within 30 days. Page said the shift will save $250,000 to $300,000 annually.

Page is also considering investing $2 million in an automated newspaper composing system.