Freedom’s Board Said to Ask CEO to Resign

The board of Orange County Register parent company Freedom Communications Inc., frustrated with the company’s sluggish performance, has asked its chief executive to step down, according to several inside sources.

Samuel Wolgemuth, who has been CEO and president since October 1999 and before that led Freedom’s now-shuttered magazine division, is expected to resign or be fired at a special board meeting scheduled for Thursday, the sources said. The timing is subject to change, however.

Freedom’s board--dominated by members of the Hoiles family, which owns Freedom--voted unanimously Aug. 13 to force Wolgemuth out if he didn’t voluntarily relinquish power, several people close to the company said.

“We need a stronger leader running this company, and change is needed,” an insider said. Sources said the board has been unhappy with Wolgemuth’s strategy to take Freedom into magazines and the Internet--ventures that ended up losing millions of dollars. One of the magazines, a joint venture fashion publication called Mode that was directed at full-figured women, shut down in October.

The board has yet to choose a successor but is expected to do so soon, sources said.

Wolgemuth, 59, characterized news of his impending dismissal as a rumor. He declined to elaborate.

His fate was sealed at a meeting Aug. 10 and 11 of Hoiles family shareholders, said three company insiders.

“People wanted action and were beyond upset,” said a source who asked not to be identified.

The privately held company, which owns 28 daily newspapers, 37 weeklies and eight television stations, last year had revenue of $760 million and a loss of $94 million amid a softening economy and a nationwide advertising downturn, said insiders familiar with the results. The financial results included $103 million in before-tax write-offs for magazine, Internet and other losses.

Tim Hoiles, a dissident shareholder who had pushed for the sale of Freedom, had long opposed Wolgemuth. One of only two board members to have voted against his ascent to the top spot in 1999, Hoiles thought Wolgemuth lacked the newspaper experience to succeed at Freedom.

Hoiles, an 8.6% owner, maintains that Freedom has lost 25% of its value in the last five to seven years because of mismanagement, including Wolgemuth’s.

He declined to comment Tuesday, as did many of the other 12 Freedom directors.

The move to oust Wolgemuth comes at a time of great upheaval at Irvine-based Freedom, the nation’s 12th-largest newspaper chain. Its Orange County Register is a standard-bearer of libertarianism and is the dominant newspaper in one of the nation’s most politically conservative counties.

After much internal wrangling, the Hoiles family recently decided against selling the company but voted to transfer ownership to the fourth generation of shareholders, now in their 20s and 30s.

Younger members of the Hoiles clan have begun discussions with family-business expert Francois de Visscher on the best way to raise capital to purchase the stock of shareholders wishing to cash out.

To raise funds to buy out the third-generation shareholders, the family could sell shares in the private equity market or to the public, or sell part of the company, experts said. No transaction is expected to be completed for six to 18 months.

Wolgemuth came to Freedom in 1995 after a career mostly in book and magazine publishing.

He holds a bachelor of arts degree from Taylor University in Upland, Ind.