Descendants of R.C. Hoiles, a onetime newspaper publisher whose brand of libertarianism was given voice in the Orange County Register and for decades helped define the character of a region, have agreed to put the company he founded up for sale.
The decision to sell the Register and the other newspapers and television stations owned by Freedom Communications Inc. was announced Thursday and came after years of bickering among family members. One group of Hoiles' heirs wanted to cash out of their holdings. In the end, they prevailed over others who were content to keep the Irvine-based company under their control.
Potential bidders surfaced immediately after Freedom's announcement. Gannett Co., the owner of USA Today, expressed interest, and other suitors are expected to emerge. Analysts said Freedom could fetch as much as $2 billion.
Freedom, one of the country's last remaining family-owned media companies, operates 28 daily newspapers, 37 weeklies, eight TV stations and a handful of special-interest magazines. Its flagship newspaper, the Register, is one of California's largest, with a daily circulation of more than 300,000.
An outright sale would end nearly 70 years of Hoiles family ownership of the Register, which helped shape the conservative politics and free-market ideas that came to be identified with Orange County. The newspaper has evolved in the years since R.C. Hoiles' death in 1970, reflecting the growth and changing politics in the region.
Yet ultimately it was not the county's evolution that prompted the Hoiles family to sell but the internecine struggles along generational lines. Late Wednesday, Freedom's board of directors, after surveying family shareholders, instructed investment bankers to solicit bids for the sale or merger of all or part of the 12th-largest U.S. media company.
"The pressure has just been building for so long, and this was the answer a majority of the shareholders elected," said Freedom Communications Chief Executive Alan Bell.
"Anything is possible now," he said. Family members "might find that selling the company piece by piece nets more than one single buyer. We don't know what the outcome will be."
Bell said the bidding process could be a lengthy one that may extend into the summer or fall. He noted that a sale of the television stations, for example, may need special regulatory approval and could take longer. He also said that if bids come in too low, family members could decide not to sell at all.
But that probably won't be the case. Analysts expect a number of companies to make offers.
Calling Freedom a "fantastic organization," Gannett spokeswoman Tara Connell said her company was "just waiting to be invited" to bid. She wouldn't say whether Gannett would offer to buy all or part of the company.
Analysts also mentioned Sacramento Bee parent McClatchy Co. and William Dean Singleton's MediaNews Group as potential bidders.
Denver-based MediaNews, which owns the Los Angeles Daily News, the Long Beach Press-Telegram and the Pasadena Star-News, acknowledged that it was eyeing at least part of Freedom.
"We've been following this situation like a lot of people," said Jody Lodovic, president of MediaNews Group. "We don't have a lot of interest in the company as a whole," he said, but certain newspapers look "very interesting."
The most valuable and visible property in Freedom's chain is the Orange County Register, which has won three Pulitzer Prizes, including one for investigative journalism for its stories disclosing fraudulent and unethical practices in the fertility clinic at UC Irvine.
The eight television stations, because they are in smaller markets such as Lansing, Mich., and Albany, N.Y., are less valuable and might not be attractive to a newspaper company such as Gannett because of cross-ownership rules limiting control of media outlets in the same market, said Christa Sober, analyst with Thomas Weisel Partners in San Francisco.
Some analysts said selling pieces of the company might bring higher prices.
"These assets don't fit perfectly for any one buyer," said Brian Shipman, who is with UBS Warburg in New York. "I believe they will get bids for individual assets."
Yet others said there was no telling what could happen in the end, given Freedom shareholders' years of conflict.
"This is a family with a long history of cantankerous relations, so you just don't know," said industry analyst John Morton of Morton Research in Silver Spring, Md.
The Hoiles media dynasty began in the 1920s with a few small newspapers in R.C. Hoiles' native Ohio. By 1935, he had moved to California and had bought the Santa Ana Register. Hoiles used the Register as a bully pulpit for libertarian and conservative causes, helping to launch grass-roots political efforts in the 1950s and '60s that fueled campaigns by Barry Goldwater and Ronald Reagan.
By the early 1980s, though, the newspaper was embracing more mainstream journalistic standards.
The 60 or so descendants of Hoiles have battled through the years over various issues. Family members divide $13 million to $14 million in annual dividends under a complicated formula.
Last summer, Tim Hoiles, grandson of R.C. Hoiles and one of the largest stakeholders with 8.6% of the company, said he wanted Freedom or the family to buy him out because he believed that mismanagement was hurting the value of his investment. Hoiles, a member of the family's third generation, also sits on the company's board.
Fourth-generation shareholders balked, insisting that the company stay under family control. They tried to come up with a plan that would allow Tim Hoiles and other third-generation members to cash out but in the end lacked the resources.
At the Register on Thursday, more than 100 reporters, editors and designers gathered in the center of the main newsroom to hear Editor Ken Brusic announce the decision by Freedom's board -- a decision he likened to officially putting a "For Sale" sign outside a building.
Employees expressed relief to learn of some news after months of waiting.
Reporter Ann Pepper said that, at the moment, most of her colleagues were not worried.
"We don't know what's going to happen down the road," she said, "but most of us feel that our jobs are very secure."
In Orange County, some community leaders said a change in ownership could be a loss for the region, though others were looking forward to new owners.
Amin David, head of Los Amigos, a Latino rights advocacy group, said his group was often at odds with the Register's coverage of Latino politicians and the community. In addition, the group has opposed the paper's conservative stance on such issues as illegal immigration and bilingual education.
"Its sale can only bring improvement," he said.
Still, such criticism has not detracted from the Register's overall popularity in the county, where it has long been seen as the hometown paper.
"The Register has evolved over time and has always been true to the county's spirit of entrepreneurship and represented a certain vision for the county," said Anil Puri, dean of the College of Business & Economics at Cal State Fullerton. "It's become more inclusive and more effective in representing the county's overall point of view."
When asked how the ownership uncertainty would affect the firm and its employees during the next few months, Freedom's Bell tried to be upbeat.
"All of us have different ways to put bread on the table," he said. "We do what we do because we get a kick out of it.
"We will continue to do our jobs well. There's no question that this is a passing of an era."
Times staff writers Mai Tran, Jia-Rui Chong and David Reyes contributed to this report.
(BEGIN TEXT OF INFOBOX)
Freedom Communications Inc.
of Irvine publishes 28 daily newspapers, 37 weeklies and several magazines. It also owns eight television stations. Some of the properties:
* Orange County Register, Santa Ana.
* The Gazette, Colorado Springs, Colo.
* East Valley Tribune/Scottsdale Tribune, Mesa, Ariz.
* Clinical Geriatrics
* Annals of Long-Term Care
* Journal of Home Care Medicine
* Journal of Gender-Specific Medicine
* WRGB, Albany, N.Y.
* KFDM, Beaumont, Texas
* KTVL, Medford, Ore.
* WWMT, Grand Rapids, Mich.
* WPEC, West Palm Beach, Fla.
* WTVC, Chattanooga, Tenn.
* WLNE, Providence, R.I.
WLAJ, Lansing, Mich.
Source: Associated Press
Los Angeles Times