Sale of Riverside Press-Enterprise goes through
After weeks of intense negotiations and missed deadlines, publishing entrepreneur Aaron Kushner can finally call the Riverside Press-Enterprise his own.
Kushner, who also controls the Orange County Register, closed the $27.25-million purchase Thursday, according to the paper’s former owner, A.H. Belo Corp.
Kushner will now begin the work of incorporating the Press-Enterprise into his small but rapidly expanding newspaper empire, which flies under the flag Freedom Communications. In addition to the Register, Freedom operates three smaller papers, in Long Beach, Victorville and Barstow.
“We appreciate the stewardship provided by A. H. Belo to the Press-Enterprise,” Kushner said in a statement. “Our focus moving forward will be to enhance the ways we can provide value to subscribers of the Press-Enterprise and the greater community.”
Since buying Freedom last year, Kushner has invested heavily in content and expanding editorial staff. But the strategy has been costly. As recently as Monday it appeared that Kushner’s plan to buy the Press-Enterprise might collapse because he didn’t have the money.
The sale, first announced in early October, had been scheduled to close by Oct. 15. When that date passed with no deal, publicly held Belo announced it would extend the deadline a month.
The Dallas company also said it had added numerous provisions to the agreement. Among them were requirements that Kushner put down a $1-million non-refundable deposit and prove that his company was financially solvent.
Despite the extra time, Freedom still couldn’t close by Friday’s deadline and Belo said Monday that it would consider suing to force Kushner’s hand. Alternatively, the company said, it would look for another potential buyer.
To acquire Freedom, Kushner turned to a high-interest-rate lender in Boston. A Freedom spokesman did not respond to a request for more information on how Kushner financed the Press-Enterprise deal.
On Thursday, there was a tangible sense of relief inside the Press-Enterprise’s newsroom.
“Six weeks of limbo is a long time,” said Nels Jensen, the Press-Enterprise’s editor and vice president of news and content. “There’s been a lot of anxiety in that time, particularly in the last few days.”
In recent years, Jensen said he has seen the paper’s editorial staff shrink significantly to just 82 full-time employees, from almost 300 at its peak. Print circulation has declined measurably in the last two years. And over the summer, Belo sold the paper’s five-story headquarters in downtown Riverside for nearly $30 million.
Employees of the paper have not been told what Kushner’s plans are for the paper, although they expect to hear some details during a staff meeting Friday.
Alan Mutter, a former newspaper editor who now works as a media consultant, predicts that Freedom will look for ways to cut costs by combining overlapping operations among the papers, such as printing plants or advertising sales. That, in turn, would permit investment in other areas, particularly content creation.
“The trend among newspaper publishers has been to consolidate markets so you can share costs among a greater group of properties,” Mutter said. “Freedom, more than any other publisher in the country, has put emphasis on the print product.”
Since stepping onto the newspaper scene last year, Kushner has been praised for his faith in an industry in severe decline. But he also has plenty of skeptics. He’s investing heavily in print at a time when most newspapers are transitioning to a digital presence.
With no newspaper experience, Kushner acquired Freedom last year for $50 million and the assumption of pension obligations worth more than $110 million. He quickly set about hiring hundreds of editorial employees, launching a new daily in Long Beach and greatly expanding the number of pages in the flagship Register.
At the same time, he’s been beset by a string of lawsuits from former advisors and employees.
Most recently, the previous owners of Freedom sued because Kushner had not paid $17.45 million he had held back from the original purchase. That suit was filed by Angelo, Gordon & Co., an investment firm that is part-owner of Tribune Co., which publishes the Los Angeles Times.
In the Press-Enterprise, Kushner gains a Pulitzer-Prize winning paper that distributes more than 110,000 print copies Sundays, according to the Alliance for Audited Media. The paper is by far the largest in the Inland Empire.
However, Riverside and San Bernardino counties were ground zero for the mortgage industry collapse and their reader demographics are far less attractive to high-end advertisers than the Register’s.
Belo, for its part, avoids the embarrassment of having to tell investors it couldn’t complete a sale. The company’s newspaper count is now reduced to two: the Dallas Morning-News and the Providence Journal, and there is some speculation that the Rhode Island paper could eventually be sold as well.
In recent years, Belo has had to substantially reduce the Press-Enterprise staff as weekday print circulation declined to 87,775 as of March 31 from 99,743 two years earlier. Employees were concerned that a failed sale would presage further cuts.
For now, in any case, that prospect has been set aside.
“We are pleased the transaction has closed, and wish our colleagues in Riverside all the best as they go forward as part of Freedom,” said Jim Moroney, chairman and chief executive of Belo.