As he shut down the Los Angeles Register — a daily newspaper he launched just five months ago — Aaron Kushner found himself once again redefining "failure."
The co-owner and chief executive of Freedom Communications, the parent company of the Orange County Register, explained the latest retreat from a bold regional expansion in a statement to employees, also signed by co-owner Eric Spitz.
"Pundits and local competitors who have closely followed our entry into Los Angeles will be quick to criticize our decision to launch a new newspaper, and they will say that we failed," the owners wrote. "We believe the true definition of failure is not taking bold steps toward growth."
Kushner and Spitz used almost the same language in June, when they announced that Freedom would roll the recently launched Long Beach Register into the Los Angeles Register — then brand new — and impose companywide furloughs.
The closure of the Los Angeles paper — Tuesday's was the final edition — also came with layoffs.
On Tuesday, Freedom eliminated 29 newsroom positions across the company, the Orange County Register reported. Editors and reporters from both the O.C. and L.A. Registers were among those who lost their jobs.
The cuts leave the O.C. Register's editorial staffing at 220, higher than in 2011 before Kushner bought Freedom, the paper said.
The developments are the latest indication of financial stress at Freedom. But the move to launch a competing newspaper in Los Angeles would have been difficult for even the healthiest of media companies, media consultant Alan Mutter said.
Newspaper companies have for decades found it extremely difficult to move into new markets, said Rick Edmonds, a media business analyst with the Poynter Institute. Today, with print advertising revenue steadily falling nationwide, that peril is only magnified, he said.
"The basic strategy was pretty badly flawed from the get-go," Edmonds said of Freedom's expansion into L.A.
Kushner and Spitz in a note on the L.A. Register's front page Tuesday said that "not enough readers took us up on our offering."
After Kushner's 2100 Trust bought Freedom in 2012, he moved to aggressively expand its print news products, drawing attention nationwide for the counterintuitive strategy. Kushner beefed up the O.C. Register with about 175 new reporters and editors, launched the Long Beach Register last year and bought the Riverside Press-Enterprise for nearly $27.3 million in November.
But financial trouble quickly surfaced. Amid delays in closing the Press-Enterprise deal, the former owner, A.H. Belo Corp., required that Kushner put down a $1-million nonrefundable deposit and prove that his company was solvent.
In January, Freedom laid off 71 employees in what management described as a "difficult but important restructuring" necessary "to tackle the next phase of our growth."
Then in June, the Long Beach paper was folded into its Los Angeles counterpart and became a stand-alone paper only on Sundays. Freedom also imposed two-week furloughs companywide, and dozens of O.C. Register staffers took buyouts.
On Monday, the company announced the sale of the Orange County Register headquarters in Santa Ana for $27 million to local developer Michael Harrah. The Register will lease back the building.
"This was another step in our progress to strengthen our balance sheet," according to the Kushner-Spitz memo.
At the end of July, Freedom owed $24.7 million in loans secured by its real estate, according to court documents. Several companies say they are owed money from Freedom. The Los Angeles Times, which delivers the Register, is among those firms.
In their memo to staff, Kushner and Spitz said Freedom has increased its total revenue.
"Our local print advertising business isn't just up, it's up double digits over last year," they wrote. "Digital revenue and traffic have also now begun to trend upward with the successful launch of our Digital Freedom products."
Freedom now will focus on core markets in Orange, Riverside and San Bernardino counties, where the company has decades-long and "deep relationships with subscribers and advertisers," Kushner and Spitz said in their memo.
The production, printing and distribution of a new daily newspaper serving 88 communities in L.A. had a "real cost and required greater community support than it initially achieved," the memo said.
Freedom said it would maintain Sunday publication of the Long Beach Register. It will also have an L.A. presence through the weekly Easy Reader and will publish L.A. news online at losangelesregister.com.