The owner of the Orange County Register has increased his holdings in Southern California by agreeing to buy the Press-Enterprise, which circulates in Riverside and San Bernardino counties.
Freedom Communications Holdings Inc. said it will pay $27.25 million to acquire the newspaper from A.H. Belo Corp., a Dallas company that has owned it for 16 years.
The acquisition is the latest in a series of moves by Freedom owner Aaron Kushner. Since buying Freedom last year, he bucked a nationwide trend of newspaper downsizing by doubling the Register's staff of reporters and editors, adding regional editions and launching a new five-day daily, the Long Beach Register.
By acquiring the Press-Enterprise, which has a circulation of 87,775 daily and 112,000 on Sundays, Freedom has a presence in four Southern California counties.
"It appears like a good advertising opportunity if you can deliver readers from Long Beach to Riverside," said Jeff Brody, a Cal State Fullerton communications professor and former Register reporter. "The question of course for the editorial side is one of community: Is there a joint community you can make out of Long Beach, Orange County and Riverside? In the past I've always looked at the two counties as made up of different demographics."
Newspaper ownership in Southern California has been changing in recent years. Tribune Co. emerged from bankruptcy in December, leaving The Times and its seven other daily newspapers in the hands of its former creditors, including Oaktree Capital Management in Los Angeles.
In 2011, real estate developer Doug Manchester bought the Union Tribune in San Diego, and later acquired the North County Times and Daily Californian in Temecula. Kushner has expressed interest in acquiring The Times from Tribune.
The Press-Enterprise deal comes at a difficult time for the newspaper, which has reduced staff and coverage amid an industry-wide downturn in advertising. The paper's revenue fell 17% during the first six months of this year, A.H. Belo said in a regulatory filing.
Mel Opotowsky, who retired as the Press-Enterprise's managing editor in 1999 and lives in Riverside, was among those who welcomed the sale.
"At least it portends that the trend will change, the cutbacks will slow down or stop, and the coverage will increase," he said. "And one can hope that it will stick."
Opotowsky, 82, said it has been "very painful" to watch the newspaper at which he worked for 26 years shrink coverage amid the advertising slump.
Palm Springs resident Rick Purnell, who owns a public relations firm, said he hopes Kushner devotes resources to the Press-Enterprise the same way he has at the Register.
"I have followed what's been going on in Orange County and have been impressed with the aggressiveness of the organization," Purnell said. "I hope this strengthens the Press-Enterprise's commitment to this region."
Kushner has said that he believes advertisers will pay to reach readers attracted to the Register's improved, intensely local coverage. He has declined to disclose the paper's revenue and profits, but says it is in sound financial condition.
However, Kushner told employees in August that the company's financial performance fell short of expectations in the second quarter. As privately held companies, Freedom and its parent, 2100 Trust, are not required to disclose financial performance figures.
Two former Freedom executives have sued the company, saying it has not paid them $4.5 million in combined severance they are owed. They also filed a petition in court to attach the company's assets, a move their attorney said is taken when plaintiffs have concerns about collecting if they win.
Brian Ferguson, whose Austin, Texas, company, Anthem Holdings, invests in newspapers, said he believes Kushner overpaid for the Press-Enterprise. He also said he remains skeptical about Kushner's hiring spree and emphasis on printed news.
"I think everyone in the industry is perplexed about how it will work," Ferguson said. "He'll either look like a genius or a fool, and we all get to sit and watch which one."