A purchase of the Orange County Register and other newspapers by the parent company of the Los Angeles Times could raise antitrust issues by depriving readers and advertisers of competition, the U.S. Department of Justice has said.
The department's antitrust division told Freedom Communications, the bankrupt owner of the Register and Riverside Press-Enterprise, that it would intervene if the company and its creditors select Tribune Publishing at Wednesday's auction.
"The division believes that the acquisition of Freedom assets by Tribune Publishing Company poses a serious risk of harming newspaper readers and advertisers in Orange County and Riverside County," Assistant Atty. Gen. William Baer, head of the antitrust division, wrote in a letter sent Tuesday to an attorney representing Freedom.
The letter adds a potential complication to the auction, which was shaping up to be a battle among three companies with strong local interests: Digital First Media, which owns the Los Angeles Daily News and several papers in the South Bay and San Gabriel Valley; Tribune Publishing, which also owns the San Diego Union-Tribune; and a group of Freedom insiders backed by Orange County real estate developer Mike Harrah.
Antitrust authorities said they do not have the same concerns with the other two bidders.
If it won the bidding, Tribune Publishing could face a protracted battle to secure the Justice Department's consent to the acquisition.
Ken Doctor, a media industry analyst, said the possibility of being forced to shed assets to allay antitrust fears could prompt Tribune to question the wisdom of continuing to pursue the Freedom assets.
A spokesperson for Tribune declined to comment, and attorneys for other parties were not immediately available for comment.
Digital First Media was selected Sunday in a "stalking horse" phase of bidding, which would effectively set a $45.5-million threshold in Wednesday's auction.
U.S. Bankruptcy Court Judge Mark S. Wallace has scheduled a March 21 hearing in Santa Ana to approve the sale, which is expected to close by the end of the month.
Freedom filed for bankruptcy protection in November after an unsuccessful expansion of the company's print publications by greeting card entrepreneur Aaron Kushner and his partner, Eric Spitz, who acquired the company in 2012. Kushner left the paper last year.