The Orange County Register and six other daily newspapers have been sold to a Boston investment group in what is expected to be the final sale of properties owned by Freedom Communications Holdings Inc. in Irvine.
Terms of the sale to the investment group 2100 Trust were not disclosed. The group is headed by Aaron Kushner, a Stanford University graduate who formerly headed a greeting card company. His investment group sought unsuccessfully to buy the Boston Globe last year.
“We believe that newspapers are essential to the fabric of our lives and are excited to own and grow these unique institutions,” Kushner, 39, said in a statement. He did not respond to requests for an interview.
In a memo to employees Monday, Freedom Chief Executive Mitch Stern wrote that there would be some staff reductions at corporate headquarters but said he expected many people to get jobs with the new publisher when the sale is completed next month.
Kushner has no media experience and is relatively unknown in the newspaper business, which is struggling to shift to a digital business model amid chronically declining print advertising revenue.
The new owner hopes to spin off the smaller papers in separate deals by the end of the summer to help finance the purchase of the Register, according to an editor at the paper who was not authorized to speak publicly. These are the Gazette in Colorado Springs, Colo.; the Appeal-Democrat in Marysville, Calif.; the Desert Dispatch in Barstow; the Porterville (Calif.) Record; the Daily Press in Victorville; and the Sun in Yuma, Ariz.
Orange County civic leaders expressed cautious optimism that the new owners would invest in the paper rather than fall back on layoffs and cost-cutting measures that have been a constant at many papers in recent years.
“We desperately need investments in good journalism,” Irvine Councilman Larry Agran said.
Shirley Grindle, a longtime Orange County government watchdog, said she relies on the Register for local news, “even with all these new Internet sites.”
“I hope the new owner realizes there is a shortage of local news coverage and investigative reporting by the Register,” she said. “And I hope they will hire some additional staff to go into some of the political corruption in this county.”
Local papers still have attractive assets, including prominence in their communities and unique content about their markets. But the industry has yet to solve the problem of falling revenue as advertisers flock to the Internet and other means of reaching consumers.
Freedom Communications has been selling off its newspapers and television stations since emerging from bankruptcy in April 2010. The Register, with average circulation of 184,000 on weekdays and 297,000 on Sundays, was the publisher’s biggest.
Freedom last year was close to a deal with MediaNews Group Inc., which runs nine Southern California papers that include the Long Beach Press-Telegram and the Daily News in the San Fernando Valley. On Monday, MediaNews said it was forming a single management team for all the papers to strengthen ties.
Kushner was not known to have an interest in the Register, and the sale to his group was unexpected. Many in the industry had speculated that the Register would be sold to San Diego developer Douglas Manchester, who bought the San Diego Union-Tribune (now called the U-T San Diego) late last year.
Some Register employees said they were relieved that the paper did not go to Manchester, whom critics have accused of influencing the U-T’s news coverage to favor his political and business interests.
“Initially people are feeling very happy,” said one Register editor who was not authorized to speak publicly. “Nobody wanted to go to Manchester.”
John Lynch, chief executive of Manchester Lynch Integrated Media, denied that the U-T’s coverage is slanted. He said its editorial page does take a “pro-business, pro-family [and] pro-military” stance, but that “we’ve taken a little bit of an unfair rap.”
Another longtime Register journalist said staffers had expected the buyer to have local ties — if not Manchester, then MediaNews Group or Tribune Co., owner of the Los Angeles Times.
“When we heard it was a group from Boston we were somewhat gobsmacked that we would be owned out of Boston,” said the journalist, who was not authorized to speak publicly. “But there is also cautious optimism that they are initially talking about building up the newsroom and not the slash and burn.”
Some analysts say the decline in newspaper values will pave the way for a new generation of owners who will transform the publications into digital-only enterprises. Or at least ones who are willing to experiment.
“The newspaper industry is in urgent need of new ideas,” said Alan Mutter, who writes a blog on the newspaper industry. “The problem is we don’t know what the new ideas are, and we don’t know whether they’re good ideas or bad ideas.”
When he was trying to buy the Globe last year, Kushner told Boston magazine that if he succeeded he would increase staff.
“If you want to grow a business, you have to invest in that business,” he told the magazine. “Especially when it is at a weak point, you cannot cut your way to growth.”
Nonetheless, Kushner and his financial backers laid off 34 of 77 employees when his former greeting card company, Marian Heath Greeting Cards, bought a rival, Boston magazine said.