If Tribune Publishing Buys Freedom’s Assets, What Will this Mean for Hispanic Media?
Industry observers interviewed by Portada noted that it is only a matter of time until the Los Angeles Times, owned by Tribune Publishing, buys the financially-troubled Freedom Communications or, at least, its most coveted asset, Orange County Register, which publishes Spanish-language newspaper Excelsior. Last Friday, things looked like they were heading in that direction when Tribune Publishing told a federal bankruptcy judge that it was willing to loan US $3 million to fund the bankruptcy case of Freedom Communications in exchange for the right to bid for Freedom's flagship publication, the Orange County Register, during any future sale process. Why is Tribune Publishing interested in Freedom's assets and what would a consolidation mean for Hispanic media? Portada takes a look at four key factors.
1. Is Freedom Communications Financially Viable?
No, not in its current form and debt levels. For this reason Freedom Communications filed for Chapter 11 protection last week to restore the company’s fiscal footing and dramatically reduce debt incurred under previous leadership in 2013 and 2014. The aggressive expansion led by Freedom Communications' former CEO and investor, Aaron Kushner (whose deal included the purchase of the Press Enterprise from Belo Newspapers as well as the launch of a new daily for Los Angeles that was later discontinued) was associated with high costs and substantial debt. Current CEO and Publisher Rich Mirman has stepped forward with several local investors to bid to purchase Freedom. Freedom Communications spokesman Eric Morgan said, "Rich is confident his bid to secure the business will be successful -- and we will continue to strengthen our position as the leader in providing local news and information in Orange, Riverside and San Bernardino counties in 2016....As Rich alludes to in the letter to employees, we have delivered strong results to the point that Freedom is on pace to turn a modest profit in 2015."
2. Tribune's Interest in Dominating Southern California
As an industry consolidator and leader in the Southern Californian print and digital market (The Los Angeles Times, Hoy Los Angeles and recently-acquired San Diego Union Tribune are some of Tribune's properties), Tribune is very interested in acquiring Freedom Communications' assets, which include the Press Enterprise based in Riverside, its Hispanic newspaper La Prensa and the Orange County Register, based in Excelsior. The Orange County Register is of particular interest to Tribune due to its strong market position, which is why it is interested in loaning Freedom Communications the money necessary for its bankruptcy case under the aforementioned conditions. Tribune lawyer Jeremy Rosenthal told U.S. Bankruptcy Court Judge Mark S. Wallace that Tribune wants an "opportunity to bid at a fair, open, transparent proceeding" should the Register undergo a sales process. As one observer told Portada, "In Southern California, Tribune now owns the San Diego Union Tribune down to the South and the Los Angeles Times in the North. The Register is sandwiched in-between these larger newspapers and has nowhere to grow. "
In Southern California, Tribune now owns the San Diego Union Tribune down to the South and the Los Angeles Times in the North. The Orange County Register is sandwiched in between these larger newspapers and has nowhere to grow.
3. Has Freedom Made the Most of the Hispanic Opportunity?
In California, Hispanics now outnumber whites, and Hispanic-targeted media should be a keystone of any media group's strategy: even more so because most Hispanic print media properties are community newspapers, a sector that has been relatively shielded from the negative revenue trends of the large metropolitan dailies.
But has Freedom really focused and invested in its Hispanic properties? Initially, Freedom unified the La Prensa and Excelsior products into one newspaper called Unidos in Southern California. However, a year later it went back to publishing the La Prensa and Excelsior publications independently. Industry experts tell Portada that on the Hispanic side, Freedom's move to bring back Excelsior and La Prensa have not worked. They have failed to connect to the Hispanic community and advertisers, primarily because they have not dedicated the necessary people or resources to reaching out to the Hispanic community.
Perhaps certain neglect for Hispanic-targeted editorial products can best be expressed by the fact that the Orange County Register decided to paint over a cultural mural that depicted Hispanics in the Santa Ana community. The mural had been on the wall of what was the Excelsior building for more than 15 years (see photo). UPDATE-COMMENT FROM FREEDOM COMMUNICATIONS: Freedom Communications no longer owns the building and was not involved in decisions to remove the mural. Excelsior is now located directly in Freedom Communications' corporate offices, in an adjacent building.
Were Tribune Publishing to buy Freedom Communications, it would have very strong Hispanic Publishing assets led by Hoy Los Angeles as well as its weekend saturation product Hoy Fin de Semana, San Diego weekly Enlace and associated publications like Freedom's properties La Prensa and Excelsior.
4. A Shrinking and Consolidating Sector
Print media (newspapers, direct mail and on a lesser scale, magazines) properties are consolidating in the hands of a few players (e.g. Tribune, Gannett Newspapers and Valassis; check out the just-announced Valassis acquisition of Clipper Magazine and Printed Deals). As these once large companies' advertising revenues are decreasing, their profit margins have become smaller. In a shrinking sector, the only way to increase margins is to consolidate with other companies and reduce costs (in fact, hundreds of Tribune Publishing employees are currently weighing if they would accept a buyout offer) and work out of a lower cost structure. Of course, the acquisition and cost-reduction rationale is the strongest when it comes to acquiring properties in the same or adjacent markets (e.g. San Diego and Los Angeles). This is what has been happening over the last few months (e.g. Los Angeles Times' acquisition of San Diego Union Tribune for US$ 85 million last May.
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