Tag

Aaron Kushner

Browsing

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?

Freedom CommunicationsNo, 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

Tribune PublishingAs 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?

IMG_1443
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

Newspaper CouponsPrint 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.

CHECK OUT RELATED ARTICLES:
5.18.2015: ANALYSIS: Tribune Gets a Major Hispanic Footprint in SoCal after the Purchase of San Diego’s UT
12.05.2014: Freedom Communications announces more layoffs, folds unprofitable pubs
9.19.2014: Aaron Kushner to evaluate whether the Los Angeles Register is viable as a daily
8.4.2014: Tribune Publishing spins off, which newspapers will it acquire?
03. 14..2014: Are Hispanic Newspapers growing? Yes! Here are 3 Examples

What: Freedom Communications is laying off about 100 non-newsroom employees and eliminating unprofitable publications including the OC Register Magazine. 
Why it matters: Co-owners Aaron Kushner and Eric Spitz’s 2100 Trust acquired the privately held Freedom in 2012 and invested heavily in increasing editorial resources. The bet, at least for now, is not working. Freedom publishes Spanish-language weekly Unidos en el Sur de California.

descarga (2)Freedom Communications, the parent company of the Orange County Register and the Riverside Press-Enterprise, is laying off about 100 non-newsroom employees and eliminating unprofitable publications such as OC Register Magazine today.

Apparently, top-level executives will be also given the sack along with staff at the Press-Enterprise. The measure will affect all departments except the newsroom.

“The motivation for this change is the fact that we need to make the company profitable. It needs to be a business that sustains itself,” said Richard Mirman, who took over as publisher of the The Orange County Register in mid-October replacing Aaron Kushner.Mirman declined to give specifics on the company’s finances, but said the company still is losing money.

Kushner, whose 2100 Trust purchased Register parent Freedom Communications in 2012, stayed on as Freedom’s CEO. Mirman became the Register’s interim chief executive and publisher.

The comings and goings

Since co-owners Aaron Kushner and Eric Spitz’s 2100 Trust bought the privately held firm in 2012, Freedom has gone through dramatic changes .

Kushner and Spitz went on a hiring spree after the reported US $50-million to US $60-million purchase and also launched two new daily papers: The Press-Enterprise in 2013, which was picked up for nearly US $27.3 million, and Los Angeles Register. Earlier this year, it launched Spanish-language weekly newspaper for Southern California, Unidos en el Sur de California.

Then came several rounds of layoffs and buyouts affecting dozens of employees. The new Long Beach Register is now published only Sundays. In September, the Los Angeles Register closed five months after its launch.

Orange County Register subscribers continue to complain about spotty delivery after the newspaper switched delivery vendors in October. The Register’s previous delivery partner, the Los Angeles Times, has sued, alleging breach of contract and failure to pay about US $2.5 million in fees.

Exactly what was expected

Aaron Kushner, CEO, Freedom Communications
Aaron Kushner, CEO, Freedom Communications

The Los Angeles Register  was launched in April of this year in the Los Angeles, CA market, where it competed with other dailies including the Los Angeles Times. Kushner’s comments on this, which were made during an on-stage interview conducted by Portada publisher Marcos Baer during Portada’s 8th Annual Hispanic Advertising and Media Conference, were the first explicit references by Freedom Communications CEO about the possibility of discontinuing daily publication of the Los Angeles Register.

During this interview, Kushner already claimed that the weekly publications and Freedom’s two core newspapers The Orange County Register and The Press Enterprise, Riverside, CAwere the main contributors to what he considered a “low single digit revenue growth rate” at Freedom Communications.

The Orange County Register and The Press Enterprise, Riverside, CAwere the main contributors to what he considered a “low single digit revenue growth rate” at Freedom Communications.

“It is very important to note today’s restructuring will not impact the newsroom, and thus it will not impact readers or the overall quality of the newspapers.It is critical that we maintain the same standard of excellence in our journalism that our customers, advertisers and community have come to expect,”  said The Orange County Register publisher Richard Mirman .

 

Aaron Kushner, CEO, Freedom Communications
Aaron Kushner, CEO, Freedom Communications

Aaron Kushner, CEO of Freedom Communications, said that he will evaluate “in the next few weeks” whether the Los Angeles Register has a viable future as a daily. The Los Angeles Register was launched in April of this year in the Los Angeles, CA market, where it competes with other dailies including the Los Angeles Times. Kushner’s comments, which were made during an on-stage interview conducted by Portada publisher Marcos Baer during Portada’s 8th Annual Hispanic Advertising and Media Conference, are the first explicit references by Freedom Communications CEO about the possibility of discontinuing daily publication of the Los Angeles Register.

Kushner, however, does see a bright future for weekly publications. During the last several months Freedom Comunications has introduced several weekly publications including Hispanic weekly newspaper Unidos en el Sur de California.  Kushner said that the weekly publications and Freedom’s two core newspapers The Orange County Register and The Press Enterprise, Riverside, CA are the main contributors to what he claims is a “low single digit revenue growth rate” at Freedom Communications. While acknowledging challenges, Kushner praised newspapers and magazines as the only medium where consumers actually look for advertising and don’t neglect it or have technology to filter it (online or TV).

Publications are the only media where consumers actually look for ads.

Before buying Freedom Communications with business partner Eric Spitz in July 2012, Kushner was a successful entrepreneur in the greeting cards business. “Everyone thought that printed greeting cards would disappear in 10 years, when in fact they have boomed,” Kushner said. He added that there may be some parallels between the newspaper and the greeting card business.

Aaron Kushner during #Portada14
Aaron Kushner during the on-stage interview conducted at #Portada14 by Marcos Baer, publisher of Portada

When asked about his view on charging readers for online content, Kushner noted that he does not see a sizable revenue stream in it and that most readers are not ready to pay for content online, with the exception of publications like The New York Times or The Wall Street Journal.
Under Kushner’s and Spitz’s ownership Freedom Communications has been acquiring publications in markets it finds attractive (earlier this year it acquired The Press Enterprise from Belo Newspapers). When asked whether he is interested in acquiring publications in Southern California, the Freedom Communications Executive noted that his company’s nature is to be acquisitive, but he said there will be no inminent announcements of acquisitions. Kushner praised San Diego’s Hispanic newspaper Enlace, which is a unit of The San Diego Union Tribune.

The Freedom Executive also noted that there is a high correlation between voting and newspaper readership. And that newspapers play an important role in building community and creating an advanced political culture. Regarding the Hispanic newspaper sector, Kushner said that the features of Hispanic newspapers across the market are relatively uneven . He also spoke highly of the quality of many Mexican publications.

Contrary to general market newspapers many Hispanic newspapers are growing their circulation. Is this fact appealing enough for national and regional advertisers? A high quality panel at Portada’s 8th Annual Hispanic Advertising and
Media Conference will explore the above and other questions.  Panelists will include Isabella Sanchez, VP Media Integration at Zubi Advertising and Verizon’s Director of Multicultural Advertising Oscar Madrid.

Oscar Madrid, Verizon
Oscar Madrid, Verizon
Isabella Sanchez, Zubi Advertising
Isabella Sanchez, Zubi Advertising

Get your tickets now! Early Bird pricing expires this Friday August 8!

In a special on-stage interview Aaron Kushner, CEO of Freedom Communications, the owner of the recently launched Los Angeles Register. the Orange County Register, the Press Enterprise and other major digital and print media properties, will explain the rationale behind his large print media investments and tell the audience what went well and what not and why.  The interview will be conducted by Portada’s very own Marcos Baer.

Other major confirmed speakers that will analyze the most important issues driving Multicultural Marketing forward include:

Ana Lucia Soto, Media Manager, JC Penney
Lyris Leos, Brand Marketing Strategy Director, JC Penney
Cesar Sroka, Group Account Director, Omnicom Group
Manny Gonzalez, Senior Director-Multicultural, Moet Hennessy
Daniel Villaroel, Director Multiethnic Marketing, Maybelline New York and Garnier
Keisha Andrews-Rangel, Managing Director, nTrigue media
Maria Lopez Knowles, CMO, Pulpo Media
Maria Rios, Director of Multicultural Marketing & Media Strategy, Macy’s

Get our e-letters packed with news and intelligence!