In 1972, when I was a young political activist working in the antiwar and pro-marijuana movements, I became aware of the Orange County Register. I was working at the campaign office for Prop. 19, the first California marijuana initiative. Word came in that the main newspaper in conservative Orange County had become the first daily paper to endorse our measure. We were amazed.
I found out later that this should have been no surprise. The Register was the flagship paper for Freedom Communications, a libertarian-owned newspaper chain. It had been founded in the early 1930s by R.C. Hoiles, who was to become a leader in the modern libertarian movement.
The Register‘s finest hour came in 1942, when most of the established media were calling for internment of innocent Japanese-Americans. Weeks after the attack on Pearl Harbor, Hoiles wrote clearly against the idea of taking away their liberty and property. The Register continued to run editorial after editorial against the internment and against the rollback of civil liberties in the time of war. The paper was the victim of several bomb threats.
More recently, as the rest of the media piled on to the false claims of the Bush Administration over Iraq, the Register ran many editorials against attacking Iraq. They have continued to support withdrawal from both Iraq and Afghanistan.
Here is a report on the effects of the bankruptcy from Alan Bock, longtime writer and editor at the Orange County Register and longtime columnist for Antiwar.com.
I am gratified at the number of people who have inquired about the Orange County Register, where I work, and about my personal fate, in the wake of the Registerâ€™s parent company, Freedom Communications, filing for bankruptcy under Chapter 11. Whether it was inaccurate or half-accurate news reports or people listening with only half an ear, some people got the impression that we were on the verge of ceasing to publish. Happily, thatâ€™s not true.
The Register, unlike many large newspapers, has never gone into the red and is still profitable, though less so than in the companyâ€™s and industryâ€™s salad days. Freedom Communications expects a profit of around $50 million this year as well. Trouble is, thatâ€™s not enough to service the debt.
The debt arises from the resolution of a family feud among the heirs of R.C. Hoiles, who founded the company and died in 1970 at age 90. The descendants of one of his three children felt they were being squeezed out of significant decision-making and demanded either that the company go public or that they be bought out. Freedom brought in two investment bankers to raise the money to buy out those who wanted it, giving them an equity stake in the company. While they were at it they borrowed a lot more money from a consortium of banks to recapitalize. This was 2004, in the midst of the housing boom, when newspapers were still ridiculously profitable.
We hit the Perfect Storm and then the recession, and profit margins declined precipitously. So the company negotiated with the banks to go into Chapter 11. Itâ€™s a "prepackaged" deal; though a bankruptcy court will have to approve the details, in essence the banks reduced the debt from $770 million to $335 million in exchange for ownership of the company (the remaining family members retain 2%).
As Register publisher Terry Horne explained in a series of employee meetings on Tuesday, the banks canâ€™t get the $435 million theyâ€™ve foregone with more layoffs and cost-cutting, of which weâ€™ve already had a lot. Their interest, not only to keep payments on the $335 million flowing but to have a prayer of recouping the other money, is for Freedom and the Register to grow to the point that they become attractive items to sell. Right now nobody wants to buy newspapers or TV stations except (maybe) for pennies on the dollar (see San Diego Union-Tribune). If the recession ends and the Freedom newspapers recover and find a way to monetize their Web presence better, thereâ€™s a chance â€“ not a guarantee but a chance â€“ that the banks can sell us for enough to recover the money theyâ€™ve foregone in Chapter 11.
The upshot is that the Register and other papers will keep publishing for the foreseeable future, while working to improve our Web presence (if you want to help you can click on http://www.ocregister.com/opinion and click around the page for a while fairly often). Thereâ€™s been no call to change the libertarian character of the editorial pages, not do we expect one. Changing the editorial philosophy is unlikely to improve the bottom line and just might hurt it. Our presumption â€“ we havenâ€™t met our new owners or the board members theyâ€™ll appoint and probably wonâ€™t for 6 months or so â€“ is that theyâ€™re more interested in money than ideology. So weâ€™ll continue to speak out against war and statism as long as possible, which looks like a fairly long time indeed.