Attorneys defending Freedom Newspapers in a suit to dissolve the $1-billion media chain Tuesday blamed the bitter internecine battle on dissident shareholder Harry H. Hoiles--whose actions allegedly included attempts to sell his shares to rival publishers.
In their opening remarks at the civil trial in Superior Court in Santa Ana, defense lawyers claimed that the suit centers on Hoiles' "disappointment and anger" at not being elected chief executive of the family-owned company, which owns the Orange County Register, 28 other daily papers and five television stations. "All else is irrelevant and contrived," said Robert E. Currie of Newport Beach, attorney for the Irvine-based media chain, and its president, D. Robert Segal.
The families of Harry Hoiles; his sister, Mary Jane Hoiles Hardie, and his late brother, Clarence H. Hoiles, each own about a third of the corporation, which was founded by their father.
Harry Hoiles claims that the actions of his brother's and sister's families not only ruined his hope of heading the Irvine-based company but also froze him out of company management and destroyed the value of his family's stock. He is seeking to have a third of the company's assets split off for himself and his family.
Hoiles also is seeking punitive damages from the other two families for what his lawyers termed breach of fiduciary duty.
Defended as Reasonable
But Leonard A. Hampel of Costa Mesa, attorney for the other families, said Tuesday that the majority owners could not be guilty of breaching their duties because they nearly doubled the value of the company in the past six years and gave the Harry Hoiles family its fair share of the increasing profits.
Indeed, Hampel said, Harry Hoiles' family earned more than either of the other two branches during the six years from 1980 through 1985. Hampel and Currie said the actions of their clients were reasonable in light of Harry Hoiles' continued threats to sell his stock to an outsider.
The lawyers claimed that Harry Hoiles sent emissaries to meet with officials of Gannett Co., the nation's largest newspaper chain, and of Times Mirror, which owns the Los Angeles Times and other papers. (A spokesman for Los Angeles-based Times Mirror said that as a matter of policy the company does not comment on potential acquisitions. Gannett officials could not be reached late Tuesday.)
Because The Times is the major competitor of Freedom's flagship paper, the Register, the chain's majority owners were "very concerned" about a sale to Times Mirror, Hampel said.
To prevent Harry Hoiles from selling his shares to a competitor, Hampel said, the majority took what it considered to be appropriate action, including changing the method by which the three-member executive committee was to be elected. An amended corporate bylaw allowed the majority families to prevent outsiders from gaining a seat on the executive committee--the company's main operating arm. But it also gave the majority the power to exclude a member of the Harry Hoiles' family.