Advertisement

O.C. Register's Parent Denies Pressure to Sell

Publishing: Freedom Communications says it may use an IPO or other means to provide family owners with liquidity.

July 25, 2002|JAMES BATES and MAI TRAN | TIMES STAFF WRITERS

The chief executive of Freedom Communications Inc., the Irvine-based media company that owns the Orange County Register, dismissed speculation Wednesday that the company may be sold under pressure from members of the Hoiles family that owns it.

But CEO Samuel C. Wolgemuth did confirm that the company was seeking ways to provide liquidity to the 81 family members whose wealth is tied up in Freedom stock, calling it a "critical issue" for any family-owned business.

Wolgemuth declined to specify what options were being looked at, but analysts said the possibilities could include bringing in outside investors, a public stock offering, a special dividend or an employee stock purchase program. Wolgemuth said various proposals would be discussed next month at an informal gathering of the 50 or so adult shareholders in the family.

Wolgemuth's comments followed a Wall Street Journal report that Tim Hoiles, part of a dissident wing long at odds with the rest of the family, is pressing to sell the company. Hoiles' father, the late Harry Hoiles, had waged a bitter, unsuccessful court battle throughout the 1980s with other family members to break up the company.

Tim Hoiles, a Freedom director and head of the company's audit committee, in an interview said he and other family members were frustrated with the company's performance and with "seeing the asset dwindle." He said he had strong support from other family members, an assertion Wolgemuth and other family members disputed.

"I'm not aware of anyone in the family other than Tim who has expressed an interest in selling the company outright," Wolgemuth said.

That view was echoed by Robin Hardie, who heads a committee of fourth-generation family members studying options and interviewing other family members about what they want to do.

"We're a big family. Some of them want to sell out, some want to diversify their holdings, but many more want the company to remain private," she said.

Freedom, which owns 28 newspapers and eight television stations, does not disclose its finances because it is private. But according to sources familiar with the results, Freedom last year had revenue of $760 million, lost about $90 million amid the nationwide advertising downturn and had cash flow of about $120 million. Analysts place the company's value at $1.5 billion to $2 billion.

Tim Hoiles confirmed that he had hired London investment banker Christopher Shaw, who has been in the middle of other newspaper family scraps in the past. Hoiles added that if other family members don't want to sell the entire company, they can buy him out.

"For a fair and competitive price, they can get me out of there," he said. He owns about 9% of the company.

Newspaper analyst John Morton said he was skeptical of an outright sale. He said he believed that most family members wanted to keep Freedom, which long has sought to uphold the libertarian philosophy of founder R.C. Hoiles.

"I would be amazed if the majority of the family wants to sell," Morton said.

Nonetheless, Morton said, Freedom and other family-owned media companies are under intense pressure to provide liquidity to younger generations eager to cash out or diversify their holdings.

He noted that pressures from the founding Chandler family led to the $6.8-billion sale in 2000 of Times Mirror, parent of The Times, to Chicago-based Tribune Co.

At the Register's Santa Ana offices, discussion of the news took up most of a meeting between editors and reporters that is usually held to discuss the day's stories.

Employees received an e-mail during the day from CEO Wolgemuth, promising them that Freedom's shareholders "will work through this process in a fair and dignified manner and final decisions will be determined based on what is best for Freedom as we move forward."

*

Times staff writer James S. Granelli contributed to this report.

Advertisement
Los Angeles Times Articles
|
|
|