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Hoileses Possible Freedom Bidders

Three family members state interest in the company that owns the O.C. Register. The first round of offers ends.

June 27, 2003|Hanah Cho | Times Staff Writer

As the first round of bidding closed Thursday for those interested in buying Freedom Communications Inc., one possible group of suitors is likely to be the descendants of R.C. Hoiles, founder of the company that owns the Orange County Register.

"A group of family members, who want to compete in the process and keep the business in family hands, is expected to participate," said Freedom Chief Executive Alan Bell.

He noted that a "long list" of parties had expressed interest in the company, but he refused to say who made offers. Freedom issued a statement saying that the company and "participants ... have agreed on maintaining confidentiality" and won't discuss the offers.

Gannett Co., the owner of USA Today, which has publicly expressed interest, along with media giants McClatchy Co. and Tribune Co, which owns the Los Angeles Times, have been mentioned as potential bidders. All declined to comment.

Media analysts estimate that Freedom could sell for $1.5 billion to $2 billion.

Freedom, which owns 28 daily newspapers, 37 weeklies and eight TV stations, is one of the last remaining family-owned media empires. Its flagship paper, the Register, has a circulation of more than 300,000.

In recent years, family members have bickered over control of the company. Some want to cash out their shares, while others want to hold on to the media empire that has been under family control for nearly 70 years.

In a letter to Freedom employees Monday, three Hoiles family members said they were not "in favor of solving the problem by selling the company."

Judy Hoiles Threshie, Betty Hoiles Bassett and Pat Hoiles Wallace said they're working with an unnamed equity partner to develop a plan that would buy out those relatives who want out.

"We are doing everything in our power to prevent such a final and unhappy ending to this fine company of which we are very, very proud," the letter said.

Threshie, reached at her home in Santa Ana on Thursday, declined to comment.

Freedom announced in March that it would solicit bids for the sale or merger of all or parts of the 12th-largest U.S. media company.

Last summer, Tim Hoiles, grandson of R.C. Hoiles and one of the largest shareholders with an 8.6% stake, said he wanted either Freedom or the family to buy him out because he believed the company was not being well managed. Hoiles also sits on the company's board.

"I've asked to be bought out personally and that position hasn't changed for the 2 1/2 years I've made the request," Hoiles said Thursday. "I wish to be bought out at a fair and reasonable price."

The preliminary bids, which were due by 5 p.m., will be narrowed by Morgan Stanley in conjunction with a special committee of Freedom's board. A second round is expected in July, and the process may extend into the fall.

"The assets of the company are so rarely seen in a single package available at one time," said Bell, who did not speculate on the identity or number of potential buyers. "Just about anyone who's anybody has expressed interest."

Some analysts say the recent relaxation of media ownership rules by the Federal Communications Commission makes it more attractive for a large media company such as Gannett to acquire Freedom.

If Gannett buys the whole group, "it would have the flexibility of selling off pieces without having a timetable from the government," said James Goss, a media analyst with Barrington Research in Chicago.

Regardless, analysts say Orange County and Colorado Springs, Colo., where Freedom owns the Gazette, are good newspaper markets for Gannett.

"It makes sense for Gannett because they are a very aggressive acquirer of newspapers," said industry analyst John Morton of Morton Research in Silver Spring, Md. "Gannett is determined to get bigger."

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