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Parent of O.C. Register Is Put Up for Sale

The decision to seek a buyer comes after years of bickering among Hoiles family members.

March 07, 2003|Debora Vrana and H.G. Reza | Times Staff Writers

Descendants of R.C. Hoiles, a onetime newspaper publisher whose brand of libertarianism was given voice in the Orange County Register and for decades helped define the character of a region, have agreed to put the company he founded up for sale.

The decision to sell the Register and the other newspapers and television stations owned by Freedom Communications Inc. was announced Thursday and came after years of bickering among family members. One group of Hoiles' heirs wanted to cash out of their holdings. In the end, they prevailed over others who were content to keep the Irvine-based company under their control.

Potential bidders surfaced immediately after Freedom's announcement. Gannett Co., the owner of USA Today, expressed interest, and other suitors are expected to emerge. Analysts said Freedom could fetch as much as $2 billion.

Freedom, one of the country's last remaining family-owned media companies, operates 28 daily newspapers, 37 weeklies, eight TV stations and a handful of special-interest magazines. Its flagship newspaper, the Register, is one of California's largest, with a daily circulation of more than 300,000.

An outright sale would end nearly 70 years of Hoiles family ownership of the Register, which helped shape the conservative politics and free-market ideas that came to be identified with Orange County. The newspaper has evolved in the years since R.C. Hoiles' death in 1970, reflecting the growth and changing politics in the region.

Yet ultimately it was not the county's evolution that prompted the Hoiles family to sell but the internecine struggles along generational lines. Late Wednesday, Freedom's board of directors, after surveying family shareholders, instructed investment bankers to solicit bids for the sale or merger of all or part of the 12th-largest U.S. media company.

"The pressure has just been building for so long, and this was the answer a majority of the shareholders elected," said Freedom Communications Chief Executive Alan Bell.

"Anything is possible now," he said. Family members "might find that selling the company piece by piece nets more than one single buyer. We don't know what the outcome will be."

Bell said the bidding process could be a lengthy one that may extend into the summer or fall. He noted that a sale of the television stations, for example, may need special regulatory approval and could take longer. He also said that if bids come in too low, family members could decide not to sell at all.

But that probably won't be the case. Analysts expect a number of companies to make offers.

Calling Freedom a "fantastic organization," Gannett spokeswoman Tara Connell said her company was "just waiting to be invited" to bid. She wouldn't say whether Gannett would offer to buy all or part of the company.

Analysts also mentioned Sacramento Bee parent McClatchy Co. and William Dean Singleton's MediaNews Group as potential bidders.

Denver-based MediaNews, which owns the Los Angeles Daily News, the Long Beach Press-Telegram and the Pasadena Star-News, acknowledged that it was eyeing at least part of Freedom.

"We've been following this situation like a lot of people," said Jody Lodovic, president of MediaNews Group. "We don't have a lot of interest in the company as a whole," he said, but certain newspapers look "very interesting."

The most valuable and visible property in Freedom's chain is the Orange County Register, which has won three Pulitzer Prizes, including one for investigative journalism for its stories disclosing fraudulent and unethical practices in the fertility clinic at UC Irvine.

The eight television stations, because they are in smaller markets such as Lansing, Mich., and Albany, N.Y., are less valuable and might not be attractive to a newspaper company such as Gannett because of cross-ownership rules limiting control of media outlets in the same market, said Christa Sober, analyst with Thomas Weisel Partners in San Francisco.

Some analysts said selling pieces of the company might bring higher prices.

"These assets don't fit perfectly for any one buyer," said Brian Shipman, who is with UBS Warburg in New York. "I believe they will get bids for individual assets."

Yet others said there was no telling what could happen in the end, given Freedom shareholders' years of conflict.

"This is a family with a long history of cantankerous relations, so you just don't know," said industry analyst John Morton of Morton Research in Silver Spring, Md.

The Hoiles media dynasty began in the 1920s with a few small newspapers in R.C. Hoiles' native Ohio. By 1935, he had moved to California and had bought the Santa Ana Register. Hoiles used the Register as a bully pulpit for libertarian and conservative causes, helping to launch grass-roots political efforts in the 1950s and '60s that fueled campaigns by Barry Goldwater and Ronald Reagan.

By the early 1980s, though, the newspaper was embracing more mainstream journalistic standards.

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