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O.C. Register owner Aaron Kushner bets heavily on print

As other publishers prepare for a digital-only future, Kushner adds staff and expands his newspaper. This week he launched the Long Beach Register.

August 20, 2013|By Jason Felch
  • Long Beach resident Antonio Romero reads the inaugural edition of the Long Beach Register in front of the Queen Mary. The newspaper will be published five days a week and will compete against the Long Beach Press-Telegram.
Long Beach resident Antonio Romero reads the inaugural edition of the Long… (Nick Ut, Associated Press )

Over the last year, the Orange County Register has been furiously paddling against a riptide that has newspapers around the country laying off journalists, shrinking coverage and in some cases cutting back home delivery.

The Register has doubled the number of reporters and editors to 350 and fattened the paper by adding 22 weekly sections. On a recent Tuesday, it had 72 pages while the Los Angeles Times had 42.

The Register's parent company, Freedom Communications Inc. in Irvine, has expanded its 26 weekly community newspapers and turned two into five-day-a-week operations.

On Monday, it launched the Long Beach Register in a community wedded for so long to its hometown paper, the Long Beach Press-Telegram, that previous incursions by the Register and the Los Angeles Times fell flat.

And, according to industry sources, Freedom is negotiating to buy the Press-Enterprise in Riverside County.

Behind these surprising investments is a 40-year-old former greeting-card executive named Aaron Kushner, who acquired Freedom a year ago. As other publishers prepare for a digital-only future, Kushner is betting heavily on print, confident that intensely local — and often upbeat — news will attract advertisers.

It's a bold experiment that media executives around the country are watching closely. Many believe that it defies the economic realities of a business whose readers and advertisers are increasingly abandoning print and going online.

"It's a bit like the Wizard of Oz," said Alan Mutter, an industry blogger and former newspaper editor. "If you believe, he's a wizard. And he might be a wizard. I might be wrong."

In an interview, Kushner declined to provide details of his company's financial performance. But he said his contrarian strategy is already showing promise.

"We were profitable last year," said Kushner, Freedom's chief executive. "We will be profitable this year, profitable next year and profitable the following year. Every controllable category of advertising is up, and circulation revenue is up."

A spokesman said later that by "controllable category," Kushner meant local advertising other than legal notices.

Kushner's message to the Register staff has been less upbeat. He told employees this month that the company's financial performance had fallen short of expectations for the second quarter. As of January, Freedom stopped matching employees' 401(k) contributions.

As privately held companies, Freedom and its parent, 2100 Trust LLC, are not required to disclose revenue, profit or other financial information.

Circulation figures are public, however, and they show that over the last year, the Register's average weekday print circulation has fallen 2%, to 159,411, according to the Alliance for Audited Media. Web readership is expected to decline sharply because the Register put up a subscriber-only pay wall in April.

In contrast, average weekday print circulation for Freedom's community newspapers has nearly doubled to 181,000.

Kushner's acquisition of Freedom and his recent investments in the Register, which he estimated at $10 million to $15 million, have been backed by a handful of wealthy individuals whose names Kushner will not reveal.

Three knowledgeable sources said they include Robert Epstein, a Boston developer and managing partner of the Boston Celtics. Epstein did not return calls seeking comment.

Another early investor, former Time Inc. Chief Executive Jack Griffin, has sued Kushner, seeking more than $13 million in damages. Griffin contends that Kushner failed to pay him for advice he gave on the Freedom acquisition, and that while negotiating the deal, Kushner falsely told financiers that Griffin was a "director" of 2100 Trust. In court filings, Kushner has denied the allegations.

The Orange County experiment comes as newspapers around the country are finding that big investments in the digital side of the business have failed to pay off.

"It's a mantra of the newspaper business that digital is the future," industry analyst John Morton said. "Clearly digital is going to be important, but Kushner understands that right now 90% of revenue and 100% of profit comes off the newsprint."

Kushner is trying to increase print revenue by pumping the Register — and the community papers that come bundled with it — full of features about high school sports, community events and other good news while preserving the Register's tradition of hard-nosed local and investigative reporting.

That combination, Kushner says, will entice people to pay $1 a day for the papers. The price is the same whether subscribers get their news online or in print. It's a sharp increase from the deeply discounted rates the Register used to offer readers. To sweeten the deal, Freedom throws in extras such as tickets to Angels or Ducks games.

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