Sale of O.C. Register Could Muzzle an Influential Voice

Orange County Business Journal

The decision by the R. C. Hoiles family to put Irvine-based Freedom Communications Inc. up for sale could have a profound impact in Orange County.

The company's flagship, the Orange County Register, has dominated the local media, mightily influenced public opinion and conservative politics and shaped the image of the community in its libertarian, anti-government vision.

A sale, which would be expected to fetch a ballpark $2 billion for Freedom's heirs, isn't likely to alter the Register's standing as the county's major news source. But it could, though not necessarily, bring an end to the Register's unique editorial page.

"That's something we can't anticipate there's going to be a period of nail-biting uncertainty," said Alan Bell, Freedom's chief executive.

"It would be tragic to see this voice be stilled, or for it to become watered down so that no one knows what it stands for," said N. Christian Anderson, the paper's publisher.

Keeping the paper's editorial voice "might be factored in as a negotiable item," under some sale scenarios, Bell said. But that would be unlikely in an outright sale of Freedom.

What appears more certain is that an expected sale spells continued hard times for management and employees of the Register.

The paper is the prized but, by most accounts, financially underperforming asset in the Freedom chain.

The Register accounted for 36 percent of Freedom's revenue last year, but only 15 percent of its Ebitda (earnings before interest, taxes, depreciation and amortization), according to Freedom sources.

The Register's revenue in last year's tough media environment was flat, at about $285 million, while Ebitda amounted to $40 million.

That was an improvement of $15 million from 2001 and was achieved through savings in print costs largely through cutting circulation and newsprint pricing as well as job reductions, employee buyouts and other reductions.

The assumption is that increasing the Register's profitability would be the single strongest way for Freedom to maximize its sales price. But Bell, noting he will continue to "drive hard" on improving the Register's profits, said further cuts wouldn't be made simply to position for a sale.

The impact of a sale on the Register's unique editorial voice hinges on several factors.

Even some Freedom shareholders who have pressed for a sale sympathize with trying to preserve its libertarian principles. It's possible that a buyer's guarantees to keep the Register's editorial independence could be a deciding factor in deciding who the family sells to, as Bell said.

Or, family members committed to the libertarian cause might negotiate seats on a Register editorial board, similar to the representation that the former owners, the Chandlers, have on the editorial board of the Los Angeles Times.

Then again, a buyer might decide to retain the libertarian bent of the Register simply because it's part of the franchise why upset readers by changing something many like?

A change in the Register's editorial stance would be a huge blow for taxpayer advocates, conservatives and critics of big government who have found the Register a good ally in the past. The Register, for instance, was a lonely voice against the Japanese internment camps in the U.S. during World War II.

But labor unions, liberals, public school administrators and supporters of government-backed initiatives might be relieved to have a different ear at the Register.

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