Bidding that could help determine the future of the media landscape in Southern California is expected to start Wednesday. At stake: who owns the Orange County Register, which has struggled through multiple bankruptcies amid plummeting advertising revenues. The winning bidder will likely be announced by the end of the month and could come as soon as Monday, when a court hearing is scheduled.
Despite its problems, the Register is still a big prize — at least as far as newspapers go — according to Gabriel Kahn, a professor at the USC Annenberg School for Communication and Journalism.
“It is the market leader in a wealthy area that’s seeing some strong economic growth, and if you take that property and combine with others, then you might have a shot at breathing some life into these things,” said Kahn.
That’s the depressing reality for newspapers these days: their business is all about consolidation.
The lead bidder, Digital First Media (DFM), covets the Register even as it cuts staff at its other properties in the Bay Area and Denver. DFM also owns the Los Angeles Daily News and papers in the San Gabriel Valley and the South Bay.
"Readers should not be too excited about a DFM ownership," said media analyst Ken Doctor.
There is more optimism among Register staffers for another expected bidder, Tribune Publishing, which owns the L.A. Times — but that company just underwent companywide buyouts a few months ago and is low on cash.
For some context on Tribune: As recently as 1999, 1,200 people worked in the Times newsroom, compared to about 450 now. Daily circulation has fallen by about half a million readers.
Doctor says Tribune buying the Register would be motivated by cost-savings.
“I estimate that Tribune thinks it can save more than $12 million a year by putting printing, production and other main operations together,” said Doctor.
As it turns out, those savings could be too good to be true. The Register reported Tuesday that the U.S. Justice Department expressed "serious” antitrust concerns about Tribune buying the Register.
In a letter this week to Alan Friedman, Freedom's bankruptcy attorney, Justice Department attorneys provided “our current assessment from a competition perspective” of the bidding for Freedom’s assets.
“We wish to inform you that, based on our review to date, the division believes the acquisition of the Freedom assets by Tribune poses a serious risk of harming newspaper readers and advertisers in Orange County and Riverside County,” wrote William Baer, assistant attorney general in charge of the antitrust division.
“If Freedom selects Tribune as its purchaser, the division will exercise its antitrust law enforcement responsibilities to ensure that the transaction does not deprive newspaper readers and advertisers in these areas of the benefits of competition.”
Doctor (who has a good analysis on where things stand at Capital New York) says the DOJ's letter could likely discourage Tribune from going forward with a bid because even if the company would ultimately prevail in court, it doesn't have the resources or the will for a drawn-out legal fight.
"The language is pretty unambiguous that they [the DOJ] intend to intervene," said Doctor. "For Tribune, that's very bad news, because neither time nor money is their friend."
Along with Digital First Media and Tribune, there's a third expected bidder: a group of insiders from Freedom Communications — the current owner of the Register — led by Orange County businessman Mike Harrah.