SANTA ANA, Calif. (AP) — Freedom Communications, the bankrupt owner of the Orange County Register and Press-Enterprise of Riverside, has decided to sell to Digital First Media after a judge blocked a higher bid by the owner of the Los Angeles Times, a Freedom attorney said Saturday.
Freedom will ask a federal bankruptcy judge on Monday to confirm and approve the sale to Digital First, which owns the Los Angeles Daily News and eight other daily papers in the greater Los Angeles area. The deal will close by March 31, Freedom attorney William Lobel said in an email.
Digital First was the runner-up bidder for Freedom at $45.5 million.
The prospective takeover of the Freedom properties is Digital First's second major move in California in the last three weeks. The Denver-based company earlier announced it would consolidate six daily newspapers in the San Francisco Bay Area into two, one serving Oakland and the East Bay and the other Silicon Valley. In the East Bay, The Contra Costa Times, Oakland Tribune, The Daily Review and The Argus will become the new East Bay Times. The San Jose Mercury News and the San Mateo County Times will become the Mercury News.
Saturday's move caps a whirlwind of last-minute legal scrabbling to decide the fate of Freedom, which found itself mired in debt after being purchased by Aaron Kushner in 2012. He made counterintuitive moves, doubling down on print production in a digital age and adding about 175 new reporters and editors.
Tribune Publishing's $56 million bid emerged as the winning offer at an auction that concluded early Thursday. Barely 24 hours later, the U.S. Justice Department filed an antitrust lawsuit. The government said if the deal went through Southern California consumers and advertisers would be harmed because Tribune would have a virtual monopoly by owning the four largest papers in four counties. In addition to the Los Angeles Times, Tribune owns The San Diego Union-Tribune.
Late Friday, U.S. District Judge Andre Birotte Jr. issued a temporary restraining order halting the deal. Tribune had warned in court filings that such an order would doom the merger.
The bankruptcy has to close by March 31, when temporary private financing keeping the Freedom newspapers afloat will dry up.
In its Friday objections to the restraining order, Tribune complained that the government was relying on "severely outdated" notions of the media market in the era of digital publication.
A Tribune spokeswoman said the company was reviewing its options following the restraining order and declined to comment further on Saturday.
In issuing the order, Birotte said that many online websites don't produce original content, but "primarily post links to stories on the websites of other content generators —including local newspapers like the Register or the Press-Enterprise."
Had the Tribune sale gone ahead, the company would have controlled 98 percent of daily English-language newspaper sales in Orange County and 81 percent in Riverside County, the Justice Department estimated. The four papers Tribune would have controlled have nearly 1,000 journalists covering an area that stretches from Los Angeles to the Mexican border. It's a region of 18 million people.
Freedom Communications filed for bankruptcy protection in November. It followed a series of layoffs and buyouts after an aggressive expansion that included starting daily papers in Los Angeles and Long Beach and buying the Press-Enterprise for $27 million. Both new papers went under.
The Associated Press is among the creditors in Freedom's bankruptcy proceedings.