What really happened at Freedom Communications
Freedom was the newspaper chain that, until recently, owned the East Valley Tribune. It was based in Orange County, and its flagship paper was the Orange County Register.
Freedom is now in bankruptcy.
In the narrative we hear about the trouble newspapers are in, new technology has vaporized their business model, readers want their news for free, and a watchdog vital to our democracy is at risk.
In reality, as this very long inquiry into the collapse of the company in, of all places, the Orange County Register shows, the papers brought most of their problems on themselves:
The loss of the family business could be attributed to many factors: too much debt, poor business decisions, an economic downturn of epic proportions and an inability to adapt to the changing tides of the newspaper industry.
But the center of the problem was the Hoiles family itself, the seeds planted by the pugnacious founder but exacerbated after his death by power struggles, petty jealousies, personal vendettas –- and money.
The reporter, Mary Ann Milbourn, does a good job delving into the family nuttiness that destroyed the company. Among other things, they rejected an offer in 1985 to sell the company for more than $1 billion.
A billion dollars was an enormous amount of money in 1985; it’s a trenchant indication of just how much money the industry was making at the time.
The EVT isn’t named, but it and its sister Freedom Communication papers in the Valley get this wan aside:
•In 2000, Freedom bought a group of papers in Arizona from The Thomson Corp. for a reported $180 million. Most were sold in March for $2 million.
6:43 AM
Is this the first sign of the "new" East Valley tribune?
PHXated has been under the weather and is just now catching up on a few things. An op-ed piece from a couple of days ago in the East Valley Tribune may be a portentous sign of the way the paper’s new management will be taking it:
A recent analysis by Roger Simon of PJTV Media maintains that Obama is showing signs of mental illness. A wide variety of commentators have observed that Obama displays severe narcissism. Obama is conceited, and he is demonstrating a serious disassociation from reality.
A recent case in point was Obama’s bizarre and meandering 17-minute, 2,500-word answer to the simple question about how he could justify raising taxes for ObamaCare during a recession when citizens are already overtaxed.
Emphases added. The authors, Roy and Mary Beth Brown, went on from there vigorously arguing their thesis, such as it was.
There are two types of people in the world; those who find the Browns’ political insights compelling, and those who find it odd to describe the spastic drooling of Pajamas Media’s Roger Simon as “analysis.”
Those in the second group will find it odd the EVT, which is not a Cro-Magnon operation, published the Browns’ essay.
Two theories:
It’s possible that the paper, which is operating with a staff size of about 20 percent of what it was three years ago, is in such chaos inside that it’s understandable that some Tea Party drivel that comes in over the transom could accidentally get published.
On the other hand, maybe it was deliberate.
In that case, it could be either a new gambit by the paper to make it the go-to publication for the state’s Tea Party fringe …
…or—more ominously, given that that might not be a strong business move—just a taste of the new owner’s political sensibility.
Anyone have an alternative explanation?
8:27 PM
1Half the EVT newsroom laid off
A bankruptcy judge on Tuesday approved the sale of the East Valley Tribune to Randy Miller’s Thirteenth Street Media. Yesterday, in anticipation of the takeover, the paper nearly flatlined the staff that remained.
From Nick Martin at Heat City:
When they arrived at work today, employees were told they would be summoned via email to one of two meetings.
At the first meeting at 10 a.m., the sources said, dozens of employees were brought into a room on the ground floor where outgoing publisher Julie Moreno told them they were being let go. One source said the mood was exactly what you’d expect: grim. There was nervous laughter, a few tears and a lot of sad faces.
A half hour later, another group of staffers met with Miller in a room on the second floor, where he handed them letters with job offers under the new regime. There, the sources said, Miller also outlined his plan for the reorganized Tribune.
According to Martin, who used to work there and has good sources, the EVT’s newsroom staff, already downsized to about three dozen people, will now have as few as fourteen.
The number is apparently about a quarter the newsroom personnel the paper had a year or two ago. The paper is publishing only three days a week, so the impact of such cuts isn’t as bad as it might be. At the same time, the effect on the paper’s web site has been palpable and embarrassing, as I’ve noted here and elsewhere.
3:04 PM
Freedom Communications says it's coming out of bankruptcy
The company is still the owner of the beleaguered East Valley Tribune, the Orange County (Calif.) Register, and about thirty other newspapers and eight TV stations. The Register reports:
Freedom Communications’ reorganization calls for the company to more than double pretax earnings to $98 million within four years. [Interim Chief Executive Burl] Osborne said that improvement will be achieved by:
Continued efficiencies in management and operations. One example already implemented is joint newspaper delivery with the Los Angeles Times
Revenue growth, especially from online activity, such as an existing partnership with Yahoo
Improved coordination among divisions within the company
Joint efforts with other media companiesOne example of that last point might be shared printing agreements among Southern California publications, but Osborne does not expect Southern California to wind up with one regional newspaper.
The company brought its problems on itself, by lading up with too much debt. One good side of the story is that the remaining members of the Holles family are now out of the picture.
A confirmation hearing is scheduled for March 9, at which a write down of just under a half-billion dollars will be finalized.
As Nick Martin reported on Heat City some time ago, the company’s was gifting a lot of its execs with bonuses, even as it was capsizing. Details here.
11:49 PM
High-wire act at the EVT
The publisher of the East Valley Tribune has posted a letter on the status of the paper’s pending sale. The news in the letter is … there is no news:
To Our Readers,
This week we have received a number of inquiries regarding the future of your newspaper. Because we value your trust in us and the relationship with all our readers, we wanted to provide a brief update.
While we have not yet reached a final agreement with Thirteenth Street Media for the sale of the Tribune, we remain in active discussions with them working to conclude the final details of a sale.
Please know that we will continue to publish and distribute the Tribune and provide our customers and readers with excellent service just as we always have while these discussions continue. Our Phoenix-area Web sites will also continue operating normally during this period.
Thank you for your continued support.
Sincerely,
Julie Moreno
Publisher, East Valley Tribune
Two months ago, the paper’s bankrupt owner, Freedom Communications, said it would close at the end of the year. Three weeks later, Thirteenth Floor came into the picture. Background on what’s happened since here.
7:00 AM
Freedom Communications: Bankruptcy ... and executive bonuses
Over at Heat City, Nick Martin has a list of execs at Freedom Communications who got bonuses, even as the company headed toward bankruptcy.
Freedom holds about 30 newspapers and eight TV stations across the country, including the East Valley Tribune, which announced last week it would close at the end of the year. The bankruptcy is a reorganization plan; the company as a whole isn’t going out of business. It was just a way to help it deal with nearly a billion dollars in debt it ill-advisedly built up.
As PHXated has noted before, before you cry tears for the newspaper industry, remember that it brought most of its problems on itself.
… Which makes the bonuses all the more appalling. Top execs were apparently getting more than $100,000 each—just for helping to run the company into the ground.
Heat City is here. The list of bonuses is here.
12:00 AM