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
EVT sale finally going through
A complete disaster seems to have been avoided in the East Valley. The Tribune, which might have closed entirely at the end of the last year, has been rescued, sort of, by a company called Thirteenth Street Media, which is based in Boulder, Colorado.
The owner of Thirteenth Street, Randy Miller, also owns a weekly paper it distributes to the tonier areas of North Tucson and a weekly called the Telluride Daily Planet in Colorado. Stories from Tucson make it seem like the former is a slight outfit and getting slighter.
On the other hand, the latter, the Telluride paper, doesn’t seem to be a silly operation. It’s not an easy feature to get going or to use, but it does boast an “e-Edition” that lets you see what the actual printed paper looks like, and it seems to carry actual news, despite its small circulation.
On the other hand, there are still a few hitches in the giddyup web-wise, as this this About Us page demonstrates.
Nick Martin has a lot of details on the sale in Heat City:
Under the just-announced deal, Miller would get the three newspapers, their printing presses and the building in Sun City occupied by Daily News-Sun, as well as all the trimmings that go along with owning a newspaper, such as its fleet of vehicles and use of trademarks.
Noticeably missing from the deal, however, is the Tribune’s headquarters in downtown Mesa, which the county government says is worth almost $7 million.
In exchange, Miller would pay $2.05 million. But he would also take over an operation which Freedom said is losing about $60,000 a week.
Any deal is still subject to approval from the federal bankruptcy judge in Delaware who is overseeing the case. The same judge will also be choosing from among the bids if others decide to compete against Miller.
Other bidders have until March 8 to submit their offer. A hearing will be held the following day to discuss the sale, and the judge could decide as soon as then whether to allow the deal to take place.
A superficial PBJ story on the sale here. It says that the Telluride Daily Planet is a weekly. All I could find in the Republic is this four-graf story.
How embarrassing is it that an unpaid blogger like Nick Martin completely out-reports the newsrooms staffs of two established news organizations on a business story involving an institution—a newspaper—that’s obviously part of a lot of people’s daily lives?
Despite its impressive win of a Pulitzer last year, for a series on Joe Arpaio, the Tribune has lost many employees in the last year and now publishes just three days a week.
It may or may not be true that the EVT is losing $60,000 a week. (A company like Freedom can make any sort of financial case it wants.) And it’s possible that the ancillary publications will help out. Still, it’s hard to believe a company the size of Thirteenth Street is prepared to carry any losses very long, and that’s not including the issue of how much debt it’s taken on to finance the deal. (Even in newspaper fire sales, debt is killing a lot of recent deals.)
All that said, $60,000 is the equivalent of some 60 employees. Even if the new owners can somehow find some internal savings that had eluded Freedom, it’s hard to see how it’s repositioning the paper for the future isn’t going to include some significant new layoffs.
2:54 PM
Potential East Valley Tribune sale is expanded
The East Valley Tribune is reporting that its long-discussed sale to Thirteenth Floor Street Media has been delayed because the company is negotiating to get the EVT’s sister papers in the Valley as well:
The new letter of intent also includes assets of the Sun City Daily News-Sun, Ahwatukee Foothills News and Arizona Interactive in Chandler, which publishes the Clipper advertising shopper and does commercial printing. The Daily-News Sun also publishes the Glendale/Peoria Today and Surprise Today newspapers.
The deal expanded because the operations are so closely intertwined, Freedom said in a statement.
Thirteenth Street owner Randy Miller was expected to be in the Valley this week visiting the staff at Freedom locations.
More details on the new developments at Heat City.
7:00 AM
The buyer of the East Valley Tribune is asking staffers to re-apply for their jobs
Things don’t look good. Nick Martin writes in Heat City:
First, [Thirteenth Street Media owner Randy] Miller asked employees which position they are applying for – a problem because Miller has not said which positions might be available.
Later, Miller asks applicants to include three references, but he adds one instruction: “Please do not include relatives or former employers.”
No former employers, you say? So who does he want listed? Friends? Community leaders? A journalist’s sources? It’s unclear.
We should prepare for some grim holiday news from the East Valley Tribune. The smart business move is to radically downsize the serious staff and let the malleable souls remaining keep the thing filled with business-, advertiser- and government-friendly newsblurbs.
That, coincidentally, is what the company did when it took over a paper in Tucson called the Explorer. Here’s a former staffer quoted in the Tucson Weekly talking about where things were headed:
[The new editors] asked me and Oro Valley reporter Patrick McNamara if Marana and Oro Valley had [public information officers], and we said, “Yeah.” Do they send press releases? Do you put them in the paper? “No, not always. It depends on what it is. We never run a press release from a PIO.” They seemed a little taken aback by that. I quipped that most of the press releases for Marana were, “Come take a picture of this cactus we just planted.” Everyone else seemed to chuckle, but when they didn’t chuckle, I sort of knew I wasn’t going to be a part of these guys’ plan."
I can’t imagine the EVT was losing a lot of money. Its current owner, Freedom Communications, has claimed only that it had been “unprofitable” for the last two years. You can view that as a careful choice of words; on the other hand, the company is in bankruptcy, so maybe the word doesn’t have a special meaning. On the third hand, the company was loaded down with debt and might have been trying to unload a paper that wasn’t losing money just to raise cash.
The big question is how much debt Thirteenth Street is taking on to accomplish its own acquisition. The poster child for this scenario is Tribune Company, which took on oceans of new debt solely for the purpose of the privilege of being owned by Sam Zell. It, too, is in bankruptcy.
The EVT is a serious newspaper right now; if Thirteenth Street is rigorous in the cost-cutting, it can coast on that reputation (and the reflexive ad buys) for a while before folks really start noticing the decline in quality. In the meantime, again, its hard to see how a lot of local journalists won’t be facing a tough holiday.
7:00 AM