Report: Sale Talks Break Off for Register ParentTuesday, June 14, 2011
Talks between Irvine-based Freedom Communications Inc. and potential buyer MediaNews Group Inc. of Colorado have broken off over a disagreement about the value of Freedom's Orange County Register and its other newspapers and television stations, according to the Wall Street Journal.
MediaNews, owner of the Los Angeles Daily News, had been seen as a likely buyer of Freedom amid a newspaper industry trend of regional consolidation.
The company owns several more daily newspapers in Southern California, along with its flagship Denver Post and others across the country.
MediaNews has looked at the Register as a way to round out its circulation here and bring savings through shared printing and distribution operations.
Sources close to the talks said MediaNews put a $700 million value on Freedom, according to the Wall Street Journal report. It remained unclear how much it offered.
Freedom’s newspapers—a mix of about 100 dailies and weeklies—are worth about $350 million, sources close to the deal told the Wall Street Journal.
That’s said to be about four times their earnings before interest, taxes, depreciation and amortization.
Freedom’s eight television stations could be worth about $400 million, or about eight times earnings, according to the same sources.
Both MediaNews and Freedom recently emerged from bankruptcies that allowed them to shed hundreds of millions of dollars in debt. Both deals essentially shifted control to creditors.
New York-based Alden Global Capital owns stakes in Freedom and MediaNews and is said to be considering a consolidation strategy for Southern California.
Freedom put itself up for sale several months ago. The original auction invited bids for the whole company, separate offers for its newspapers or television stations, or a deal for the Register alone.
It now will seek other suitors for all or parts of the company, according to the recent report. It also could resume talks with MediaNews, sources said.
That will come as the newspaper industry continues to seek ways to stem a long-term trend of declines in advertising revenue and cut costs on printing and distribution.
The ongoing weakness has made it difficult for some newspaper publisher to make acquisitions. Recent rumbling indicated that MediaNews had been trimming expenses at other newspapers it owns as it sought financing for a deal for Freedom.
The offer that was reportedly rejected by Freedom was fully financed, according to the Wall Street Journal.