Scott Flanders, chief executive of Irvine-based Freedom Communications Inc., is getting to know Orange County well. And not from behind a desk in an air-conditioned office.
An Indiana native, Flanders took the reins of the county’s dominant media company in January. He’s spent the past seven months checking out his new surroundings.
And he’s set some ambitious goals for Freedom.
More local magazines, more Web sites,even more newspapers,are part of the plan.
On a recent weekend, Flanders said he hopped on his bicycle and rode some 25 miles along the coast in Newport Beach and Balboa Island. He soaked in the scene and heat,with temperatures in the 90s.
With little humidity, Flanders says he barely sweat, a pleasant OC surprise.
It isn’t the only one.
“The diversity of the industry has surprised me,” Flanders said. “I would confess that I had the OC image that everybody lived on the beach and was tan. I’ve had a lot of perceptions that have proven to be superficial.”
Flanders, who moved to Irvine’s Shady Canyon after relocating from Manhattan, said he used to think real estate was the biggest driver here.
Other industries are equally “vibrant,” including technology and medical devices, he said.
“I didn’t realize how diverse the economy was,” Flanders said. “It’s important for me to understand the business and social fabric of our largest market.”
Studying economics is a natural for Flanders, who earned a degree in the field from the University of Colorado before getting his law degree at the University of Indiana. He’s also a certified professional accountant.
OC is expected to play an even bigger role in Freedom’s future, Flanders said. So it’s critical to get the lay of the land. The company employs about 2,000 workers here at the Orange County Register in Santa Ana and at its headquarters in Irvine. It has 7,000 workers in all.
“There’s such an influx of advertisers here,” Flanders said. “It’s a rich environment for a media company.”
The Register and local weeklies and magazines make up 40% of Freedom’s some $1 billion in yearly sales, Flanders said.
He wants to build on that.
“We’re going to be more aggressive than we’ve been in the past,” Flanders said.
The company is entering a new era.
The past few years were spent improving profits and fine-tuning operations after a feud was settled with members of the founding Hoiles family.
Private equity firms Blackstone Group LP and Providence Equity Partners Inc. bought a major stake in the company and allowed disgruntled family members to cash out.
Flanders’ predecessor, Alan Bell, who retired, focused on improving operating results, including with the layoffs of some workers.
Cash flow at the Register has doubled to about $80 million, Flanders said. The paper’s operating margins now are on par with its peers, he said.
“The objective going forward is to grow,” Flanders said.
Newspapers have seen falling circulation amid challenges from the Web and the national do-not-call list, which hamstrings telemarketing.
Monday through Friday circulation at the Register was off 2.5% for the six months through March, versus a year earlier, according to the Schaumburg, Ill.-based Audit Bureau of Circulations. Sunday circulation was off by roughly the same percentage.
A big push for the company: interactive.
Three percent of Freedom’s revenue comes from the Web, according to Flanders. He said he wants to boost that to 7% during the next two years.
Freedom recently hired a new president of interactive development to spearhead the charge.
The company is pairing Web sites with its print publications, as with its SqueezeOC.com site that plays off Freedom’s weekly entertainment magazine.
It also wants to give readers more information on the Web and update stories and other content more often, Flanders said.
“We need to move the newsroom back to 24 by 7,” Flanders said. “When the Angels game is over I want the score and commentary on the site within a half an hour.”
Freedom also is looking at ways to generate more revenue from its sites.
The company is looking to strike a deal with a big search operator, such as Google Inc., Yahoo Inc. or Microsoft Corp.’s MSN, to help spur ad revenue, Flanders said.
“We’ve been more conservative than our peers in investing in interactive,” Flanders said. “That’s where we have to put the greatest amount of investment most quickly.”
Interactive media is “highly competitive,” he said.
Freedom sees itself competing with local news sites of the big Web companies, according to Flanders.
“They’re more nimble than we are,” he said.
Freedom had its own early Internet blip.
The company started Lake Forest-based myOC.com in 2000. It was a news, weather and entertainment site that drew a lot of material from the Register.
The division struggled and eventually folded.
Freedom “prematurely abandoned myOC.com,” Flanders said.
“Freedom, like other media companies, jumped on the online bandwagon,” Flanders said. “When business models didn’t develop as quickly as projected and the air went out of the stock market bubble, we, along with everyone else, retrenched and shut down those operations.”
Times have changed. Flanders said he has support from Blackstone and Providence to move fast.
He has a history with Blackstone.
Flanders was head of Columbia House Co. when Blackstone bought the music and video marketer from Sony Corp. and Time Warner Inc. in 2002. He worked with Blackstone on the deal, and stayed on as chairman at Columbia House. Last year, Germany’s Bertels-mann AG bought Columbia House.
The private equity firms “want to build the business and ensure we continue to remain viable in a dramatically changing landscape,” Flanders said.
Flanders has been traveling the country visiting Freedom’s newspapers and stations and encouraging staff to “operate with confidence and ambition.” The company owns 28 daily newspapers, 37 weeklies and eight TV stations.
Freedom recently paid $17 million to buy Albany’s WCWN-TV, a WB affiliate, from Chicago’s Tribune Co.
Flanders said he wants workers to “trust that they will be supported even if mistakes are made.”
His motto: encourage people to “ask for forgiveness instead of permission.”
“If every new product we launch is successful then we haven’t taken enough risks,” he said. “We should have some failures.”
Flanders, who served on Freedom’s board for five years before becoming chief executive, said he took the top spot at a good time.
Blackstone and Providence aren’t expected to look to cash out of their investment until 2009 or 2011.
“Blackstone and Providence Equity understand that for us to create value, business as usual will not deliver acceptable results,” Flanders said. “I’m coming in early enough in the holding period that we can place some bets.”
