Freedom Rings From OC to Boston; Pyott Proves Prescient

What do OC and Boston have in common? Both have a Back Bay, each has a cluster of medical device makers, and both are purportedly home to numerous individuals who are writing off six- and seven-figure investments they made in Orange County Register parent Freedom Communications when Aaron Kushner was raising money with a bold sales pitch that turned out to be as rash as it was brash. One difference: Investors Kushner corralled in his hometown of Boston seem to be more vocal than their OC counterparts. That much came through in the halls outside the Medical Device & Investor Forum put on last week by Octane, which drew a bi-coastal crowd to the Hotel Irvine … There’s profit, operating profit and the outlook for profit to consider for daily newspapers, which seem to have found some stability lately but continue to face an overarching downward trend on print advertising, which is still their bread-and-butter. That’s worth noting in the run-up to bidding for Freedom, which is bound for auction with its BK filing. Mediha DiMartino gives an overview, while Mark Mueller checks in on how Mike Harrah could figure into both ends of the deal (stories, page 1) … Put Freedom CEO and Register Publisher Rich Mirman among investors whose equity stands to be wiped out in BK—but give the University of Chicago alum-turned-casino exec-turned-newspaperman credit for picking up Kushner’s pieces and getting the company in sufficient shape to draw competing bids … Tribune Publishing boss Jack Griffin grabbed enough headlines to elbow Mirman and his team of bidders nearly out of the conversation last week, but it might be premature to make the Chicago-based owner of the L.A. Times the favorite. It just posted another quarterly loss and would likely have to borrow to support a winning bid for Freedom. Word has it that that would trigger a recalculation on about $400 million in debt carried over in its spinoff from Tribune Media last year. The interest on the $400 million is said to be below market for now but would be marked up if any new borrowing occurs. That could cost around $6 million annually—more than half of the operating profit expected from Freedom’s two newspapers this year … Tom Phelps’ side jobs include moderating the OC Business Council’s Leadership Breakfasts, some 40 colorful chats over the years with folks such as David Pyott, Michael Mussallem, Tom McKernan and Sandra Hutchens. Phelps switched chairs to face questions from OCBC Chair Laura DeSoto and CEO Lucy Dunn last week, relating his journey from small-town kid from Iowa to big-time attorney to prominent Democrat in GOP-dominated OC. Banking specialist Phelps and his politically connected Iowa State buddy, the late Chuck Manatt, opened an L.A. law firm with themselves and two secretaries in 1965. Manatt Phelps & Phillips now boasts 400-plus lawyers and other professionals in 10 offices. The OC office opened in 2001, five years after Phelps and wife, Beth, moved here. Phelps says, “We wish we came 10 years earlier” … Has anyone’s critique of a would-be raider been validated by the market in a more clear and stunning fashion as the turbulence Valeant Pharmaceuticals has encountered in recent weeks? Pyott and his former team at Allergan raised some fairly specific flags about its unwanted suitor more than a year ago, and those seem to have come home to roost for Valeant CEO Michael Pearson and backer Bill Ackman.