Tribune Publishing rejected in bid for Orange County Register

SANTA ANA, Calif. — Freedom Communications, the bankrupt owner of the Orange County Register and Press-Enterprise of Riverside, has decided to sell to Digital First Media after a judge blocked a higher bid by Tribune Publishing Co., the owner of the Chicago Tribune and the Los Angeles Times, a Freedom attorney said Saturday.

Freedom will ask a federal bankruptcy judge on Monday to confirm and approve the sale to Digital First, which owns the Los Angeles Daily News and eight other daily papers in the Los Angeles area. The deal will close by March 31, Freedom attorney William Lobel said.

Digital First, whose headquarters is in Denver, had been the runner-up bidder, behind Chicago-based Tribune, for Freedom, at $45.5 million.

Saturday’s move capped a whirlwind of last-minute legal scrabbling to decide the fate of Freedom, which found itself mired in debt after being purchased by Aaron Kushner in 2012. He’d doubled down on print production in a digital age and added about 175 new reporters and editors.

Tribune Publishing’s $56 million bid emerged as the winning offer at an auction that concluded early Thursday. But barely 24 hours later, the U.S. Justice Department filed an antitrust lawsuit. The government said if the deal went through, Southern California consumers and advertisers would be harmed because Tribune would have a virtual monopoly by owning the four largest papers in four counties. In addition to the Los Angeles Times, Tribune owns The San Diego Union-Tribune.

Late Friday, U.S. District Judge Andre Birotte Jr. issued a temporary restraining order halting the deal. Tribune had warned in court filings that such an order would doom the merger.

The bankruptcy has to close by March 31, when temporary private financing keeping the Freedom newspapers afloat will dry up.

A Tribune spokeswoman said Saturday that company officials are reviewing their options and declined to comment further.

In its objections Friday to the restraining order, Tribune complained that the government was relying on “severely outdated” notions of the media market in the era of digital publication. It argued the restraining order might doom the deal, which would have given it control of Southern California’s four largest daily newspapers.

The company also complained that the government was relying on “severely outdated” notions of the media market and had cited 50- and 60-year-old legal cases, from an era before digital publication, in its bid to block the sale.

Had the deal been approved, Tribune would have controlled 98 percent of daily English-language newspaper sales in Orange County and 81 percent in Riverside County, the Justice Department estimated.

In issuing the order, Birotte wrote that many online websites don’t produce original content but “primarily post links to stories on the websites of other content generators — including local newspapers like the Register or the Press-Enterprise.”

Freedom Communications filed for bankruptcy protection in November. That followed a series of layoffs and buyouts after an aggressive expansion that included starting daily papers in Los Angeles and Long Beach and buying the Press-Enterprise for $27 million. Both new papers went under.