In Orange County Register sale, we have a winner (and lots of questions)
Tribune Publishing folded its federal bankruptcy auction bid for Freedom Communications today. That cleared the way at a brief hearing for the sale of the company to the second highest bidder, Digital First Media.
The Department of Justice had obtained a temporary restraining order late last week blocking the sale of the Orange County Register and Press-Enterprise of Riverside to Tribune, alleging the deal would give the company an effective newspaper monopoly in Orange and Riverside counties.
While bowing out, Tribune disputed the DOJ's reasoning but conceded that a delay to litigate would not serve the interests of Freedom and its creditors.
A company statement, issued for Tribune by Los Angeles Times spokesperson Hillary Manning, put it this way:
We respectfully reiterate that the government’s position on this matter does not recognize the current state of the media landscape. Internet-based aggregators take journalism content from leading news brands — like the Orange County Register — and profit at the expense of the content creators.
We will continue advocating for the future of journalism and content creators, and we hope by engaging in that conversation, regulators will change their position.
Put another way, whether the DOJ had a legitimate case or instead had gotten stuck in a time-warped 20th century view of the newspaper industry will remain unresolved. The case finished before it really got started.
Here are five quick parting thoughts:
- Newspapers are not the only game in town for advertisers anymore. In the Golden Era of the business, newspapers could raise rates at will because car dealers, department stores, classified customers and others had no good alternative place to go.
Now, to the contrary, much of that business goes to Craigslist, Google, Facebook and others — the majority of it unbundled from news, original or aggregated. That digital competition is what has led to the crippling 50 percent-plus loss of newspaper ad revenues over the last 10 years.
- On the other hand, the remaining newspaper ad base — preprinted inserts an obvious case, paid obituaries another — serves stores, services and individuals who find the medium essential. By that narrow definition, controlling market share still confers pricing power.
- The clout of the Los Angeles Times and Tribune's ownership of the Union-Tribune in San Diego appear to be largely beside the point of the case DOJ was trying to make. (Digital First, like Tribune, has adjacent papers — the Long Beach Press-Telegram and the Los Angeles Daily News among others).
Instead, DOJ was hanging its hat on the circulation the Los Angeles Times has in Orange and Riverside counties — as best I can tell, roughly 155,000 Sunday and 85,000 daily.
Had Tribune Publishing's high bid gone through, would they have stopped selling the L.A. Times separately in those counties? Homogenized local reports in the three papers to one? Raised ad rates across the board? I'm not sure any of that was likely.
- For that matter, will Orange County and Riverside readers be better off under Digital First? The company will almost certainly consolidate business and editorial functions (as Tribune would have done too).
Digital First has deep roots as a cost-cutter, and Steve Rossi, a longtime master of the art, is its CEO. Tribune has done plenty of trimming as well — but from a base of once having had the best-staffed regional newsrooms in the country.
By my reckoning, Tribune still spends much more generously on ambitious reporting and editing than does Digital First.
We will soon see — but I would bet against affected readers finding themselves grateful in the end, as DOJ says it intended.
- The intervention — abrupt to the public eye last week but probably brewing over a period of months — may signal a revival of anti-trust interest in the industry generally. Until last week, it looked as if anti-trust regulators had simply lost interest.
With other companies, Gannett and New Media Investment Group especially, scooping up properties at a brisk pace, it will be worth watching whether DOJ now wants to establish boundaries on how much consolidation is too much.
It is hard to overstate how tangled the course of the bankruptcy auction became. When I wrote a week ago that Digital First was the likely winner, I was so wrong I turned out to be right (not anticipating either Tribune's higher bid of the DOJ suit blocking it).
Mark the auction drama over, for now. But expect the story to be continued for the winner, the loser and the dubious trophy they were battling for.