Feds file antitrust suit to block California newspaper sale

SANTA ANA, Calif. ) – The U.S. Justice Department sued Thursday to block Tribune Publishing Co. from buying the bankrupt Orange County Register and another Southern California newspaper, arguing the $56 million sale would end competition for readers and advertisers in the region.

The move came just hours after Tribune announced it had won a bid to buy the Register and Press-Enterprise of Riverside, both owned by Freedom Communications. The Tribune already operates the Los Angeles Times and San Diego Union-Tribune, which it purchased last year.

The sale, which still needs a federal bankruptcy court judge’s approval, would give Tribune control over the four largest daily newspapers in Southern California, covering a vast stretch from Los Angeles to the Mexican border that is home to 18 million people.

The four combined newsrooms would have upward of 1,000 journalists. However, if the deal ultimately goes through, job cuts are a virtual certainty.

“Tribune’s dominant position in both Orange County and Riverside County would allow it to, among other harmful effects, increase subscription prices and advertising rates to businesses targeting readers in those areas,” the Justice Department’s lawsuit said.

A message left for a Tribune spokeswoman was not immediately returned.

The newspaper industry has struggled since the advent of the Internet and has been contracting and consolidating for years as readers turned away from printed pages. Establishing a network of major dailies in Southern California would provide huge leverage to attract advertisers and allow for efficiencies in news production.

Gabriel Kahn, a professor at University of Southern California’s journalism school, said the lawsuit would make the purchase more expensive for Tribune but he didn’t believe newspapers struggling to retain readers and advertisers would constitute a monopoly.

“A monopoly on newspaper sales is not that much different than a monopoly on horse-drawn buggy rides,” he said.

Ken Doctor, a former newspaper editor and executive who now analyzes media, worried about local coverage suffering if the sale goes through.

“Communities benefit by having different groups of editors looking out for them,” he said. “When you essentially only have one newsroom leadership deciding what is news for Los Angeles County, Orange County, Riverside County, San Diego County, that is unprecedented.”

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

Tribune was competing for Freedom’s newspapers against Digital First Media, which owns nine Southern California papers and websites, including the Los Angeles Daily News, and an investor group led by Freedom’s current managers.

Digital First, which submitted a $45.5 million “stalking horse bid” for the papers, and Tribune saw purchasing the papers as a way to expand their territory and consolidate operational costs.

Freedom’s managers pulled out of bidding during the auction that began Wednesday and stretched into Thursday. Their proposal would have retained local control over the 110-year-old newspaper that serves an affluent county of 3 million people that is home to Disneyland.

It received support from a coalition of business and community leaders who did not want to cede decisions over news coverage to publishers in Los Angeles.

The Associated Press is among the creditors in Freedom’s bankruptcy proceedings.