The Digital First Media (DFM) conglomerate, which controls 800 multi-platform newspaper and media information products, announced that it is interested in bidding against the Tribune Corporation, which owns the Los Angeles Times, for control of the bankrupt Orange County Register newspaper.
The owner of the Los Angeles Daily News, as part of a portfolio that serves 75 million customers through 76 daily/Sunday newspapers and 160 weekly publications in 15 states, made an “indication of interest” to the US Bankruptcy Court that is administering the bidding process for the Register and other assets of the bankrupt publishing company Freedom Communications.
That aggressive move sets up a three-way bidding war for the Register among Digital First Media (DFM), Chicago based Tribune Publishing and a Freedom Communications insider group led by CEO Rich Mirman and dominant Santa Ana developer Mike Harrah.
Tribune Publishing emerged from bankruptcy in 2014 with just $50 million in cash and $350 million of high-yield junk bond debt. Since then the stock of the marginally profitable company has lost two-thirds of its value by falling from $25.50 to $8.50.
By bracketing the Register with the Times to the north, and the San Diego Union-Tribune–which it also owns- to the south, Tribune would seem like a natural buyer on a consolidating cost basis. But there have been substantial concerns about the company’s ability to issue and service even more junk bonds to fund the cash deal.
Newspaper revenue from circulation and print advertising had a good bounce from 2011 through 2013, after being pummeled in the aftermath of Global Financial Crisis. But in the last 2 years, circulation has dropped by four percent and print advertising has dropped by about 12 percent.
Despite widespread talk of a shift to digital, most newspaper readership continues to be in print. The number of people reading newspaper articles in a digital format has skyrocketed, but the rapid shift of online followers from desktop to mobile is radically changing the newspaper business again as the average mobile visitor only stays on a news site for an average of just three minutes per visit.
DFM, as the second largest newspaper company in the United States by circulation, has benefited from the shift to mobile due to its other 600+ complimentary multi-platform news and information products.
In the most recent data, the digital audience engaged with newspaper content reached a new all-time-high in August 2015 of 179.3 million adult unique visitors. That was a 10 percent increase in adult unique visitors over August 2014 and is double the five percent growth rate for the Internet overall as measured by comScore.
The latest data also revealed that more than nine in 10 men (93 percent) and women (92 percent) in the key ages 25-44 advertising demographic who went online in August 2015 engaged with newspaper digital content.
Half of the newspaper digital audience is composed of those who use only smartphone or tablet digital devices for their newspaper digital content. Eight in 10 of the newspaper mobile audience use smartphones exclusively for access.
In Santa Ana on Monday, U.S. District Court Judge Mark Wallace approved DFM’s request to move back the deadline for so-called “stalking-horse” bids, which set a minimum price for a bankrupt company’s assets. The Freedom Communications auction is now scheduled for March 16.
Representatives of DFM and its attorney, Alan Martin, did not respond to media requests for comments after the bankruptcy court hearing on Feb. 1.