The OC Register has been rapidly expanding its staff and operations, bucking newspaper industry trends. Its parent company, Freedom Communications Holdings Inc. announced Thursday it plans to purchase the Press-Enterprise for $27.25 million.
(Updated) The parent company of the Orange County Register announced Thursday it plans to buy the Riverside Press-Enterprise for $27.25 million.
Aaron Kushner, CEO of parent company Freedom Communications Holdings Inc., said the company will expand the ways the Press-Enterprise "helps its subscribers, advertisers and community grow and thrive."
"The Press-Enterprise is a Pulitzer Prize-winning institution with a rich history in serving and connecting the community," Kushner said in a statement, adding he will continue to build upon that foundation.
Kushner first entered the newspaper industry last year when his holding company, 2100 Trust, bought Freedom Communications and with it, the OC Register. Under Kushner's leadership, the OC Register has embarked on a rapid expansion. Earlier this year, the paper extended its coverage into Long Beach with a 16-page Long Beach section and increased its staff, despite the overall decline in newspaper industry print ad revenues.
Freedom Communications is purchasing the Press Enterprise from Dallas-based A.H. Belo Corp., a company that saw revenues decline 4 percent to $104.5 million in the second quarter due to falling ad sales at its newspapers Press-Enterprise and the Providence Journal. Sales at its flagship newspaper, the Dallas Morning News were flat.
The Press-Enterprise deal is expected to close in mid-October. The $27.25 million purchase price includes the Press-Enterprises' production facility and related land, both companies said in a press release. The Press-Enterprise will maintain its "primary business offices" in Riverside.
It's unclear what changes may come to the Press-Enterprise, but the Register's approach to increasing revenues has been closely watched within the newspaper industry. The paper has installed a hard paywall on its website, and unlike other newspapers, the Register isn't offering customers the choice between a long-term digital or print subscription. Customers can pay about $20 for a 7-day subscription, which covers both the print and online versions.
Changes Ahead for the Press-Enterprise
OC Register spokesman Eric Morgan said Kushner is declining media interviews on the Press-Enterprise deal for now. When asked whether Freedom Communications plans to consolidate its ad operations between the OC Register and the Press-Enterprise, or install a paywall at the Press-Enterprise, Morgan said, "We're not ready to speak to that quite yet."
Dallas-based A.H. Belo Corp.'s sale of the Press-Enteprise comes at a time when digital ads are increasing, but not matching the lost revenue caused by the decline of print ads in newspapers.
"The real center of their operation is Dallas and it probably makes sense for them to concentrate on that, rather than spend a lot of time on Riverside and the other paper they own in Providence, Rhode Island," said Rick Edmonds, a media business analyst at the Poynter Institute.
Is the L.A. Times next?
Earlier this year, Kushner said 2100 Trust was interested in buying the Los Angeles Times and other Tribune newspapers. "We believe that they are important institutions and we will evaluate whether we believe our model can and will work in each of the markets," Kushner told KPCC.
But will Kushner continue to make a play for the L.A. Times? Media analyst, Ken Doctor told KPCC it depends on the cash position of Kushner's group. The investors have poured a lot of money into growing the OC Register and it's unclear how much revenue the paper has returned. Now investors are hoping to improve the Press-Enterprise.
"You're going to need more capacity to operate and possibly reinvest in that paper as he had with the Orange County Register," Doctor said.
Kushner did not disclose to KPCC earlier this year the names of those in the 2100 Trust, or the sales revenue figures at the OC Register. Doctor said he thinks the strategy of improving the product and better serving consumers and local communities "makes a lot of sense" but whether Kushner's group can justify its investment in the staff and newsprint "is an open question."
"The worrisome thing in expanding that rapidly is that it happens at the same time when print advertising universally is in decline," Doctor said. "You can do well with digital ads, but digital ads has a hard time making up that lucrative print revenue and print is going down all around the Register. It doesn't make sense that it's going to be able to do largely better with print."
That said, Doctor believes Kushner and his group of investors could still be a potential buyer for the L.A. Times whenever it comes up for sale. The L.A. Times' parent, Tribune Co., has plans to separate its newspapers from broadcast stations, creating two distinct companies. Tribune is already looking at ways to make its properties more efficient. Earlier this summer, the L.A. Times conducted a modest round of staff reductions and recently, pressmen and women at the L.A. Times printing facility were offered buyouts.
"The convergence and the synergy that you see with Orange County next to Riverside, Orange County next to the Los Angeles, with the Register moving into Long Beach, argues for the L.A. Times to be of more interest to him," Doctor said.
This story has been updated.