The parent company of the Los Angeles Times said Thursday it had won a public bankruptcy auction to buy Freedom Communications, the owner of several Southern California newspapers, including the Orange County Register. The Justice Department responded by filing an antitrust lawsuit to stop the Times from acquiring both the Register and another Freedom holding, the Riverside Press-Enterprise.
The Justice Department said in a statement that it filed a civil antitrust lawsuit Thursday to block the acquisition, seeking a temporary restraining order to prevent the sale from proceeding.
The statement said that the L.A. Times and the Register account for 98 percent of Orange County newspaper sales, with the Times and Freedom's newspaper's making up 81 percent of English-language newspaper sales in Riverside County.
"Tribune’s acquisition of its most significant competitor would give it a monopoly over newspaper sales in each county and allow it to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers," the statement said.
Tribune Publishing Co. had agreed to pay $56 million in cash for the business and its real estate in Santa Ana and Riverside.
Before the announcement of the lawsuit, media analyst Ken Doctor told KPCC’s "AirTalk" that he thinks the Department of Justice is taking an interest in the Tribune bid for the OC Register and Riverside Press-Enterprise because such a sale would create control of large markets.
“A domination of this size would be unprecedented,” he said.
When publishers control markets, they can impose pricing for advertisers that would be anticompetitive, he said. On the readership side, the domination is less clear but real, since one set of editors can decide what’s news and what’s covered, he added.
He said it is possible that the judge overseeing the sale will decide that an antitrust case could drag on too long and select another bidder, Digital First Media, to complete a sale.
Freedom declared bankruptcy in November.
"The successful bid for the business of Freedom Communications will allow the Orange County Register and the Press-Enterprise to continue providing a distinct local voice in their communities and deliver premium news and information to consumers across Southern California," Tribune CEO Justin Dearborn said in a statement.
Digital First Media, which owns the Los Angeles Daily News and papers in the San Gabriel Valley and the South Bay, had also bid on the deal.
Both Digital First and Tribune properties have seen staff cuts recently.
Tribune's bid is still subject to court approval at a hearing set for March 21.
Read the full legal documents below:
This story has been updated.