Freedom on brink of bankruptcy

Filed under: Daily News | Tags:, ,

The Wall Street Journal reported yesterday that Freedom Communications, parent company of the Colorado Springs Gazette and more than 100 other media properties, will file for bankruptcy this week.

The WSJ said that the chain would be taken over by the banks that hold the company’s debt and that present equity holders would be wiped out.

Until 2002, Freedom was owned by descendants of Raymond Hoiles, who had founded the company more than seven decades earlier.

Disagreements between family members came to a head during 2002, when the company agreed to a partial buyout, enabling the dissidents, led by Colorado Springs resident Tim Hoiles, to sell their stock.

As a consequence of the buyout, two private equity firms, Providence Equity Partners and the Blackstone Group, acquired about 45 percent of the company, leaving the Hoiles family in control.

But like many newspaper publishers, Freedom has been squeezed by declining advertising revenue and outsized debt loads. Since Freedom is a private company, details about the company’s finances are not publicly available, but the WSJ reported that Freedom’s current debt is about $774 million.

A bankruptcy filing is anticipated as soon as today.

The fate of the Gazette, and of the company’s 30 other newspapers is as yet unknown.

The company’s individual properties are thought to be profitable as stand-alone entities, but much of their revenue has been diverted to servicing corporate debt.

The company announced last month that it would reduce pay across the board by 5 percent, and the Gazette has sought to cut costs this year with layoffs and unpaid furloughs. Similar measures have been employed by newspapers nationwide, as publishers have attempted to maintain margins during the recession.

Print media have been especially hard-hit by the economic downturn. Classified advertising, which once accounted for as much as half of daily newspaper advertising revenue, has shrunk dramatically as advertisers have migrated to online sites such as Craigslist.

John Weiss, the founder and publisher of the Colorado Springs Independent, said that he had been contacted “sort of jokingly” by people who want to know whether he’s planning to buy The Gazette.
“I’m not,” he said. “But my hunch is that everything in the Freedom chain is in play – and it would be nice if a local investment group took it over.”

Sean Paige, former editorial page editor of The Gazette, expressed concern that a new ownership group, if one emerges, might abandon the newspaper’s longstanding commitment to libertarianism.
Paige said that “he’s aware of rumors” that Gazette Publisher Steve Pope might be talking to potential investors about buying the paper.

“I don’t know what his political philosophy is, but I think it would be a bad business decision to tamper with a voice which is a very good fit for the community,” Paige said. “I think it would cost them. To think that you’ll increase revenues by turning The Gazette into the Denver Post, that’s just delusional.”

But, Paige said, the ultimate outcome of Freedom’s bankruptcy is uncertain.

“They’ll probably have to sell some properties,” he said. “And I’d applaud anyone who’d be willing to buy a newspaper in this climate, but I haven’t seen a ‘for sale’ sign on the building yet.”

Weiss said that Hoiles is the big winner.

“He sold at the right time,” Weiss said. “But my big concern is that there are a lot of long-term employees there who have done great work. They don’t benefit on the upside and they get screwed on the downside.”

3 Responses to Freedom on brink of bankruptcy

  1. Unlike Mr. Paige, I believe a new owner of the Gazette with a more open view point would gain a larger readership. I was a subscriber to the local paper in Georgia before moving to the Springs. After purchasing the Gazette several times at the news stands, I never was motivated to subscribe. I believe local newspapers are an important part of a community and are viable businesses. The Gazette as it is today, though, is not inclusive enough to truly be the city’s newspaper.

    John Sawyer
    August 31, 2009 at 12:52 pm

  2. I disagree with Mr. Sawyer, not surprisingly.

    Having a distinctive and independent editorial voice doesn’t make The Gazette non-“inclusive.” It simply means it stands on core principles — America’s founding principles — and won’t be buffeted around by ideological fads. The Gazette, even while holding firmly to its positions, was not averse to publishing contrary opinions or a diversity of views — at least in the 5 years I was there. We routinely ran critical letters, counter-point pieces and other-than-libertarian columns, even while jealously guarding the editorial space for our own perspective, as any self-respecting editorial page (even very liberal ones) would do. I venture to say you’ll find more diversity of opinion in The Gazette than in the Washington Post or New York Times.

    Most of us who had the honor of running the pages weren’t shy about engaging in combat, or forcefully defending our positions, in sharp contrast to the wishy-washy, mealy-mouthed, boringly-above-the-fray pose struck my many editorial pages. And that’s bound to ruffle the feathers of some readers. But I think most readers appreciate an editorial page that actually has a philosophy, and will fight for ideas, even if they disagree with them.

    The only person I ever blackballed from the pages was regular letter writer Phil Kenny, who became demanding and obnoxious when he couldn’t publish at will. Otherwise, the pages were open to all comers. Today the pages offer more “diversity” of views than ever. Liberals have been invited to sit on the editorial board and blog there. Yet we still hear the same old complaints — most often from folks who don’t regularly read the pages — that it’s not “inclusive” enough. Has Mr. Sawyer appreciated these bows to “diversity”? He hasn’t even noticed them. Will subscribers come pouring out of the woodwork if the Gazette begins to parrot The New York Times? Not in this town.

    It’s not “inclusiveness” that some Gazette critics want; it’s conformity. But how can any paper have any editorial philosophy to speak of if it simply bends to the will of people who don’t understand or agree with it? Not that the Gazette cares, but its libertarian positions happen to be a good fit for this community. And I think it would be a serious mistake, simply from a business perspective, for the Gazette’s publisher to mess with that, just because the Hoiles family has lost the paper. Although a change of philosophy might win the current publisher praise at cocktail parties, and please the RINOs at the country club, alienating loyal editorial page readers will only hasten the paper’s demise.

    Sean Paige
    August 31, 2009 at 5:59 pm

  3. I have more to say on the above topic at my Local Liberty Online blog, if anyone is interested: http://www.locallibertyonline.org/paige_blog.php.

    Sean Paige
    September 1, 2009 at 8:59 am