More local Web sites. More magazines, too. Maybe even a new Orange County commercial television station.
Those are some of the big plans that the new chief executive of Freedom Communications Inc. is considering as he takes the helm of the Irvine company that owns the Register, dozens of other newspapers and eight television stations across the country.
"The operative word here is local," said Scott N. Flanders, who took over Freedom on Jan. 1 after former chief executive Alan Bell retired. "We want to capture the largest share of advertising dollars spent in Orange County across all media."
That may seem ambitious for a company that produces more than 70 news publications nationwide at a time when the newspaper industry frequently is portrayed as on its deathbed. Two decades of industry declines continued this year, with the average daily circulation among North American newspapers dropping 2.6 percent in the six months through Sept. 30 from a year earlier, according to the Newspaper Association of America. The Register's circulation slipped 0.9 percent.
Flanders' solution for Freedom is to capitalize on the ability of its media businesses to cull local news and information that people can't easily get elsewhere and package it in any format people want it. They will then sell that targeted audience to advertisers eager to get access to local households.
John Morton, a longtime newspaper consultant in Silver Springs, Md., thinks Flanders could be onto something.
"Only newspapers are organized to gather massive amounts of local information that's their continuing strength," Morton said.
Flanders, a self-acknowledged early adopter of technology from his days with Macmillan Publishing, said he wants to make the Internet a major focus of the company, the 12th-largest newspaper chain in the U.S.
"We are going to allocate additional resources into the Web business so that we will be the leading online local media site in each of our communities," he said.
He also plans more local magazines either created by Freedom or added through acquisitions.
A new Orange County commercial television station is also a possibility.
"Orange County is unique in that it's the largest community in the country that doesn't have its own (major) television station," said Flanders, who lived in New York City before taking the helm at Freedom.
Orange County has two broadcast outlets KDOC/56, a small independent channel, and KOCE, currently a PBS station. (The Register has a marketing agreement with KOCE-TV, and Register Publisher N. Christian Anderson III sits on the KOCE board.) Flanders is thinking in terms of a larger commercial television venture.
That may come as a surprise to locals who remember Freedom's previous experiment with the Orange County NewsChannel.
Freedom launched the 24-hour local cable news station in 1990. It never turned a profit and was sold six years later. OCN ended up owned by former cable giant Adelphia Communications Corp., which shut it down in 2001, citing annual losses of $5 million.
Flanders shrugs that off as an unfortunate experience, citing the success of Freedom's network stations in other parts of the country.
"I like the broadcast business," he said.
That's not to say Flanders has given up on print news.
In fact, Flanders clearly sees Freedom in a growth mode, saying he would be particularly interested in buying newspapers in the 100,000-circulation range.
Newspapers remain attractive because of their convenience and portability and their unique role in giving a community an identity, he said.
In a time-challenged age, a newspaper can also fill the role of a trusted filter for people who don't have time to sift through all the news online, he added.
Flanders, who has been a director on Freedom's board for five years, expects Freedom to continue to improve its financial position, which he said is key to maintaining the company's independence.
Privately held Freedom was family-owned until a long-simmering feud among shareholders boiled into the open in 2002. Several family members, critical of the direction and financial performance of the company, wanted to sell their shares.
The result was a $2 billion deal in 2004 that brought in two East Coast private equity firms, the Blackstone Group and Providence Equity Partners, as investors.
The new minority partners, which own 40 percent of Freedom's voting stock, are expected to want to cash out their stake between 2009 and 2011.
Flanders, however, does not expect the kind of high drama then that surrounded the Freedom family buyout.
"We will have the financial capability to meet the return on investment required of our financial partners without selling the company," Flanders said. "We will meet our objective of keeping Freedom as an independent company that is family-owned." After lagging its peers in operating profit margins from 2000 to 2004, Freedom exceeded the industry average of 23 percent last year, Flanders said. As a private company, Freedom does not disclose financial details.
Moody's, the debt-rating service, gave the company overall satisfactory marks in a Dec. 12 report, citing its attractive media assets, the stability and geographic diversification of its cash flows and its strong management team. It had some reservations about the company's high financial leverage; the potential vulnerability to competition of its Metro Division newspapers, the company's four largest; and its control by a relatively small group of insiders.
The rating service, however, was encouraged by projections of strong free cash flow in 2006 that would reduce Freedom's debt, which stood at $792 million in September.
(c) 2006, The Orange County Register (Santa Ana, Calif.).
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Distributed by Knight Ridder/Tribune Information Services.
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