Register land already flipped, making papers a real bargain

Media analyst Ken Doctor writes that by selling the real estate around the Orange County Register — 14 acres on Grand Avenue in Santa Ana for $34 million — Digital First Media has managed to acquire the Register and sister newspaper the Press-Enterprise in Riverside for a bargain price of $15.8 million.

"While there’s a certain logic to that low, low price – earnings at the combined operations have been just above or below zero – it’s still an astounding number for two papers with significant circulations," Doctor writes for Politico. "The Register sells 228,000 papers on Sunday; Riverside sells 111,000."

It’s even more astoundingly low when you consider all of the Sturm und Drang over the newspapers these last couple of years.

It was just two and a half years ago that Freedom Communications (parent of the Register) bought the Press-Enterprise alone for $27.5 million. CEO Aaron Kushner overpaid, and he had trouble amassing the cash for seller A.H. Belo, creating a circus of will-or-won’t-the-deal-happen intrigue that only served as prologue for Freedom’s bundle of head-scratching strategies with the papers.

The eyeballs stayed fixated on the papers when Freedom declared bankruptcy and Tribune Publishing CEO Jack Griffin made such a priority of buying the two papers that he had to complete a last-minute deal with a Chicago entrepreneur to amass the cash to take to bankruptcy court. That deal cost Griffin his job – and precipitated a massive executive turnover – within weeks of being signed. Then, in short order, Tribune emerged as the high bidder for the two papers and real estate, but the Department of Justice’s Antitrust stepped in – and stopped the sale to Tribune. Private equity-owned Digital First Media positioned itself perfectly as the second bidder, finally winning the properties for $5 million less than Tribune had offered to pay.

And all of this turns out to have been for two regional print newspapers worth a little more than $15 million, apart from the real estate.

The buyer of the real estate around the Register is local developer Mike Harrah, who previously had acquired the Register's headquarters. His plan, per Doctor: housing, retail and a hotel.