For months, newspaper insiders have been abuzz about Denver Post parent company MediaNews Group potentially acquiring Freedom Communications, owner of the Colorado Springs Gazette and the Orange County Register -- two properties that synergize nicely with MediaNews strongholds here and in Southern California. The Wall Street Journal is now reporting that talks have broken down, but the deal hardly seems dead.
Reached by phone, MediaNews boss Dean Singleton declines to comment on the Journal story or the Freedom negotiations. Likewise, Freedom reps won't even confirm details to the Gazette beyond stating, ""Freedom is continuing to work with its financial advisers on reviewing its various strategic options."
The Gazette couldn't reach Singleton in time for its story -- but he addressed the prospect of acquisitions in a January interview following the announcement that he would be stepping down as CEO of MediaNews. Here's an excerpt from that piece:
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Three new board directors will take the place of [departing MediaNews president Jody] Lodovic and two other departing members, with a couple of the newcomers, Heath Freeman and Bruce Schnelwar, hailing from Alden Global Capitol. Alden is hedge fund that owns a sizable chunk of MediaNews Group as well as pieces of assorted newspaper companies, including Freedom Communications, whose holdings include the Colorado Springs Gazette and the Orange County Register. Rumors have circulated for months about a possible MediaNews-Freedom merger, and while Singleton won't address that prospect directly, he makes it clear that he'll be looking closely at consolidation.
"After our restructuring" -- MediaNews emerged from bankruptcy this past March -- "we have a very good balance sheet for expansion," Singleton maintains. "And expansion, if you do it geographically, lets you consolidate a lot of overhead, which makes the businesses more efficient -- and that gives the core business a lot more value. But it also gives you more critical mass to create new media platforms. In terms of developing new media strategies, interactive and mobile and social media, the size of the platform does matter, and having a larger platform does offer some opportunity."
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The mindset reflected by these quotes show why MediaNews Group would want Freedom -- and while the Journal reports that disagreements over price caused the schism, Freedom's options are limited. No other firms have expressed interest in buying the company as a whole, and while properties could be sold in piecemeal fashion, Freedom would never be able to generate as much cash -- approximately $700 million, according to the Journal -- using such a method, especially at a time when print publications are viewed with suspicion, if not downright derision, by plenty of investors.
As such, expect MediaNews Group and Freedom to sit down again in the coming months despite the current state of negotiation interruptus.
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