Freedom Communications Seeks Bankruptcy Protection

Sept. 1 (Bloomberg) -- Freedom Communications Inc., the owner of more than 30 daily newspapers including the Orange County Register in California, sought bankruptcy protection after print advertising revenue declined.

Freedom, owner of eight television stations, has assets of as much as $1 billion and debt of more than $1 billion, it said today in Chapter 11 papers in U.S. Bankruptcy Court in Wilmington, Delaware. The Irvine, California-based company’s revenue totaled $734 million last year, according to Moody’s Investors Service Inc.

The company said it filed to implement a pre-petition agreement it reached with its lender on a restructuring of its debt. A majority of the lenders will support a “pre-negotiated plan of reorganization,” Freedom said in a statement.

“Reaching this agreement with our lenders provides us with an orderly process to realign our balance sheet with the realities of today’s media environment,” Freedom CEO Burl Osborne said in the statement.

The average weekday circulation of the Orange County Register in the six months through March fell 12 percent from the year-earlier period to 233,626, according to the Audit Bureau of Circulations. That compares with a 7.1 percent industrywide decline.

Freedom’s Gazette of Colorado Springs, Colorado, in the period lost 2.4 percent of its weekday circulation, to 91,599.

Newspaper Bankruptcies

U.S. newspaper publishers including Tribune Co., owner of the Los Angeles Times and Chicago Tribune, and Journal Register Co., owner of 20 daily newspapers, previously filed for bankruptcy as the recession speeds declines in ad spending and more readers seek news from the Internet.

Industrywide ad revenue fell 29 percent to $6.82 billion in the second quarter from $9.6 billion a year earlier, according to figures released by the Newspaper Association of America. Ad sales dropped 28 percent in the first quarter, the Arlington, Virginia-based trade group said.

The drought has forced publishers to cut jobs, wages and sections, and boost newsstand prices. Ad sales make up more than half of revenue for publishers including New York Times Co. and Gannett Co.

U.S. advertising revenue for media and entertainment companies will decline through 2010, not returning to growth until 2012, when marketers increase spending on the Internet, PricewaterhouseCoopers LLP said. The New York-based accounting firm predicts print-ad sales will continue to fall until 2013.

Blackstone Group LP owns a 27 percent stake in Freedom and Providence Equity Partners Inc. holds about 18 percent.

The case is In re Freedom Communications, 09-13046, U.S. Bankruptcy Court, District of Delaware (Wilmington).