O.C. Register parent seeks to modify loan terms

October 6th, 2008, 4:30 pm · 1 Comment · posted by Mary Ann Milbourn

Freedom Communications Inc., parent of The Orange County Register, announced today it is in technical violation of the terms of its loan agreements but generates sufficient cash to meet payroll, pay its vendors and make its loan payments and other financial obligations.

Due to the uncertainty in the financial markets several weeks ago, Freedom said it also decided to draw down on its $300 million revolving line of credit.

The Irvine-based media company said it is in discussions with its lenders to address the current situation. Those talks are expected to take several months, Freedom said.

“The company’s issue with its loan covenants will have no immediate impact on the Register,” said Maya Pogoda, a Freedom spokeswoman.

Freedom owns more than 100 daily and weekly publications and eight television stations nationwide. The company cited circulation declines, the economic slowdown and the collapse in real estate for adding to financial pressures already created by weakness in advertising and increased competition from the Internet.

In response, Freedom said it has undertaken a series of initiatives to streamline the organization and save costs, including an increased focus on local news and advertising, continued investment in the Internet and consolidating functions.

Ken Doctor, a newspaper analyst for Outsell Inc. in San Jose, said that because of industrywide financial problems, all newspapers are talking to their bankers including the McClatchy Co., which owns the Sacremento Bee and 29 other papers, and Gannett Co. Inc., whose flagship is USA Today.

“You won’t see any immediate impact, but you might see more cost-cutting caused by the new agreements with the lenders,” Doctor said.

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