The Orange County Register, where I wrote editorials for 19 years, could be bought by a billionaire Real Estate tycoon, Ambassador George Argyros, and another local businessman, Larry Higby. So reports to a new article up this night as I write in The Orange County Business Journal. Before I comment on that, a couple of observations.
As newspapers collapse, all that’s left is their brand name. But if billionaires know one thing, it’s brand names. So billionaires are buying these newspapers and playing with them like sports teams. Argyros, for example, once owned the Seattle Mariners baseball team.
An interest in the vererable (to some, not me) New York Times just was sold to Mexican Crony Capitalist Carlos Slim, the second-richest man in the world ($60 billion worth) after Warren Buffett ($62 billion). Buffett earned his money through brilliant capitalist investing.
By contrast, Slim is a Crony Capitalist — he has a monopoly on Mexico’s telecommunications system, granted him by Mexico’s corrupt government. Steve Seiler reported on Slim:
The only scandals clinging to Slim’s name are business-political, not personal. He embodies the Mexican ruling class at its best.
Which still isn’t so hot.
Although not an innovator, Slim is a competent businessman and manager. He likely would have gotten rich in even the most honest country….
…mix Slim’s financial skills with Mexico’s crony capitalism and you get the richest man in the world.
As New York Times correspondent Alan Riding wrote of Mexico in his 1984 bestseller Distant Neighbors: A Portrait of the Mexicans
, “Public life could be defined as the abuse of power to achieve wealth and the abuse of wealth to achieve power.” It’s worth examining how the master plays the game.
The Mexican-born son of a prosperous Lebanese Christian merchant originally named Yusef Salim Haddam, Slim made his big move in 1990 during President Carlos Salinas’ corrupt privatization binge (which was enthusiastically endorsed by the elder President Bush). He bought the government’s telephone monopoly. Interestingly, Slim’s telephone monopoly was written into NAFTA, negotiated during Bush I, granting Slim a decade without foreign competition.
To Slim, buying a chunk of the NYT is pocket change.
Zell buys the Chicago Tribune and L.A. times
Before that, 17 months ago, Chicago real-estate tycoon Sam Zell bought the Chicago Tribune company, which includes that paper and the L.A. Times, for $8.2 billion. He did so too early. Like Sim and (possibly) Argyros, he should have waited a year for the price to drop more and saved himself maybe half that money.
But buy it he did. He also took out a risky loan, which Slim and Argyros probably wouldn’t need. Swimming in his natural habitat, Zell is dealing some of the real estate. He’s continued the L.A. Times’ recent history of editorial shakeups.
But the point is that it’s a plaything for him.
The days of the great newspaper families — the Sulzbergers, the Pulizers, the Pulliams, the Hoileses — are over. Even the days of the conglomerates, like Gannett, are over. This is the day of the billionaire tycoons.
You don’t make yourself a billionaire (as opposed to inheriting it) by being stupid. These guys know the days of printed newspapers are numbered. So, they’re buying the brand name, as I noted earlier, to use online for whatever they want. Maybe it’ll pay off, maybe it won’t. But it’ll be fun playing with it.
Brief interlude on newspapers
I was at a bar tonight (Sunday night) in Newport Beach with some friends. Someone mentioned to two women, about 30, that I “worked for the Orange County Register.” Before I could correct them by pointing out that I took a buyout almost 2 years ago, one woman said, “The Register? What’s that? Didn’t it close years ago?” The second stranger concurred.
One of the friends I was with, also about 30, said he hadn’t read the printed Register in years, instead reading it online.
Printed newspapers: R.I.P.
Argyros, the Register, and Measure R
George Argyros was a major presence in Orange County even before his contributions to Republican causes got him named ambassador to Spain, a post he left after the 2004 election. In my Register days, I met him several times. At least to me and other journalists, he was cordial, a typical glad-handing businessman.
Chapman University, his alma mater, has so many buildings named after him they might as well call it Argyros University.
After Orange County’s 1994 bankruptcy, Argyros headed a group of businessmen that tried to get passed Measure R, a half-cent sales tax increase to make up for the $1.6 billion the county wasted. Argyros came in to talk to the Register editorial board, trying to convince us of the need for a tax increase. He also was a friend of then-Register Publisher Dave Threshie, a top member of the Hoiles Family, which has owned the Register since 1935. Threshie sat in on the discussions.
Argyros said that the county would be badly damaged without the tax increase. The roads would crumble, the schools would fail to teach, business would flee.
We retorted that Orange County was known globally as a low-tax island amidst the high-tax ocean of California, that tax increases would damage the tax base and send businesses fleeing. Measure R should be defeated and the county government forced to find some other way to make up for its own stupidity.
Threshie, naturally, wasn’t going to break the Hoiles Family tradition of opposing tax increases. He unleashed us to attack Measure R. The tax increase lost heavily. Orange County recovered from the bankruptcy almost as if it hadn’t happened. No tax increase was needed.
Argyros and the Register’s future
If Argyros does buy the Register, he of course will want it to play with it as he sees fit. A Bush-Cheney-McCain partisan, he naturally would ditch the anti-war libertarianism and constitutionalism. It would become just another Republican, Neocon mouthpiece backing unconstitutional wars, torture, the “Patriot” Act and other abridgments of the Bill of Rights, etc.
Another bankruptcy/Measure R situation is unlikely. But he might make the editorial page back the many local school bond and city tax initiatives that come up every election cycle.
At the state level, he might back Schwarzenegger’s calls for tax increases.
Other changes would be made ending 7 decades of libertarianism at America’s highest-circulation libertarian newspaper. A unique voice would be gone. Blandness would take over.
Hoiles Family cashing out
But what’s clear is that the Hoiles Family is cashing out, ending yet another family newspaper dynasty. Reported the OC Business Journal:
“We are having a lot of conversations that in the past in a different environment would have been inconceivable,” said Scott Flanders, chief executive of the Register’s parent company, Irvine-based Freedom Communications Inc….
The situation at the Register and elsewhere at Freedom has raised doubts that the heirs of company founder R.C. Hoiles, who own an estimated 55% of the company, will be able to engineer their hoped-for buyout of private equity investors next May.
That’s when Blackstone Group LP and Providence Equity Part-ners LLC can force the buyback of the roughly 45% stake they bought in 2004. The investment was part of a restructuring that enabled dissident heirs to cash out of the company.
But analysts and others have said it’s possible the private equity firms won’t exercise their “put rights” next May because they’re unlikely to recoup their investment, given the declining values of Freedom and other newspaper companies.
That’s just what I’ve been reporting right here — and here — and here — on this blog, based solely on my analyses of newspaper trends and Freedom Communications’ financial situation.
Gone With the Wind
I recently re-subscribed to the Register after canceling my subscription a year ago. A nice chap at the local Albertson’s convinced me to do so, giving me a $10 food coupon as an enticement. I like getting the paper in the morning. 
It reminds me of the Old Days when I worked in the industry, and of my youth when my family got the Detroit News.
Yet I don’t read much of it. The national and world news I read the evening before online. Movie listings I get online, too; it’s easier. I’ll probably keep my subscription until they don’t deliver papers anymore.
As Rhett Butler says when he finally joins the Confederate Army:
I’ve always had a weakness for lost causes once they’re really lost.
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