Register

591

By SUSAN DEEMER

Orange County Business Journal

James N. Rosse has spent the past seven years making Freedom Communications less of a family-run business, but as he prepares to retire, he says keeping the business family-owned is fine by him.

In fact, Rosse says that Freedom, owner of the Orange County Register, should remain private, even though that constrains the ability to grow in an ever-consolidating media landscape.

“If I had a free call on it, the key issue to resolve is whether or not there is a family committed to the company’s welfare,” Rosse said. “If there is, it is better off private. If not, it would be better to go public. In this case there is a family that is committed. So I would continue doing what we are doing and stay private.”

And if that means no public stock to issue for acquisitions, well, there’s always leverage.

“We do all our growth the hard way we pay cash,” Rosse said. “Before that, it was all savings. Now the company recognizes the importance of debt and using it well and carefully. We spent $170 million to buy a TV news station in western Michigan that took our debt up a nickel or two.”

Rosse, who plans to retire in November, became the first outside CEO of Freedom in April 1992 after a long career in academia, which was capped when he became provost of Stanford University. During his tenure, Freedom has grown steadily, from less than $500 million in annual revenue to $750 million last year. He has diversified the company’s product mix, too, adding magazines, broadcast properties and most recently an interactive division.

Freedom owns 27 daily newspapers, six weeklies, eight television stations and 19 magazines. It employs 6,435, with 2,404 in Orange County. The once-dominant Register is down to about half of total revenue and the TV and magazine divisions now each contribute about one-sixth to total revenue.

Perhaps more significantly, Rosse has opened up the company to more professional managers. There are six independent directors on Freedom’s 12-member board.

Rosse achieved all this by gaining and retaining the assent of Freedom’s owners, the many (now 65) and sometimes-feuding heirs of Freedom founder R.C. Hoiles.

“It’s difficult for someone to come from outside a company into one that has a strong family control as this one and learn to deal with that, make use of it, and gain the confidence of the owners,” Rosse said.

So what does Rosse have to say about the battle lines drawn between the Register and the Orange County edition of the Los Angeles Times?

“Every time I hear about another change of leadership (at the Times), I celebrate,” Rosse said. “You can’t run a newspaper to serve Orange County from downtown Los Angeles. We produce a better product for OC and are aggressive about selling and printing it. The Times does a good job of serving its audience, but doesn’t appeal as broadly.”

During his tenure, the Register has maintained its dominance in daily circulation and widened its lead in Sunday circulation, achieving both economic and psychological victories over the Times.

For the six months ended March 31, the Register had 62.5 percent of the county’s average daily circulation and 59 percent of the average Sunday circulation. Over seven years, the Register has widened its daily lead by about 11,000 subscribers and increased its Sunday edge by about 36,000, according to figures reported to the Audit Bureau of Circulations.

“They don’t make much money out of there, that’s for sure. It’s incremental revenue,” Rosse said of the Times’ Orange County edition. “They also don’t have the full costs because the OC division is supported from downtown Los Angeles. If that were a freestanding newspaper it would be close to bankruptcy. It’s hard to be successful with less than 40 percent of the market share The Times is down in that danger zone.”

Times officials declined to comment in detail on Rosse’s statements.

“This issue is much more complex than Mr. Rosse’s opinion suggests,” said David Garcia, a spokesman for the Los Angeles Times.

It’s unclear whether Rosse, 67, will continue to have a role on Freedom’s board. Close observers have said a board seat would be his for the asking, but that Rosse has expressed concern about being seen as interfering with his successor as CEO.

“I would be most comfortable simply stepping back and letting somebody else take over. I think that’s the only right way to do it,” he said.

In January, he oversaw the consolidation of the company’s east and west community newspaper divisions. Also, Rosse helped launch the new interactive media division in May. “All of us are placing a lot of bets (on the Internet), but the chips are still falling and nobody knows what will happen,” he said. “Newspapers and TV are no longer the first source of breaking news, and that changes the way they do their coverage. And newspapers are no longer the sole source of classified advertising.”

As for his successor, Rosse has little to say.

Rosse announced his plans to retire at a board meeting two years ago with a target as early as January 1999 and no later than December 1999.

A CEO Succession Committee was formed in 1997 to do an internal search for a successor. Earlier this year, Youngs Walker in Illinois, the same executive search firm that hired Rosse and Alan Bell, head of the TV division, were retained to conduct an outside search for a successor.

The searches have been narrowed to a short list with a recommendation expected at the November board meeting, according to Freedom.