la times
The LA Times building in Los Angeles. David McNew/Getty Images

LOS ANGELES — The Los Angeles Times and Orange County Register will not join forces after all. Following a lawsuit last week by the U.S. Justice Department, which flexed its muscles over antitrust concerns, Tribune Publishing, the Times’ parent company, will abandon its effort to acquire Freedom Communications.

A competing bidder has already stepped forward. On Monday, the Bankruptcy Court for the Central District of California approved a bid by Denver-based Digital First Media of about $52 million in a bankruptcy auction for the assets of Freedom Communications, which include the Register and Riverside Press-Enterprise, papers that serve counties bordering Los Angeles.

Tribune had bid $56 million, but the DOJ filed an antitrust lawsuit claiming that combination, which would give Tribune 98 percent of all newspaper sales in Orange County and 81 percent of English-language fare in Riverside County, was an unfair monopoly. Tribune disagreed, but decided to end its pursuit, a spokesperson confirmed to International Business Times.

In abandoning the purchase, Tribune avoids a costly legal battle with the U.S. government, which would have yielded dubious results given the prize is an embattled newspaper company already in bankruptcy.

In a statement to IBT, Hillary Manning, a Tribune spokesperson, maintained the publisher’s position that regulators did not fully understand market conditions for newspapers — and their advertisers — in the internet age.

“We respectfully reiterate that the government’s position on this matter does not recognize the current state of the media landscape,” Manning said. “Internet-based aggregators take journalism content from leading news brands — like the Orange County Register — and profit at the expense of the content creators.”

The DOJ filed its suit last Thursday, and late Friday, U.S. District Judge André Birotte Jr. granted a temporary restraining order blocking the sale to Tribune. That effectively ceded Freedom’s newspapers to Digital First — owner of the Los Angeles News Group of regional papers — and the only other bidder still involved in the process.

“Preventing the Los Angeles Times from combining with the Register and the Press-Enterprise will ensure that citizens and advertisers in Southern California continue to benefit from competition and from a diversity of views in their local news coverage,” Bill Baer, an assistant attorney general at the DOJ’s Antitrust Division, said in a press release announcing the approval of Digital First as the buyer of Freedom’s assets.

Baer declined further comment to IBT.

Chicago tech executive Michael Ferro acquired control of Tribune in February and appointed Justin Dearborn as chief executive. L.A. Times editor Davan Maharaj was promoted to the new position of editor-publisher earlier this month.

With parent Tribune’s stock price down 56 percent over the past 52 weeks and deep cuts in the newsroom, rumors have swirled with increased frequency about the L.A. Times being sold — with billionaire philanthropist Eli Broad the favored buyer. Broad made an offer for the paper last year. In its statement, Tribune said it plans to continue the conversation around the “future of journalism” with regulators in the hope of changing their minds, and “remains focused on its strong portfolio of news brands, led by the Los Angeles Times.”

Ken Doctor, a news industry analyst, wrote Friday that the DOJ’s move would almost certainly deliver Freedom’s newspapers to Digital First, and he predicted the quality of those papers would be increasingly degraded as “collateral damage” from the DOJ intervention.

“Even with Tribune’s aims at regional consolidation, the standards of the LA Times — over the years, even through cuts — still trump those of DFM’s papers most of the time,” he wrote. “While the Department of Justice may be aiming to represent readers’ interests in southern California, the journalistic result will likely be disappointing.”