Newspaper publisher Freedom files for Chap. 11 bankruptcy protection

SAN FRANCISCO -- The owner of the Orange County Register in California and dozens of other newspapers became the latest publisher Tuesday to seek bankruptcy protection, driven into financial despair by a staggering drop in advertising revenue.

The filing was part of a prepackaged plan approved by a majority of Freedom's lenders. The consensus on the proposed restructuring should minimize that haggling that can bog down bankruptcy proceedings.

"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," said Burl Osborne, a newspaper industry veteran who became Freedom's chief executive two months ago.

Osborne said Freedom still has ample cash to finance its operations and pay its bills. The company sought to assure customers that the bankruptcy filing wouldn't affect the day-to-day business.

In a Chapter 11 petition made Tuesday in Wilmington, Del., Freedom Communications listed debts of more than $1 billion and assets of $500 million to $1 billion. Freedom's debt includes $770 million owed to a group of banks led by JPMorgan Chase.

Freedom has been struggling to bring in enough money to repay its debt for the past year. It already has required workers to take unpaid leave and imposed an across-the-board 5% cut in wages.

The Irvine, Calif.-based company employs 8,200 people in 15 states.

In an attempt to avoid a bankruptcy filing, Freedom negotiated a reprieve from the restrictions governing its loans four months ago. But it still couldn't find relief from a recession that continued to dry the ad sales that generates most of its revenue.

It's a story that has become all too familiar for newspapers as the worst economic downturn since World War II exacerbates the trouble that the industry already was facing as both readers and advertisers increasingly shun print editions for online alternatives.

Freedom is at least the 10th newspaper publisher to file for bankruptcy protection over the past year. The other publishers still in bankruptcy proceedings include the owners of the Los Angeles Times, Chicago Tribune, the Star Tribune of Minneapolis and The Philadelphia Inquirer.