Robert Emmers, a spokesman for Freedom, declined to comment Sunday night on the possibility of a bankruptcy filing, but he told The Associated Press that the company is "continuing to work with its lenders to resolve (its) balance sheet issues."
The Journal reported that Freedom's lenders were expected to take control of the company while it operates under bankruptcy protection. The lenders - including J.P. Morgan Chase & Co., SunTrust Banks and Union Bank of California - hold about $770 million in debt.
Freedom was founded in the 1930s by R.C. Hoiles and is still majority owned by the Hoiles family. Besides its flagship Orange County Register, the company owns 32 daily and 77 weekly newspapers, plus several television stations.
Family members representing about one half of the Hoiles clan sold their stake in the company more than five years ago when private-equity firms Blackstone Group and Providence Equity Partners acquired a 40 percent share for about $460 million. The stake of the remaining family members likely would be wiped out by a bankruptcy filing, the Journal said.
Freedom's Chapter 11 filing would be the latest in a long line of bankruptcy cases involving media companies that have struggled with a sharp drop in advertising revenue brought on by the growth of the Internet and compounded by a long recession.
"Freedom has been affected by the same thing that all the media companies have been affected by: the decline of advertising, which has been accelerated by the downturn in the economy," Emmers said. "Freedom has been working really hard to realign its balance sheet with the reality of the media market today."
The company announced last month that it would reduce pay across the board by 5 percent, and the Register has announced cost-cutting measures this year including layoffs, unpaid furloughs and salary freezes.
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