Freedom Communications, Inc. Business Information, Profile, and History

Company Perspectives:

Our company founder, R.C. Hoiles, left a legacy based on the principles of voluntarism and the libertarian philosophy. Those legacy values--Integrity, Self Responsibility, Respect for Individual Freedom, Community and Life-Long Learning&mdashe the bedrock on which Freedom Communications operates today. We call it the Freedom Way. The Freedom Way means serving communities with integrity and respect while keeping the torch of freedom burning brightly. Opportunity for individuals, careful management of resources, commitment to the ideals of individual freedom and lifelong learning are the cornerstones of the Freedom Way.

History of Freedom Communications, Inc.

Freedom Communications, Inc. is a privately held media company that owns some 27 daily newspapers, 35 weekly newspapers, more than 20 specialized magazines, and eight broadcast television stations. The Hoiles family, which owns Freedom, began in newspaper publishing in the late 19th century in Ohio, then moved to California and acquired the Santa Ana Register in the 1930s. The newspaper later became the Orange County Register, the third largest daily newspaper in California. In the 1990s, the company diversified its revenue base by acquiring television stations and starting a magazine division, in addition to acquiring more newspapers. In 1999 it launched an interactive division devoted to developing web sites and Internet-related ventures.

Origins in 19th-Century Ohio

The Freedom Communications story begins in Ohio in the late 19th century. Raymond Cyrus (R. C.) Hoiles was born into a prosperous farm family on November 24, 1878, in Alliance, Ohio. As a young adult he studied electrical engineering at Mt. Union College in Ohio. However, he also took an early interest in the newspaper business, first by selling subscriptions for the Alliance Review, a daily newspaper owned by his brother Frank Hoiles.

After Hoiles graduated from college, he worked full-time for the newspaper as a printer's devil, or apprentice. By 1905 he had served as the newspaper's bookkeeper and business manager and had acquired a one-third financial interest in the endeavor. Hoiles and his brother expanded their newspaper business by purchasing the Lorain Times Herald in 1919 and the Mansfield News in 1921. Hoiles served first as publisher of the Lorain Times Herald, and then held that title for the Mansfield News.

As publisher of the Mansfield News, Hoiles wanted to speak out against what he perceived as the oppressive influence of labor unions. His brother Frank refused to print such criticisms, and the disagreement caused the two brothers to dissolve their partnership. Hoiles bought out his brother and became sole owner of the two newspapers; in return, Frank received R.C.'s one-third interest in the Alliance Review.

In 1927 Hoiles acquired the Bucyrus Telegraph-Forum and began allowing his 22-year-old son, Clarence (C. H.), to manage the newspaper under his direction. It was the beginning of a long and productive partnership between R.C. and C.H. Hoiles. During this time, a bitter rivalry with another local newspaper reportedly resulted in several attempts on R.C.'s life, and he sold the Lorain and Mansfield newspapers in 1932. For the next three years he stayed away from publishing and read extensively. It was during this period that he began to identify himself as a libertarian.

From Ohio to California: 1935--70

In 1935 R.C. Hoiles moved his family to Santa Ana, California, in the heart of Orange County, and purchased the Santa Ana Register. Through that paper, he was able to fully express his political interests; he contributed personal columns and editorials that encouraged his readers to engage in a political and philosophical dialogue. Hoiles strongly objected to the government's power of taxation and to government-run programs. According to Freedom Communications' company history: 'Many criticized his views. He was labeled and attacked on several fronts. But the same steadfast convictions that drew him criticism also won him praise when he applied them to the unfair treatment of Japanese-Americans during World War II. Nearly a lone voice among American journalists, R.C. Hoiles publicly protested the internment, an act that would earn him commendation from some of his staunchest critics and recognition by the Japanese-American Citizens League more than 20 years later.'

R.C. and C.H. Hoiles ran the Register together. The family publishing business flourished, as they acquired the Clovis News Journal (New Mexico) in 1935 and the Pampa Daily News (Texas) in 1936. In 1946 the firm acquired the Gazette-Telegraph in Colorado Springs and the Appeal Democrat of Marysville, California. In 1948 the Odessa American (Texas) was added to the group. In 1950 the family's newspaper holdings were incorporated as Freedom Newspapers, Inc. By 1970, the year that R.C. Hoiles died, Freedom Newspapers owned 16 daily newspapers in seven states.

A New Generation of Leadership in the 1970s

When R.C. Hoiles died in 1970, his son Harry moved from Colorado Springs, where he had served as publisher of the company's Gazette-Telegraph since 1946, to Santa Ana to become co-publisher of the Register with his brother C.H. Hoiles, who was Freedom's CEO. The newspaper was still known as the Santa Ana Register at that time.

When C.H. Hoiles died in 1981, Harry expected to succeed him as CEO of Freedom Newspapers. However, in the year before C.H.'s death, both he and his sister, Mary Jane, had decided to eliminate the CEO position and replace it with a three-person committee that would be elected by family representatives and one outsider, D. Robert Segal, who had worked with the company since 1942. Segal was president of Freedom, and Mary Jane Hoiles Hardie's husband, Robert C. Hardie, was company chairman. Thus, Harry's bid to become CEO of the company was opposed by his brother and other family members. A bitter lawsuit ensued, with Harry attempting to dissolve the company and claim his one-third interest. He resigned from the company's board of directors in 1990 and was replaced by his son, Tim. A hard-line libertarian all his life, Harry Hoiles died in Colorado Springs on April 18, 1998, at the age of 82, the last surviving child of founder R.C. Hoiles.

Diversification in the 1980s--90s

By the mid-1980s Freedom owned 29 newspapers, including the Orange County Register, which was California's third largest daily newspaper. It also owned four television stations in minor markets. Annual revenues overall were estimated to be $322 million. In 1986 Freedom acquired CBS affiliate WRGB-TV serving Schenectady and Albany, New York, for $56 million. Veteran television executive Alan J. Bell became president of Freedom's Broadcast Division in February 1989. At the time the company owned five network-affiliated television stations, four of them with CBS. The widely scattered stations were located in Providence, Rhode Island; Albany, New York; Chattanooga, Tennessee; Beaumont-Port Arthur, Texas; and Medford, Oregon. By 1994 the Broadcast Division also included a local cable network and the Orange County NewsChannel, which began broadcasting in 1990. Also in 1990 Freedom acquired Golden West Publishing from Media General of Richmond, Virginia. The acquisition included 14 weekly newspapers in Los Angeles and Orange Counties that were operated by Golden West's subsidiary Highlander Publications.

In 1992 James N. Rosse, a former Stanford University economics professor and provost, joined Freedom as president and CEO. Under his leadership, the company adopted an acquisition strategy that continued through the end of the decade. The acquisitions were designed to help balance the company's portfolio, which by the end of the decade consisted of about 25 daily newspapers and 34 weekly newspapers and several business magazines in addition to its five television stations. Under Rosse the company changed its name from Freedom Newspapers to Freedom Communications, Inc. Rosse also launched the company's Magazine Division in 1993 with the acquisition of World Trade and USA Exports.

In 1994 the Register began developing an online interactive classified advertising service to be launched in 1995. Called the American Classified Network, it would be based on cable television and allow viewers to search a database of the Register's classified ads. The service would also sell products from retailers, including J.C. Penney, Hallmark, WaldenBooks, and 800-Flowers, among others.

Facing an uncertain future that included declining revenues from traditional print advertising, Freedom entered into a consortium with other newspaper publishers to explore new opportunities emerging from technology. Called PAFET (Partners Affiliated for Exploring Technology), the consortium included A.H. Belo Co., Central Newspapers, Cowles Media Co., McClatchy Newspapers Inc., and the Pulitzer Publishing Co. The alliance was managed by the CEOs of the participating companies and had its own executive director.

In 1995 Sam Wolgemuth was hired as the first president of Freedom's Magazine Division, which was created in 1993 to help diversify the company's revenue base. The division included two magazines, World Trade and U.S./Latin Trade, as well as two related directory publications, USA Exports and FashionSource USA. Wolgemuth was formerly president of Simon & Schuster's Business Technical Publications Group and COO of the Reed Travel Group.

In 1995 Freedom acquired WPEC-TV, a CBS affiliate serving West Palm Beach and Fort Pierce, Florida. It was the company's first television acquisition in nearly a decade and the largest single transaction in the history of the company. While terms were not disclosed, analysts estimated that Freedom had paid $120 million or more for the station. The next year Freedom agreed to sell its Orange County NewsChannel to Century Communications Corp. The cable news channel had failed to generate any profits since it began operating in 1990. During this time, Freedom also acquired ABC affiliate WLAJ-TV of Lansing, Michigan, and WWMT-TV of Grand Rapids, Michigan.

New Challenges and New Management: 1999--2000

Freedom began 1999 by selling its Home Theater and Mobile Office magazines. In May 1999 it launched its interactive division, known as Freedom Interactive Media. Its mission was to launch and manage community-specific and customer-interest web businesses and to invest in new media companies. Freedom's management perceived the Internet as a natural and important extension of its core information and entertainment business of serving customers and advertisers. The first community web businesses would be developed in Orange County, to be followed by community sites in other markets served by Freedom's newspapers, including Colorado Springs and eastern North Carolina. Customer-interest web sites were also planned as spinoffs of selected magazines, such as Mode, the company's fashion magazine for average-sized women. During the year Freedom Interactive Media launched web sites LatinTrade.com, ModeStyle.com, SmallOffice.com, and MDNetGuide.com. The company also made strategic Internet venture investments in DrDrew.com, eHow.com, WebOrder, Intraspect, TalkCity, and DigitalWork. Before the end of 1999 Freedom established MyOrangeCounty.com as an interactive media company that would form the basis for Freedom's new Orange County Internet portal.

During the year Freedom announced it was looking for a successor to retiring CEO James Rosse. Under Rosse's leadership Freedom had grown from an estimated $500 million in annual revenue to more than $700 million in 1998. In an interview with the Los Angeles Business Journal, Rosse maintained that Freedom ought to remain a private company, given the founding Hoiles family's unique Libertarian beliefs. Rosse was credited with improving the company's management and bringing in independent directors.

In August Samuel Wolgemuth, who was president of the Freedom Magazine Division, was named president and CEO of the company to succeed Rosse. Under Wolgemuth's leadership, the magazine division had grown to about 20 titles and annual revenue of $80 million. Among the titles he launched or acquired were Mode, Girl, and P.O.V. Colin Ungaro succeeded Wolgemuth as president of Freedom's Magazine Division in November 1999. The division was focused on four primary groups: business and consumer technology, healthcare, international trade and business, and women's fashion and beauty.

Also in 1999 the Magazine Division acquired full ownership of the Curtco Freedom Group, which had been a 50--50 partnership with the group's CEO William J. Curtis since 1995. Curtco consisted of two divisions. The SOHO Division published the magazines Small Business Computing, Home Office Computing, Networked Home, and Small Business Solutions Provider. The CRM Division published Sales Automation, Field Force Automation, Knowledge Management, eCRM, and operated a live events group. The group was renamed Freedom Technology Media Group. Freedom was also negotiating to sell its World Trade Media Group and its flagship magazine, World Trade, to Business News Publishing of Troy, Michigan.

In mid-2000 the Freedom Technology Media Group launched an Internet gateway devoted to customer relationship management (CRM). It was called destinationCRM.com and would include content from FTMG publications as well as real-time coverage from its own editorial staff.

The previously announced closure of P.O.V. magazine, an award-winning lifestyle magazine for young professional men, took place with the February 2000 issue. Freedom had acquired P.O.V. in April 1996. Although the magazine boasted more than 100 leading advertisers, Freedom wanted to exit the men's category of magazines and focus on other areas. The company planned to launch a related online venture for young professionals, LiveLarge.com, later in 2000.

In its Community Newspaper Division, Freedom added to its cluster of North Carolina weeklies by acquiring the Hickory News and three niche newspapers. In Florida the company traded its daily Tribune in Fort Pierce to E.W. Scripps Co. for the twice-weekly Destin Log, its sister paper the Walton Log, and an undisclosed amount of cash. The acquisition added to Freedom's holdings in northern Florida, where it already published three community newspapers in Fort Walton Beach, Panama City, and Santa Rosa Beach.

In mid-2000 Freedom agreed to purchase several Arizona newspapers from The Thomson Corporation, which was in the process of divesting all of its newspaper operations in the United States and Canada, with the exception of Canada's Globe and Mail. The acquisition included the Tribune in suburban Phoenix, the Daily News-Sun in Sun City, the Yuma Daily Sun, and a portfolio of non-daily publications.

Around the same time Freedom formed a new company called Freedom Publicaciones with Mexus Publishing to print and distribute a monthly entertainment and general interest Spanish-language tabloid. The core product would be the Mexus publication La Onda, which was a general interest monthly tabloid with the largest circulation (51,000 copies) in the state of Sonora, Mexico. La Onda was printed in Tucson and distributed to Mexican communities near the Arizona-Mexico border. Freedom Publicaciones planned to expand the La Onda concept to other markets along the U.S.-Mexico border, beginning in 2001 with a Monterrey edition.

For 2000 and beyond, Freedom's challenges included expanding its online activities and an ongoing advertising and circulation battle between the Orange County Register and the Los Angeles Times. About half of the company's revenues came from the Orange County Register. Future growth was expected to come from improving its existing properties, exploiting online opportunities, and developing new Internet and magazine partnerships. According to the company's 1999 annual report, it planned a thorough strategic review during the year 2000 to set long-range goals and challenge current assumptions. Although planning to innovate in times of rapid change, Freedom Communications remained committed to the libertarian values and ideals of its founder, R.C. Hoiles.

Principal Subsidiaries: Freedom Technology Media Group; Lewit & LeWinter/Freedom LLC; Freedom Magazines International; MultiMedia HealthCare/Freedom LLC; Freedom Publicaciones.

Principal Divisions: Orange County Newspapers; Community Newspapers; Broadcast Television; Magazines; Interactive Media.

Principal Competitors: Tribune Company; The Hearst Corporation; The E.W. Scripps Company; Gannett Co., Inc.; Knight-Ridder, Inc.

Chronology

• Key Dates:

• 1935: R.C. Hoiles moves his family from Ohio to Santa Ana, California, and purchases the Santa Ana Register.
• 1950: Hoiles's newspaper holdings are incorporated as Freedom Newspapers, Inc.
• 1970s:The Santa Ana Register changes its name to the Orange Country Register.
• 1989: Alan J. Bell becomes president of Freedom's Broadcast Division, comprising five network-affiliated television stations.
• 1992: James N. Rosse is named president and CEO of Freedom Newspapers, Inc.
• 1993: The company's Magazine Division is launched.
• 1994: Company changes its name to Freedom Communications, Inc.
• 1999: Freedom's interactive division, Freedom Interactive Media, is introduced.