Freedom Communications Inc, the US media company majority owned by the Hoiles family, is expected to file for chapter 11 bankruptcy this week according to US media reports.
The business has reached agreements with its lenders for debt restructuring and will continue to operate under bankruptcy protection. "We are continuing to work with our lenders to address our balance sheet," a Freedom spokesman told the Wall Street Journal.
Freedom, which owns more than 30 daily newspapers and eight TV stations, was founded in the 1930s by Raymond Cyrus Hoiles when he first acquired the Santa Ana Register and is still majority owned by the family. In 2004, Freedom partnered with private equity groups The Blackstone Group and Providence Equity Partners, creating a recapitalisation opportunity for those family members who wanted to sell their shares for cash, while allowing those who wanted to continue in ownership to stay.
As part of the arrangement with Blackstone/Providence, Freedom's family shareholders maintain control of the company. The company currently has revenues of $700 million but has significant debts, in part from the private equity groups' invlovement, that have proved unsustainable.
Meanwhile, family-owned international media company Bertelsmann reported net losses of €333 million for the first half of 2009 compared with profits of €327 million for the same period of 2008. The downturn in advertising revenues has prompted the company to engage in cost-cutting measures, which prevented the half-year losses from being any worse.
Non-family chief executive Hartmut Ostrowski said the advertising market would "remain difficult" for the rest of 2009 and most of 2010. Germany-based Bertelsmann is Europe's largest media company and still owned by the Mohn family, descendents of company founder Carl Bertelsmann. Latest available figures put the company's revenues at $21.1 billion. (Click here to read previous Bertelsmann stories)
The difficult advertising climate has impacted other family businesses during the downturn, where the newspaper sector has been particularly badly affected. July saw Cox Enterprises, the US family-owned media company, sell 13 of its newspapers to family-owned Cooke Communications (click here to read our coverage of the story) and the Sulzberger family, who control the New York Times Company, announce a fire sale of assets in order to reduce debts (click here to read our coverage of the story).
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