Earlier this decade, US-based Freedom Communications was one of the largest family-owned media companies in the world. The third-generation, $2.5 billion company was completely owned by approximately 70 descendants of R C Hoiles, Freedom's founder, writes JoAnne Norton.
However, in 2004 the family brought in equity partners Blackstone and Providence to allow members who wanted liquidity the opportunity to exit. The remaining family members bought out their relatives at a premium price and took a large bank loan to retain the company.
When the balloon payment was due five years later, the company was operating at the lowest point of the most devastating media recession in 50 years—and the US economy was the worst it has been since the Great Depression. Though profitable, Freedom was unable to repay its loan and filed for Chapter 11 reorganisation of the US bankruptcy code on 1 September 2009.
Freedom was hardly alone; 11 other newspaper companies also went down the bankruptcy route. With the reorganisation Freedom will continue to operate as a media company, but that is only part of the story.
Although the Hoiles family has traditionally owned Freedom, it maintained its position as a highly successful newspaper and television company for nearly 90 years thanks in part to the Segal family.
While never owners themselves, the Segals have a multigenerational leadership legacy within Freedom that parallels that of the Hoiles family.
D R Segal was Freedom's first non-family CEO. His son Jon was president of Freedom's newspaper division until it was reported on 29 March 2010 that he would be retiring.
According to Craig E Aronoff and John L Ward, in their seminal book More Than Family: Non-Family Executives in the Family Business, good non-family executives can enable a family business to grow, enhance standards of professionalism, and transfer the family's values and ideas to other associates.
D R Segal was integral in helping Freedom Communications improve its newspapers and adding television stations to Freedom's portfolio. Successful non-family executives understand the importance of keeping the values of the family business founder alive. The Segals' involvement in the leadership of the company was crucial in keeping R C Hoiles' value of promoting libertarianism a fundamental part of Freedom. Jon Segal, in particular, championed the training of associates regarding Hoiles' libertarian philosophy.
While Jon Segal focused on the growth of the company, he never lost sight of how significant Freedom's 7000 associates were to the process as he strived to create a more professional workforce. During Jon's tenure, Freedom newspapers outperformed their peers in both profitability and operating efficiency, according to an independent review.
Customer surveys showed that readers ranked Freedom's newspapers higher in "cares about the community" and "fair and accurate reporting" than other papers in the research. Most importantly, employee-attitude surveys consistently showed that morale was higher at Freedom than was the norm for other newspapers. Segal's attitude was "work hard and play hard," and he absolutely insisted that everyone have fun at their annual meetings.
Jon and D R Segal had values Aronoff and Ward consider vital for non-family executives to be successful. The Segals were competent, treated the business as their own, helped to professionalise the business, took their roles as teachers seriously, emphasised teamwork while being part of the team, and worked hard to earn trust. Jon was trusted by Freedom associates not only for having integrity but also for having empathy, another quality indispensable to a successful non-family executive.
Kathie Bassett, a family member in the fourth generation and reporter for Freedom's Alton (Illinois) Telegraph, says of Jon: "He has a tremendous capacity for empathy because he listens and considers different view points. He has earned everyone's respect because he has such a strong moral compass."
As Jon Segal prepares to begin the next chapter of his life, he said he wants to give back to the business community and to advise other family businesses and media companies. He will also mentor the next successor of the Segal legacy, his son Chris, who began his career in 2005 in the pressroom of Freedom's Orange County Register and is now a reporter for Freedom's Panama City (Florida) News Herald.
The Segal dynasty continues, proving that there can be a line of generational leaders who work in the family business who are not family owners.
Picture: The Segal family