By Gary Gentile
LOS ANGELES (AP) — Shareholders of Freedom Communications Inc. overwhelmingly approved a partnership with two investment companies that preserves one of the last family-owned media companies.
The deal, announced late Wednesday, allows some family members to cash out their shares. That prospect caused other family members to fear they would lose editorial and voting control of a company that operates The Orange County Register, 27 other daily newspapers, 37 weeklies and eight television stations.
In New Mexico, Freedom owns the Clovis News Journal, Portales News-Tribune and the Tucumcari-based, twice-weekly Quay County Sun.
The company’s board voted in October to enter a partnership with Blackstone Communications Partners and Providence Equity Partners, two New York-based investment firms, after conducting a long bidding process that included offers from media rivals Gannett Co. Inc., publisher of USA Today, and Denver-based Media News Group Inc.
Although investment firms are likely to want to turn over their shares at a profit at some point, the deal maintains for now the family’s ability to maintain the libertarian editorial philosophy of founder R.C. Hoiles.
‘‘The ultimate boss, the owners of the company, have spoken,’’ Freedom president and chief executive Alan Bell wrote to Freedom’s employees after the vote. ‘‘The way is clear. Welcome to the future.’’
The company did not disclose the vote count.
Under terms of the deal, shareholders will receive $220 per share, although that will be reduced to $212.71 after the company spends $58.9 million to buy out several of its minority newspaper partners, according to sources familiar with the matter.
The deal needs the approval of the Federal Communications Commission because Freedom owns television stations.
Shareholders have until 10 days before the deal closes to decide how many shares to tender. The deal will likely close sometime in March or April.
If more than half the shares are sold, Blackstone and Providence have agreed to accept enough nonvoting stock to keep the company under family control, according to people familiar with the terms of the agreement.
Family members do have the option to sell more of their shares to the two investment firms in later years. If the percentage of shares owned by Blackstone and Providence climbs too high, the firms could eventually gain voting control of the company under the deal, sources familiar with the terms said.
Once the deal closes, the company’s formal name will be Freedom Holdings, although it will continue to be operated as Freedom Communications. The new board of directors will include four family members, four members named by the investors, Bell, and four independent members.
Bell, who has led the company since last August, said the new structure will allow Freedom to grow.
‘‘The past is of a polarized company, a company where half of the owners actively want to get away from the other half,’’ Bell said. ‘‘That kind of noise and divisiveness has cost the company.
‘‘Once we have unified the ownership, it will be much easier to get things done.’’
On the Net:
Freedom Communications Inc.: http://www.freedom.com