Actions by The Orange County Register’s owners this year as they’ve worked to sell the newspaper’s Santa Ana headquarters building and the land around it have led to questions regarding whether the real estate deals could be affecting the paper’s coverage of City Hall.
News of the Register’s financial distress has been piling up for months, with some calling the sale of its headquarters to local real estate tycoon Michael Harrah and efforts to sell an additional 14.3 acres adjacent to the building a last ditch gambit to stave off bankruptcy.
Last week it was revealed that two Freedom investors, Abbey Financial LLC and Old Colony 2012 Investment Fund LLC, are pressing a Delaware judge to force the newspaper into receivership because they claim the company is “insolvent and in financial distress from mismanagement.”
The Register’s parent company, Freedom Communications, has issued a statement denying those claims.
But it is clear that company owners Aaron Kushner and Eric Spitz have made the land sale a high priority in recent months and are working with Harrah and Santa Ana Mayor Miguel Pulido to get them done.
Meanwhile, favorable coverage of Harrah and an editorial flip-flop on Pulido in the pages of the Register have raised eyebrows.
The ‘Pioneer’ Award
In June, Spitz sat at Pulido’s VIP table during the mayor’s state of the city address.
Then in July, Spitz was sitting in the council meeting audience when Pulido presented Harrah with the “William H. Spurgeon Pioneer” award for Harrah’s considerable investment in downtown buildings.
Councilmen Roman Reyna, who ran against Pulido in this year’s mayoral election, and Sal Tinajero openly ridiculed the newly established award, attributing it to election year politicking by Pulido.
“Kudos to us for creating a brand new award. I had no idea that we had the brand-new, first William Spurgeon’s award,” Reyna said.
Tinajero then cut in, saying jokingly: “Yeah, they usually happen during election time.”
After the ceremony, Spitz and Harrah left the meeting together. And the following day, the Register published a glowing write-up on Pulido giving Harrah the award.
It makes a point of highlighting One Broadway Plaza, Harrah’s signature development in Santa Ana, without mentioning the decade-long controversy over the impacts of what would be the county’s tallest building.
“Mike is a pioneer. He is a guy that goes the extra mile,” the article quoted Pulido as saying.
Two months after that meeting, Harrah completed the purchase of the Register’s headquarters and is now leasing it back to Freedom. And he is reportedly among the bidders for the vacant land parcel.
There has also been a shift in the Register’s editorial page stance on Pulido.
In the run-up to the 2012 mayoral election between Pulido and Councilman David Benavides, the editorial board made it a point not to endorse either candidate.
In fact, it went so far as to mention in an editorial that it was not comfortable with how Pulido conducts civic affairs.
“[Pulido has] dabbled with subsidies for development and light rail and higher taxes, and we worry about the potential for crony capitalism in the city,” the 2012 editorial states. “But if Mr. Pulido wants another term, he should be willing to change the way he does business.”
Since then, Pulido’s way of doing business has come under increasing scrutiny. Local, state and federal authorities are investigating the mayor’s property swap with a city contractor that good government experts say looks like a bribery scheme.
But in an editorial penned this month, just days before the election, the Register gave the mayor a ringing endorsement, crediting him with a “continually declining crime rate and substantial rises in property values.”
At the end of the editorial was a vaguely worded note that read: “The Orange County Register is headquartered in Santa Ana, and the company conducts a great deal of business in the city.”
When questioned on the change in the editorial board’s tune regarding Pulido, Kushner defended it.
“The Orange County Register is the preeminent political voice in Orange County,” Kushner wrote in an email. “Our readers count on us, we take our political responsibilities seriously and we stand by our opinions.”
That is not how Councilwoman Michele Martinez sees it.
Martinez said it was Pulido who brought Harrah to the bargaining table with the Register. And she didn’t mince words about what she believes are the Register’s motives in endorsing Pulido for reelection.
“It has to do with this [real estate deal],” said Martinez, who is one of Pulido’s foes on council. “In the end people are going to look at them and say, ‘are they even credible?’ You’re not supposed to be playing politics. You’re supposed to be reporting.”
Martinez’s claim could not be verified; Pulido, Harrah and other city officials didn’t return phone calls for comment.
However, public records show that the Register owners have met at least once with Pulido and other city officials to talk about the zoning change.
According to public meeting calendars, Pulido joined a May 28 Register “briefing” specifically about potentially rezoning the land. The meeting included Kushner, Spitz, City Manager David Cavazos, City Attorney Sonia Carvalho, Planning Director Karen Haluza and Councilman Vincent Sarmiento.
The Register’s land is located in Sarmiento’s ward, and he said he expressed his opposition in that meeting to having only high-density residential at the plot.
“I scrutinize any changes to zoning, especially when it involves a zoning amendment or change to residential from commercial or industrial,” Sarmiento said.
Sarmiento said he didn’t know how Pulido was involved in the deal and said he couldn’t recall whether it was the mayor who set up the meeting.
The previous bidder for the land was also a developer known to have close ties to Pulido. William Lyon Homes – which donated the most of any contributor to the mayor’s reelection campaign – signed a preliminary agreement to buy the property. But negotiations didn’t pan out.
A Controversial Tenure
Kushner and Spitz’s ownership of Freedom has been one of the most well-chronicled media gambles in recent years and has come under intense scrutiny as their plans for the Register have unraveled.
They bought the newspaper in 2012 and immediately invested heavily in the newsroom. They also launched newspapers in Los Angeles and Long Beach and purchased the Riverside Press-Enterprise.
Since the sale, the new owners have cut deals that generate more revenue but also triggered intense criticism from media watchdogs who question the Register’s ethics and credibility as it pursues creative new business ventures.
Last year, the Register launched a universities section underwritten by the very universities it covers. The deal raised questions about the newspaper’s ability to objectively report on the schools.
A few months later, Voice of OC published an article detailing Freedom’s pitch to be the corporate naming rights broker for Anaheim’s expensive train depot project, a partnership that media ethicists said would make the Register appear to be an agent of the government. After the article, negotiations between the Register and Anaheim fell apart.
And while these efforts have generated criticism, they apparently haven’t generated enough cash.
By September of this year, the Long Beach Register had been cut back dramatically, the Los Angeles Register had folded, Freedom employees had endured multiple rounds of layoffs, and the Los Angeles Times filed suit over unpaid bills for delivering the Register.
Then on Oct. 13 Kushner – the public face of the Register’s bold expansion plans – stepped down as publisher and was replaced by Richard Mirman, a Las Vegas casino operator and one of the company’s investors.
A Quid Pro Quo?
Marc Cooper, the USC journalism professor who in the past has openly questioned Kusher’s ethics, said the Register’s latest moves are signs of its desperation, and he called the editorial endorsement of Pulido an apparent “quid pro quo.”
“Of course there is the remarkable irony that this newspaper, which has built a decades long reputation as being a libertarian voice against government in general, now gets in bed with the mayor to save its own skin,” Cooper said. “There’s clearly is a difference between their public and private morality… the mayor could be a socialist, they probably would have found a way to endorse him.”
Cooper also said that the endorsement’s disclaimer was woefully inadequate.
“Every newspaper endorses the city officials in the city it does business in. So what is the disclaimer?” Cooper said. “It’s a very, very poorly executed measure to cover their butt in a conflict of interest charge.”
And regarding the coverage of Harrah’s award before he purchased the Register’s building, Cooper said that it exposed the “logical conclusion” of offering up the kind of positive news Kushner wanted for the publication in order to help “raise Orange County” – granting rosy coverage to local elites in exchange for doing business with the Register.
“This is the incarnation of that as a self-serving farce,” Cooper said.
Voice of OC staff writer Nick Gerda contributed reporting to this article.
Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek