Heat City

Julie Moreno

Jonathan Segal

When Freedom Communications executives Jonathan Segal and Julie Moreno announced Monday the company would be shutting down the East Valley Tribune newspaper at the end of the year, they told staffers it was due, in part, to the bad economic state of the news industry. Freedom was under bankruptcy protection, the Tribune was losing money and the company just didn’t have the wherewithal to keep the Mesa newspaper afloat.

What Segal and Moreno did not say, however, was that behind the scenes of their company’s decline, the two of them continued to do very well financially thanks to hefty bonuses given out to executives this year by Freedom Communications.

In fact, documents filed Oct. 24 in federal court in Delaware show that bonus payments as high as $775,000 were widespread within Freedom’s top ranks as the media chain barreled toward bankruptcy. In all, 19 of the company’s top officers pocketed a combined $2.6 million in the first eight months of 2009 alone.

All the while, those who took the extra cash continued to lay off workers or slash pay at most of Freedom’s 100-plus news outlets nationwide. As consolation, the executives told employees their decisions were difficult and not made lightly.

Freedom spokeswoman Maya Pogoda said Wednesday that none of the company’s executives were willing talk about the bonuses. She also declined to answer questions about what merited the rewards in the first place.

“The company doesn’t have any comment beyond what has already been filed in court,” Pogoda said.

The court documents provide a startling picture of a company that knew it was in dire straits financially, yet continued to pay handsome rewards to its leadership anyway. The records show that many of the payments came just days before the company made major announcements regarding its financial decline.

For example, on Aug. 14 – two weeks before it filed for federal bankruptcy protection awash in more than $1 billion in debt – Freedom handed out more than $825,000 in bonuses to 13 executives. That included a payment of $400,000 to former CEO Scott Flanders, who left the company months beforehand to take over the adult entertainment company Playboy Enterprises.

In another example, on March 13, Moreno, a Freedom vice president and the publisher of the East Valley Tribune, took $28,333 in extra pay. She did so seven days before she told staffers at the newspaper they would be forced to take a week off without pay as a “preemptive strike” to prevent future layoffs.

The March bonus capped off $65,456 in total extra pay for Moreno, who already was being paid a salary of about $190,000. Her bonuses all came within three months of the January layoffs of about 140 people from her newspaper. As she did on Monday, Moreno at the time blamed the layoffs on the failing financial state of the industry.

And indeed, Freedom’s news outlets were failing fast. The same documents that detailed the executive rewards also showed just how badly the California media company and its news outlets have been sliding the past few years.

Freedom said in other documents filed Saturday the East Valley Tribune has been unprofitable for two years.

Those were the only two years in which Moreno was publisher of the newspaper. She took over on Sept. 1, 2007 after being promoted from the same post at the Yuma Sun.

So after two years of running a failing newspaper, what exactly earned Moreno the $68,456 in bonus payments? Her employees may never know. She did not return multiple calls for comment this week.

Update (Nov. 6, 3:30p): As one commenter pointed out, the revenues that Freedom Communications reported for the past three years don’t quite make sense. (No, I did not confuse the numbers for quarterly revenue.) So I’ve pulled them out of the story along with the graphics. The Orange County Register is also reporting that the government is questioning some of the numbers Freedom has released during this process. We know Freedom is in bad shape, but the revenue numbers they released Oct. 24 are questionable.

Update (Nov. 6, 4:42p): You asked for it. “Freedom Bonus Central” is now live with all the information Heat City has collected on the executive bonuses. See who got paid while cutting employee pay.

[Disclosure: I'm a former Tribune staffer and was among those laid off in January.]

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