Heat City

View Larger Map | Google Map with Street View shows East Valley Tribune in Mesa

A California newspaper publisher says he believes he has the means to make a better offer for the East Valley Tribune and its sister newspapers than the one announced Tuesday in federal court.

Stephen Hadland, the chief executive of the Santa Monica Media Company, would not disclose how much money he plans to offer. But he said he thinks his pitch will be more attractive than the $2.05 million being offered by Colorado newspaperman Randy Miller.

Miller’s bid was revealed Tuesday in federal court in Delaware as part of the bankruptcy process for Freedom Communications, which currently owns the newspapers. The media giant wants to sell all of its papers in the Phoenix metro area to help pay off part of its $1 billion debt.

Under the rules of bankruptcy, Freedom must put the newspapers up for public auction and let a judge determine which bid is best. Hadland said he expects to put up enough cash from investors in the next three weeks to make a serious challenge to Miller’s bid.

“I feel very confident,” Hadland said. “I’ve had six months to work on this and I have a half dozen investors and financers lined up.”

Hadland has had his eye on the Pulitzer Prize-winning East Valley Tribune, as well as the Ahwatukee Foothills News in Phoenix and the Daily News-Sun in Sun City, since last summer when he was in talks to buy them from Freedom.

He said Freedom at the time was willing to sell him all three newspapers for a flat $2 million, but he was unable to pull the financing together before the company declared bankruptcy on Sept. 1.

“We had this deal prior to the bankruptcy and we needed a couple extra days to sell a municipal bond,” Hadland said. “Two days later, we had the money, but it was two days too late.”

Robert Emmers, a spokesman for Freedom, would not discuss the details of the bid or even confirm the company had been in talks with Hadland.

“I’m not going to comment on any negotiations that may or may not have taken place,” Emmers said.

‘That party’

Hadland, who runs a small chain of weekly newspapers in southern California, said Freedom referenced his previous offer in the documents it filed Tuesday in federal court.

Buried within hundreds of pages submitted to the court, Freedom mentioned several other people or companies that were interested in buying at least one of the Phoenix-area newspapers. None of them were explicitly named, but Freedom talked about each one in vague, anonymous terms.

One of the potential suitors, for instance, wanted to buy the Ahwatukee Foothills News and Daily News-Sun but had no interest in the Tribune, the documents said. Others were interested in one paper or another but not the entire group.

But the documents also mentioned another potential buyer – someone besides Miller – who was interested in buying all three newspapers. There were problems with the offer, though.

“That party’s proposed purchase price was lower than (Miller’s),” the documents said, “and that party was unable to demonstrate that it had the financial wherewithal to consummate the transaction.”

Hadland said he was “that party” and his bid was $2 million. And while he said it’s true the figure was lower than Miller’s $2.05 million offer, it was only $50,000 off the mark. “Clearly this is a doable deal for us,” Hadland said.

Now, Hadland has the chance to show publicly whether he truly has the backing to outbid Miller, who has emerged as the front runner for buying the newspapers.

But he – or any serious bidder – will first have to clear a number of hurdles that Freedom put up to weed out halfhearted offers.

The criteria

In its court filings this week, Freedom Communications laid out 13 criteria that anybody besides Miller would have to meet before submitting an offer to buy the newspapers.

Many of the criteria are intuitive: the offer has to be made before the deadline; it has to be for all three newspapers plus the other assets; and it has to be in U.S. dollars.

But the company also set a hefty price to even enter the auction. Anyone hoping to challenge Miller’s bid must first hand over a 10-percent deposit, which would be more than $205,000, before they can get a foot in the door, according to the court records.

The documents didn’t say whether Miller had to put down such a deposit. But they did say anybody who makes a serious offer and loses the auction will be given their deposit back. If, however, the outsider wins the auction but fails to follow through on the purchase, Freedom will keep the cash.

Hadland said the cash up front will be his biggest hurdle. Freedom set a March 8 deadline for offers to be made, giving him less than three weeks to organize his investors and hand over the cash to show he is serious.

“Our only problem will be timing,” Hadland said. “This is a pretty quick turnaround.”

Whether he jumps in or not, the fate of the three newspapers will be known soon enough. Freedom wants a hearing to be scheduled for March 9, the day after the deadline, to discuss the sale. If set, the judge overseeing the bankruptcy could decide as early as then who will take over the newspapers.

[Full disclosure: I am a former staff reporter for the East Valley Tribune.]