EXCLUSIVE: Read Aaron Kushner's Secret PowerPoint Pitch to Investors to Save the OC Register
At the beginning of December 2013, Orange County Register owner Aaron Kushner was seemingly on top of his empire-building game.
Will those little cute papers be smiling on Monday?
Just a year and a half after acquiring Freedom Communications, the Boston businessman had completed the purchase of the Riverside Press-Enterprise, four months after having launched the daily Long Beach Register. Plans were in the works to launch yet another new daily - the Los Angeles Register, which would battle the Los Angeles Times in its own turf. Longtime Freedom community weeklies in Irvine and Newport Beach had been turned into dailies, and staffing at the Reg had ballooned to around 370, near the height of the paper's glory days in the 1990s.
Hiccups had occurred along the way--the P-E's previous owners, the A.H. Belo Corporation, had threatened not to go through with the sale after Kushner couldn't meet certain thresholds, and Freedom's previous owners had sued Kushner over allegations he owed them money. But Kushner was still riding a wave of positive national press for apparently doing the impossible: not only expanding a daily newspaper in a time of endless layoffs and budget cuts, but making it thrive.
Privately, though, Kushner was fretting.
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To complete the P-E deal, he had to take out another loan. His company only had $6 million on hand. Advertising sales were nowhere near the level needed to sustain Kushner's grand experiment, an inconvenient truth he had already shared with his staff in August. To fund his expansionist plans, Kushner was already planning to do the unthinkable: sell off the Register's longtime headquarters, along with the last newspapers of the old R.C. Hoiles chain of libertarian dailies, the Victorville Daily Press and other desert publications.
But first, Kushner needed money.
Gracias, source! The opening slide of Kushner's PowerPoint presentation
According to sources who spoke to the Weekly on the condition of anonymity, Kushner went around Southern California at the end of 2013 pitching potential funders on a $12 million investment in Freedom. It was needed, according to a confidential PowerPoint presentation obtained by the Weekly, to "complete the $30 million preferred equity financing that surrounded the acquisition of the Press-Enterprise and the recapitalization of the company." Anyone who took the plunge was promised a robust 18 percent annual return, 12 percent equity ownership and "the opportunity to participate in future Freedom transactions" as well as have an "advisory role in the growth of Freedom."
The PowerPoint document (which you can read in its entirety below) is mostly boardroom boosterism: an overview of the company's accomplishments, biographies of its principals, a description of its strategy moving forward, and inspirational "insights" intended to convince potential investors of Freedom's vision.
Investors were unimpressed, sources tell the Weekly.
What's most fascinating about Freedom's PowerPoint presentation is its optimistic description of how Kushner planned to dig himself out of debt even as it showed a dark future ahead. Also notable: his considerable sense of self, even in times of desperation.
"Management believes that the Orange County Register has now built a reservoir of quality and goodwill rivaling any newspaper in the country," the presentation asserted. "The fixed investment in a major revamp of the Register is now complete with the upswing in revenue and major partnerships accumulating already with significant growth still to come."
If that wasn't enough to get the attention of potential investors, there was this: "No other newspaper in the country has yet harnessed the full economic power of Freedom's model."
Kushner's main leverage to ensure the future of his company and convince investors he'd be financially solvent? Real estate.