• by Erik Sass  @eriksass1, February 15, 2016

The contest for the Orange County Register is heating up, with multiple suitors submitting preliminary bids for the financially strapped Southern California newspaper as owner Freedom Communications prepares for a bankruptcy auction.

However, the list of bidders does not include the newspaper’s current management -- at least for now.

As expected, Los Angeles Times publisher Tribune Publishing submitted an early, “stalking horse” bid in the lead-up to the bankruptcy auction, which serves to set a minimum price for further bidding during the auction itself. The amount of the bid, which also includes the Riverside Press Enterprise, wasn’t disclosed.

Tribune’s war chest recently received a cash infusion through a surprise investment by Michael Ferro, the majority owner of Chicago Tribune rival Chicago Sun-Times, which purchased a 16.6% stake in Tribune for $44.4 million earlier this month.

Tribune faces competition from Digital First Media -- publisher of the Los Angeles Daily News as well as the Denver Post, among other newspapers -- which submitted a rival bid, also undisclosed.

Both Tribune and DFM could benefit from cost efficiencies by consolidating printing and distribution operations for their LA-area news areas. However, there are also major potential costs involved -- most notably liabilities associated with Freedom’s pension plan, which will be a major point of contention in the auction.

Any bid that offers to take on some or all of the $155 million in future obligations will have an advantage. The bidders don’t necessarily have to assume these costs, pushing the burden back on to Freedom’s unsecured debt.

The auction is scheduled to take place on March 16, with second-round offers due by March 11, and a final decision by a federal bankruptcy judge possible as early as March 21.

Previously, a local investor group led by Rich Mirman, the CEO of OC Register publisher Freedom Communications, said it intended to submit a preliminary bid for the newspaper, but they had not submitted a bid by the deadline last Friday.

That doesn’t mean the group won’t participate in the auction at a later point, according to Mirman, who stated: “After weighing its advantages and drawbacks, we decided not to submit a stalking horse bid. We believe our interests are better served in letting the auction determine a fair price, rather than prematurely anticipating the ‘right’ price.”