Ex-candidate to file lawsuit blocking deal for area papers

Former mayoral candidate Clint Reilly plans to file a lawsuit today to squash the $1 billion deal that would put the majority of the Bay Area newspapers under the ownership of Denver-based media company MediaNews Group.

Since it appears the United States Justice Department will not kill the transaction, the lawsuit is the last measure to try and prevent the birth of a newspaper monopoly in the Bay Area, Reilly’s attorney, Joseph Alioto, said. He will file the lawsuit today in the United States District Court.

“Newspapers are more than commercial enterprises,” Alioto said. “They are opinion-makers and have a tremendous influence. The more the voices, the more diversity, the better it is.”

In April, Media-News Group and the Hearst Corporation joined together to purchase, for $1 billion, four newspapers from Sacramento-based media company McClatchy.

The four papers were among 12 of Knight Ridder’s 32 newspapers put up for sale after McClatchy acquired Knight Ridder earlier this year.

If the sale goes through, Media-News Group would own three more Bay Area papers, the San Jose Mercury News, the Monterey County Herald and the Contra Costa Times. The company already owns the Oakland Tribune, the Fremont Argus, the Marin Independent Journal, the Tri-Valley Herald and the Hayward Daily Review.

Hearst Corporation, which publishes The Chronicle, would not have an interest in these Bay Area newspapers. In exchange for helping to finance the purchase, the Hearst Corporation would gain a stake in the MediaNews newspapers outside of the Bay Area group of papers, such as its flagship paper, The Denver Post.

The Justice Department is expected to issue a ruling within a few weeks on whether the deal would violate federal antitrust laws, which prohibit businesses from monopolizing a market.

MediaNews Group President Jody Lodovic said he would not comment on the case because he has not seen it yet, but that the Justice Department “is doing their job.” He added, “We don’t believe there are any antitrust issues.”

Six years ago, Reilly filed and lost a similar lawsuit against the Hearst Corporation over its purchase of the San Francisco Chronicle.

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