In announcing this week that the takeover of three Bay Area newspapers in a $1 billion deal would not substantially reduce media competition, the U.S. Justice Department showed great familiarity with legal loopholes and a lack of understanding about the local newspaper business.
And that’s to be expected in an administration that has no problem seeing fewer editorial voices. But there’s no getting around the fact that it’s a very sad day for Bay Area newspaper readers and journalists.
By allowing Denver-based Media-News to buy the San Jose Mercury News, the Contra Costa Times and the Monterey Herald and add them to its existing stable of newspapers in the East Bay and San Mateo and Marin counties, federal regulators have essentially sanctioned a media stranglehold around San Francisco, where the once-mighty Chronicle seems closer to gasping its last breaths.
“After a careful investigation … the Antitrust Division determined that the transaction is not likely to reduce competition substantially,’’ according to the Justice Department statement. And if that’s the case then it’s only because all signs point to the conclusion that the Chronicle is not really going to be competing very hard, since in the domino scheme in which the McClatchy chain bought the local Knight-Ridder newspapers only to sell them to MediaNews, the Hearst Corp. — the Chronicle’s parent company — actually financed a large portion of the deal.
Dean Singleton, the chief executive of MediaNews and the new king of the Bay Area newspaper market, told reporters that since all the newspapers his company will now have are outside The City, they’re competing in different markets. And to that I can say only that it’s an incredibly loose interpretation of the facts.
I worked for nearly 20 years at the San Jose Mercury News and the Chronicle, and the two papers and their owners were at various times locked in a titanic territorial struggle for readers and advertisers. In recent years the Chronicle tried to make deep inroads into the rich enclave of Contra Costa County, a battle that the San Francisco paper all but surrendered when Knight-Ridder took over the Times and made it a very credible local suburban daily.
Such attributes are generally not handed out to Singleton’s current Bay Area holdings, which include the Oakland Tribune, the Hayward Daily Review, the Marin Independent-Journal and the San Mateo County Times. Those papers more closely reflect his management model to keep operating costs to a bare minimum — small news staffs, lean production and distribution crews, shared story content and generally less-than-glowing editorial reviews.
But Singleton is nothing but a dealmaker, and in this case he brokered his best. MediaNews is buying the Mercury News and Contra Costa Times for $736 million and then acquiring the St. Paul Pioneer Press in Minnesota and the Monterey Herald with some $265 million from Hearst — which is turning them over to MediaNews in exchange for a percentage of earnings from the papers outside the Bay Area.
And that’s where the idea that they will be fierce competitors becomes, well, a little shaky. For Hearst and MediaNews recently announced that they are in talks to share online content between their Bay Area newspapers — an arrangement that would have stirred old-school headline writers to conjure up the word “cahoots.”
“The idea that a competitor would finance another major competitor and then say they’re going to be aggressively competing against each other would require you to believe in the tooth fairy,” said Joseph M. Alioto, an antitrust attorney who filed a federal lawsuit recently to block the deal. “In this case the Justice Department has turned out to be the true handmaidens of the monopolists.”
A judge refused to grant an injunction stopping the ownership transfer but left intact the option of nixing the deal if a case can be made that the business transaction doesn’t
meet anti-monopoly standards.
I have no stake in the outcome other than observing it as an ongoing and intriguing local story. The Examiner is going its own way with a new model that is gaining both readers and revenue. Whatever happens with MediaNews and the Hearst-owned Chronicle will not have a great impact on this paper’s future success — and I can honestly say that I hope all the papers survive because as a career journalist, I’ve always believed that more voices and competition make us all better.
But the most likely outcome, based on history, is that Singleton’s takeover will mean cuts and layoffs — possibly severe — and that the quality of journalism will suffer here from what appears to be a battle in words only.
And — the bottom line — it’s one of the few times as a columnist I hope to be proved wrong.