Two companies that collectively own the majority of Bay Area newspapers — including the San Francisco Chronicle, the Contra Costa Times and the San Jose Mercury News — settled a lawsuit filed by San Francisco businessman Clint Reilly, who charged that Hearst Corp. and MediaNews Group Inc. have been working in collusion to create a local media monopoly.
Reilly filed an antitrust lawsuit in July 2006 to halt a multi-layered deal in which Hearst, which owns the San Francisco Chronicle, made a $300 million investment in MediaNews — an agreement that enabled MediaNews to purchase the Contra Costa Times, the San Jose Mercury News, the Monterey Herald and the St. Paul [Minn.] Pioneer Press for $1 billion.
At the time, Denver-based MediaNews, the fourth largest newspaper publisher in the country, already owned nine Bay Area newspapers, including the Oakland Tribune, the San Mateo County Times and the Marin Independent Journal. The acquisition of the two Northern California dailies cemented MediaNews’ dominant ownership of Bay Area newspapers.
The deal created a media monopoly, Reilly claimed, that would limit the flow of ideas and debate that is created between competing newspapers, as well as lead to increases in advertising and subscription rates.
Giving proof to his assertions, Reilly and his attorney, Joseph Alioto, have pointed to an April 2006 letter, revealed as a result of the legal proceedings, in which MediaNews and Hearst discussed combining local distribution and national advertising operations.
On Wednesday, Reilly — a former political consultant who once made a run for San Francisco mayor — celebrated the settlement of the lawsuit, and said the terms ensured that competition would remain between MediaNews Group and the Chronicle and that the “secret deal” between the two companies had been “torn up.”
Hearst attorney Daniel Wall said agreeing not to pursue that particular proposal wasn’t much of a sacrifice and doesn’t prohibit the companies from looking into the possibility in the future.
“When that was the principal demand being made in the settlement, it was very easy to resolve the case,” Wall said. “There wasn’t enough there to make it worth litigating over.”
Wall also said that charges that the media groups could restrain news competition were unfounded.
“This is the most competitive media market in the country,” Wall said. “If there’s a principal newspaper competitor, it’s The Examiner, not any of the MediaNews newspapers. There’s also competition from Craigslist and Internet and radio and TV. None of that is going away.”
The agreement also gives Reilly unusual monitoring access for a private citizen over MediaNews Group, including the right to receive timely copies of documents related to a management committee that oversees the California newspapers for the Denver-based publisher, and the right to serve on the editorial board of any California paper owned by MediaNews.
The purpose of the oversight provisions is to prevent the media companies from “reneging” on commitments not to collaborate, said Reilly, who added that if he became aware they were investigating new agreements, they “would face a most certain lawsuit from me.”
In addition, Reilly will be given weekly space in all of MediaNews Group’s California newspapers in which he can air his own personal views. The defendants also agreed to pay Reilly’s costs and attorney’s fees.
Reilly said he decided to settle the lawsuit because he didn’t feel he would get more from the courts, and he may have received less.
UC Berkeley media law professor Stephen Barnett said he was disappointed that the lawsuit wasn’t going forward, because he believed more documents would have surfaced showing that there was a “secret plan to monopolize Bay Area media.”
“One hates to miss the excitement of a trial, but the result of that would have been unpredictable, and this settlement seems to be about the best that Reilly could have done,” Barnett said. “But I think he has provided a public service in calling attention to this deal in the first place.”
The Department of Justice is still continuing its review of the MediaNews Group-Hearst Corp. transaction, according to a statement released Wednesday by Hearst, which said it was “optimistic that its investment in MediaNews Group will be allowed to proceed.”
SUMMARY OF THE LAWSUIT AND SETTLEMENT
» Hearst Corp. and MediaNews Group agreed to not pursue previously negotiated cooperative business efforts between the newspapers they collectively own, including the San Francisco Chronicle, the Contra Costa Times and the San Jose Mercury News.
» Such joint agreements would have created an anti-competitive media domination that would affect advertising prices as well as news coverage, the antitrust lawsuit, filed by San Francisco businessman Clint Reilly, charged.
» In return, Reilly agreed to drop his lawsuit, which sought to halt the sale of the San Jose Mercury News and the Contra Costa Times to MediaNews, which already own nine Bay Area newspapers, including the Oakland Tribune, the San Mateo County Times and the Marin Independent Journal.
WHAT THE SETTLEMENT STOPS
» Recent efforts to combine distribution between the Chronicle and MediaNews Group
» Recent efforts to combine production
» Recent efforts to combine the sales of national advertising and any advertising sales
» Recent efforts to combine editorial operations
» Recent efforts to combine Internet sales