Bay sharks still circling

Details of the semi-secret financial deal behind a huge Bay Area newspaper buyout described in these pages in June ("Sharks in the Bay,” cover package, June 1) are finally becoming public, thanks to documents available because of an antitrust lawsuit.

It turns out that the Hearst Corp., owner of the San Francisco Chronicle, gave financial help to MediaNews Group Inc. when the latter paid $1 billion to purchase three major Bay Area dailies and 30 community papers from the McClatchy Co., which earlier bought them from Knight Ridder. MediaNews already owned 11 dailies in the region.

The arrangement gave MediaNews (which also owns several papers in the Sacramento Valley, including the Chico Enterprise-Record, the Oroville Mercury Register and the Paradise Post) control over most of the Bay Area’s newspapers and a combined circulation of 697,000. The only daily the company doesn’t own is the Chronicle, whose circulation is 398,000.

The lawsuit, which was filed by Clint Reilly, a San Francisco real estate executive, charges that the arrangement puts too much media control in too few hands—especially now that it’s apparent that Hearst and MediaNews were financial partners in the deal.

According to a Sept. 8 article by George Avalos in the Contra Costa Times, documents show that Hearst provided financing to help MediaNews purchase the Times and the San Jose Mercury News. Hearst also bought the Monterey Herald and the St. Paul (Minn.) Pioneer Press from McClatchy “and agreed to trade the papers to MediaNew in return for a stake in MediaNews properties outside the Bay Area,” Avalos writes.

A spokesman for Hearst told Avalos that Hearst had no management interest in the Bay Area papers. Executives with MediaNews refused to talk with Avalos, and Frank Vega, publisher of the Chronicle, told him, “I really don’t have any comment about the lawsuit. This is a Hearst-MediaNews deal.”

Critics of the deal, however, are charging that it proves Hearst and MediaNews are in collusion to monopolize Bay Area newspapers. At the least, they say, certain conditions of the arrangement could allow Hearst to invest in all of MediaNews’ holdings, thereby becoming a part owner of its Bay Area papers.

Perhaps the most vociferous critic has been Bruce Brugmann, the editor/publisher of the feistily independent weekly San Francisco Bay Guardian. In published stories and his blog, he’s been trying to get other papers in the area even to report on Reilly’s lawsuit, which was filed weeks ago. He notes that the recent stories in the Times and the Mercury News closely followed upon his paper’s publication of the Project Censored list, a Sonoma State University Journalism Department endeavor that documents the most underreported stories each year and this time included the media blackout on the MediaNews-Hearst connection.

The Chronicle, Brugmann notes, still has not covered the story.

Meanwhile, Avalos reports, the Justice Department has begun reviewing the revelations about the Hearst-MediaNews transaction. Federal and state antitrust lawyers earlier had approved the sale of Knight Ridder to McClatchy, holding that it did not impede competition in the region.