Newspapers temporarily restrained

A recent spate of newspaper acquisitions led developer Clinton Reilly to launch an antitrust case against some of California’s biggest media players this summer. The Hearst Corporation and MediaNews Group, which have stakes in just about every page of Bay Area newsprint, are two of five entities accused of collaborating when they should be competing. U.S. District Judge Susan Illston is investigating claims that “past and present owners of the major Bay Area newspapers have begun to consolidate ownership of those newspapers, to divide up the geographic market, and ultimately to forego competing with each other.” The McClatchy Company, though not a defendant in the case, sparked the recent suit by selling four of its recently acquired newspapers (including the San Jose Mercury News, Contra Costa Times and Monterey Herald) to MediaNews and Hearst. (See “The media, the market & McClatchy,” SN&R Feature Story, May 18.) Trial on the antitrust issue is set to begin in April of 2007.

The case might have sat on the shelf until spring, but a recently uncovered letter between Hearst and MediaNews shook Illston’s faith by detailing ways the two companies can share resources. On November 28, Illston granted a temporary restraining order: “Defendants are temporarily restrained and enjoined from entering into any agreements of the nature described in the April 26 letter, including agreements to offer national advertising sales for their San Francisco Bay Area newspapers on a joint basis, and consolidation of the Bay Area distribution networks for their papers.”

Illston hasn’t yet made her order permanent, but she may not need to. The president of MediaNews responded on December 6: “The parties were very conscious of the need for any such agreements to pass muster under the antitrust laws,” reads a declaration from Joseph Lodovic. Until the completion of trial, he said, the two companies will not offer joint national advertising or joint Internet advertising sales. They won’t share distribution functions, either.

Reilly’s not exactly satisfied. His attorney continues to file documents detailing new acquisitions, including the December 15 acquisition of the Torrence Daily Breeze—"another transaction in which Hearst ‘will buy and later sell to MediaNews another California newspaper.’ “