The case against the media grab

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EDITORIAL The last time real estate investor Clint Reilly took the local newspapers to court in 2000, the trial was a sensation. Among other things, Tim White, who was at the time the publisher of the San Francisco Examiner, admitted that he had offered to give then-mayor Willie Brown more favorable editorial coverage if Brown would help squelch a Justice Department investigation into an Examiner-Chronicle financial deal.
The so-called "horse-trading" testimony brought to light one of the giant lies of the daily newspaper business in San Francisco and proved that the out-of-town owners of these papers care more about profits than honest journalism.
Back then, the deal involved Hearst Corp., which owned the Examiner, wanting to buy the Chronicle. The idea was to shut down the Ex, eliminate a 35-year-long joint operating agreement, and create a daily paper monopoly. The Justice Department hemmed and hawed a bit, then (thanks to Brown and Sen. Dianne Feinstein) agreed to a backroom deal: Hearst would give the Ex to the Fang family (along with a juicy three-year, $66 million subsidy), and the federal regulators would get out of the way.
Reilly’s suit was a tremendous public service, shining light on parts of the newspaper business that the big publishers always try to keep secret. In the end the suit went down, dismissed by a conservative federal judge, Vaughn Walker, who nevertheless called the whole Hearst-Fang-Chronicle deal "malodorous."
Now there's another, much bigger newspaper deal in the Bay Area, one that would create a far bigger and more powerful news monopoly — and once again, while the government regulators dither and duck, Reilly is taking the matter to court.
The unholy arrangement in question would give Denver media baron Dean Singleton and his Media News Group (in partnership with Gannett and Stephens Media) control over virtually every daily newspaper in the Bay Area [see “Singleton's Monopoly,” 5/6/06]. Singleton, who already owns the Marin Independent Journal and the Oakland Tribune (among others), is buying the San Jose Mercury News, Contra Costa Times, Monterey Herald, and some 30 other small dailies.
That would leave the Chronicle as the only real competitor, but Hearst, which now owns the Chron, is in the deal too, helping finance some of Singleton's out-of-state purchases in exchange for a stake in the business.
Reilly, represented by antitrust lawyer Joseph Alioto, argues that the whole thing violates the Sherman and Clayton antitrust acts and would lead to an illegal consolidation of market power for one newspaper owner. It would also, of course, lead to an unprecedented consolidation of local political power for a conservative Denver billionaire. Reilly wants an immediate injunction to put the merger on hold while the courts can determine how bad its impacts will be.
Three cheers for Reilly: Somebody had to question this massive media scandal — and so far, there's no sign that the government is going to. The US Justice Department is doing nothing to aggressively fight (or even delay) the deal, and we've heard nothing out of the office of Attorney General Bill Lockyer.
The damage that this newspaper consolidation could do is long lasting and irreparable: Once the papers are all fully integrated under the Singleton umbrella, there will be no way to unscramble the egg. That's why the court should quickly approve Reilly's request for a temporary restraining order so the whole thing can be examined in detail, in public, before a judge.
Meanwhile, the political questions keep flowing: Where is Lockyer? Where is Oakland mayor Jerry Brown, who wants to be the next state attorney general? And where is the supposedly competitive Chronicle, which has said nary a word against the deal?
PS: The news coverage of Reilly's suit reflects how poorly the daily papers cover themselves: Just tiny press-release-style reports, with no outside sources, no indication of how crucial the issues are, and no aggressive reporting.