Feds let Singleton off the hook

Justice Department refuses to block media mega-merger
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tredmond@sfbg.com

The United States Department of Justice has refused to intervene in the largest media merger in Bay Area history.

In a brief press release, the DOJ said that the deal under which Denver billionaire Dean Singleton will buy almost every daily newspaper in the Bay Area "is not likely to reduce competition substantially." That, of course, is crazy (see the Bruce Blog).

But the deal is by no means done yet.

Although the local news media have played up the fact that real-estate investor Clint Reilly was unable to block the merger deal, Reilly's lawyer, Joe Alioto, says the case has only begun.

"We are requesting all of the Justice Departments documents, and we want to make them public," Alioto told me. "We're going to notice the depositions of the CEOs and ask for a trial date."

Alioto said that the judge, Susan Illston, refused to issue a restraining order -- but said in court that the case rasied serious questions. She also said that if she finds a violation of law in the merger, she will order the parties to undo it, Alioto said.

The judge -- along with the Department of Justice -- also acknowledged that there's another potentially problematic element here: Hearst Corp, which owns the San Francisco Chronicle, is slated to enter into a financial deal with SIngleton that would give Hearst a stake in one of Singleton's operations. That offers serious competitive problems, since the Chron would be the only remaining competitor to Singleton after the merger.

"She said that when the agreement with Hearst is finalized, we can come back and file for another injunction, which is exactly what we will do," Alioto said.