The letter, Illson wrote, “casts doubt on the Court’s earlier finding that the San Francisco Chronicle is a strong source of competition for [Singleton’s] newspapers.” She added that the arrangements “appear inconsistent with the notion [cited by Hearst’s lawyers] that … Hearst ‘is specifically not going to be involved in [Singelton’s] Bay Area newspaper properties.’” That’s legalese for saying that the giant newspaper barons at the very least misled the court.
In fact, Illston states that she “is not wholly convinced that the arrangement now described by defendants would be legal.” The point: advertisers seeking to buy space in a Bay Area daily paper might wind up with having exactly one choice - the combined Singleton-Hearst operation - a situation that would violate antitrust laws.
“Such agreements, the mere existence of the letter, and the cooperation between Hearst and Media News they reflect, increase the likelihood that the transactions at issue here were anti-competitive and illegal,” Illson wrote.
In open court, Alioto argued that the Hearst-Singleton side deal was the lynchpin that made the entire complex purchase deal possible. That would mean that from the start, officials from Hearst and Singleton had agreed to join forced and end daily competition in the Bay Area.
Illston didn’t toss out the entire Singleton deal, ruling that if Reilly succeeds in proving the deal illegal, it can be undone later. But she did issue a restraining order blocking the parties from entering into any of the joint operations that were described in the April 26 letter.
The amazing thing about all of this is that it came to light only because Reilly was willing to put up his own money to take on the case. The U.S. Justice Department was happily allowing it to sail forward. California Attorney General Bill Lockyer had done nothing to toss even a pebble in the path of the merger steamroller. That’s not just terrible public policy - it’s embarrassing. With this new evidence now available, Lockyer and the feds should immediately go into court and join with Reilly to seek a permanent injunction against the entire deal and to force Singleton to divest some of his properties so that some semblance of competition will exist in the local daily newspaper market.
The ruling raises a troubling question: What’s in all of the other secret documents are out there? What other plots and plans were the newspaper owners hatching? We don’t know - because the publishers, who love to describe themselves as staunch supporters of open government, have demanded that every piece of paper in the case be kept under court seal. That’s wrong: The papers certainly can’t claim that competitive trade secrets are at issue, since they clearly had no intention of competing. So why the secrecy? Judge Illston should lift the seal and open all of the records in this case to the public.
PS: The mighty U.S. Justice Department can lock 24-year-old Josh Wolf in prison for standing up to his First Amendment rights, but can’t seem to lift a finger against big newspaper publishers. Lovely.
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