See bottom of story for full Web package of Guardian newspaper-transaction coverage and documents related to the Reilly suit
Well, it's over before it ever truly began.
Clint Reilly's federal civil suit against the Hearst Corp. and MediaNews Group, filed last year in an attempt to block the would-be competitors from sharing monopoly control of the Bay Area's daily newspaper establishment, ended today in a settlement that left Reilly claiming victory.
The deal blocks any future business deals between Hearst, owner of the San Francisco Chronicle, and MediaNews, which now owns almost every other daily in the region.
The settlement saved some of the nation's biggest newspaper barons from the prospect of a long and embarrassing trial that could have produced alarming revelations about the way the big publishers do business.
The case was set to go before a judge and jury April 30.
But in exchange, Reilly says he got most of what he was asking for - in particular, an end to the prospect of a Hearst-Media News business deal.
At a morning press conference April 25, Reilly announced that the settlement puts the Chronicle back into competition with local MediaNews properties.
"The purpose of my lawsuit," Reilly told reporters, "was to ensure we will not have one company or one partnership owning every single paid subscription daily newspaper in the Bay Area ... I strongly believe in newspaper competition. Newspapers create the record of our civic life."
The local real-estate investor and former mayoral candidate forced the two companies, along with minority business partners the Stephens Group and Gannett Co., to promise they wouldn't carry out the terms of a now-famous letter dated April 26, 2006 that outlined how Hearst and MediaNews could consolidate distribution and advertising operations among their local papers to create revenue.
That was just one of many proposed plans Reilly's suit called a violation of federal antitrust laws. Also according to the settlement, Hearst's $300 million stock investment in MediaNews, which CEO William Dean Singleton relied upon to complete his takeovers last spring of the San Jose Mercury News, the Contra Costa Times, the Monterey County Herald, and eventually, the Torrance Daily Breeze near Los Angeles, would rise and fall in value based only on the performance of MediaNews assets outside of the Bay Area.
The "tracking stock" scheme, as it's known, was initially conceived this way to clear Hearst and MediaNews of immediate antitrust scrutiny by justice-department officials, but Hearst hoped it would later be converted into general MediaNews stock that included its Bay Area papers, a fact confirmed by records unearthed in an earlier phase of Reilly's suit. Hearst, it turned out, much preferred that its huge investment include the totality of MediaNews.
But today's settlement would keep that from happening, according to terms laid out between the parties, some of which they've agreed not to disclose.
Any talk of conjoined operations during the next three years between the companies would have to first be divulged to Reilly and his legal team.
Singleton has also agreed to turn over all executive meeting minutes of the California Newspapers Partnership, formed originally with Gannett and Stephens in 1999, that detail any negotiations with the Chronicle or other major media companies looking to do business with MediaNews in the Bay Area for the next three years.
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