Barons back off newspaper trial - Page 2

Barons back off! Settlement in newspaper trial blocks future Hearst-Singleton deals - and may lead to release of key documents
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In addition, Reilly will be permitted to recommend a citizen for appointment to the editorial boards of CNP's Bay Area newspapers and will himself serve on the editorial board of at least one of them.

"The ten-month-long legal battle gave us a chance to see confidential documents between Hearst and MediaNews, Stephens and Gannett," Reilly said. "Numerous documents show these newspaper companies and their executives are capable of the very cover-ups they so vigorously prosecute in politicians, executives and celebrities. I believe that their primary motivation for settling this case was their fear of exposing questionable competitive practices to public scrutiny.

"This is the second time Reilly has done this," his attorney, Joe Alioto, told the reporters, referring to a 2000 suit Reilly filed to stop Hearst from shutting down the San Francisco Examiner. "And he does it because the government won't do it. He does it all at his own cost and risk."

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Reilly's first antitrust assault on Hearst produced some sensational revelations - including the fact that the Examiner publisher sought to trade favorable editorial coverage of then-Mayor Willie Brown in exchange for Brown's support of Hearst's business deals.

With the settlement in place, Reilly's second suit won't produce that sort of high drama. But he has forced the release of records showing that Hearst and MediaNews wanted to develop close business ties - and there are more potentially explosive documents that may become public.

After the Guardian and Media Alliance intervened to have records previously sealed by the newspaper companies opened to public access, we learned for the first time that Hearst had considered selling the San Francisco Chronicle to Singleton in 2005. But the latter's offer was chump change, coming just a few short years after Hearst had plowed through three quarters-of-a-billion dollars in its bid to take over the Chronicle and dump the San Francisco Examiner, which it had owned for more than a century. The terms were "totally unacceptable," Hearst executive James Asher would tell the justice department in a September deposition that turned out to be among the most interesting and candid documents to surface from the intervention.

We learned that Hearst had spent more than 10 years gnashing at the bit for an opportunity to invest in the MediaNews business model, best described as a series of "clusters," in which Singleton consolidates the operations of several regional newspapers, hacks madly at the payroll with a broadsword, and sends ill-fated staffers packing, from veteran editors with Pulitzers on their résumés to longtime press operators.

We learned that Hearst's inspiration for its major stock investment in MediaNews began after the two became fast friends in Texas, Singleton's home state. MediaNews in 1995 sold the assets of the Houston Post for $120 million to Hearst, which owned the Houston Chronicle, enabling Hearst to rid itself of a major-market competitor.

We learned that from day one, Hearst wanted its $300 million investment to directly hinge on Bay Area MediaNews properties as well, presumably meaning they believed it would make the investment more valuable, and also meaning Hearst would then have less of an incentive to compete directly with MediaNews. Would you if your competitor was holding $300 million of your money?

We also learned that an anticompetitive agreement to join advertising and distribution networks with MediaNews was required by Hearst "in order to proceed with the transaction," according to a memo Hearst exec Asher sent to MediaNews president Joseph J. Lodovic IV in early 2006. In other words, a quid pro quo by its very definition.

We learned that contradictory legal strategies are far from off limits. The Hearst Corp.

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