Beyond the Reilly settlement

Beyond the Reilly settlement: What does the deal really mean for the Bay Area's news media?


Click here to read the Guardian editorial on the Reilly victory

Shortly before Clint Reilly began a press conference April 25 announcing that he'd settled his federal antitrust suit against the Bay Area's two largest newspaper companies, Cheryl Hurd of NBC affiliate KNTV, channel 11, loudly complained to the pack of reporters that she just didn't quite get the story.

"Why does anybody care about this?" she asked, sounding annoyed as she waved the press release listing the terms of the settlement in the air. "I don't even understand any of this. What's this mean?"

She wasn't the only confused reporter. In the week since the settlement was announced, the local media have downplayed or mangled what is actually a huge story: Reilly, acting on his own, with no support from federal or state regulators, managed to scuttle a deal that would have ended all newspaper competition in the Bay Area.

"Would I have liked to see it go further? Yeah," said Bruce Cain, director of UC Berkeley's Institute of Governmental Studies, who penned a declaration supporting Reilly's case. "But at least he was able to stop more collaboration between those two companies, and he was able to establish the legal point that this has more than just economic consequences. It has consequences for the vitality of political news coverage in the Bay Area."

The settlement involved a lot of peripheral terms, but the essence was this: the Hearst Corp., which owns the San Francisco Chronicle, can no longer consider combining printing, distribution, and ad sales with MediaNews Group, which owns almost every other major local daily in the Bay Area.

Reilly announced that the deal prevents the supposed competitors from unfairly or illegally negotiating any major joint operating arrangement in the near future. The trial was scheduled to begin just days after the agreement was reached.

"Newspapers are the intellectual bridge between citizens and their government," Reilly told reporters. "To me, one Bay Area newspaper company owning every paid circulation daily newspaper would be a very bad thing for Bay Area newspaper readers and for public discourse."

The deal nixes a plan outlined in a letter unearthed during an early phase of the trial. The letter showed that Hearst and MediaNews wanted to consolidate distribution and advertising operations among their local papers to create additional revenue and save on expenses.

Hearst enabled MediaNews to complete the purchase of several major local dailies last year by investing $300 million in the company's stock. To survive antitrust scrutiny, the deal was crafted to make the stock's value hinge entirely on non-Bay Area assets. But documents revealed during the suit clearly show that Hearst had planned to convert the stock so that it included MediaNews papers here as well. The settlement also prevents that from happening.

According to the terms, Reilly will recommend private citizens for appointment to the editorial boards of every California Newspapers Partnership publication in the region, including the San Jose Mercury News, the Contra Costa Times, and the Oakland Tribune.

He will also get access to advertising space in the pages of the papers for a regular column.

Reilly had originally sought to force MediaNews to divest itself of the San Jose Mercury News and other papers, but that was a long shot at best. What's remarkable is that he accomplished as much as he did when no government agency was willing to help.

"I see in a lot of places what's happening is owners are trying to make as much money as possible," Cain told us. "I see this in local TV, I see this in print media.

Also from this author

  • 'He's not going anywhere'

    Newly available documents expose what happened to a man shot 16 times by SFPD officers two years ago

  • Money for nothing

    Nancy Pelosi is raising millions of dollars, but keeping very little for her own reelection campaign

  • Newsom reappoints the condo commissioner