April 24, 2002


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A bad news-rack deal


A COMPLICATED LAWSUIT over a city ordinance that would regulate the placement of news racks is heading toward settlement, and as a part of that deal, a giant San Antonio, Texas-based media corporation could get control of newspaper distribution in San Francisco – on terms that are very bad for the city.

At issue is a law Mayor Willie Brown and then-supervisor Barbara Kaufman pushed through in 1998. The measure, driven by Brown's dislike of newspapers, which he considers his enemies, would have effectively given the mayor the ability to ban freestanding racks anywhere in the city. Instead, an outside contractor would build "pedmounts," large, pedestal-mounted racks with room for eight or more papers to be sold or given away, and charge publications a fee for placing their papers in them. The vendor could also sell ads on the back of the pedmounts.

The plan could have dramatically cut down on the number of distribution points available, which would have devastated the newspapers, particularly the small papers that depend on street racks for their distribution.

A coalition of publishers, later joined by the Bay Guardian, sued to block the law, and the parties recently reached a tentative settlement: The city will only ban news racks from designated areas where there's significant pedestrian traffic. It's not a perfect solution; rather, it's the tortured result of years of litigation. The Bay Guardian has reluctantly signed off on the changes to the ordinance.

But there's still a real problem with the deal. The vendor that won the contract to build and maintain the pedmounts is Adshel, which is owned by the notorious Clear Channel Communications. As Tali Woodward reports on page 13, Clear Channel has become a conglomerate on the scale of NBC, Viacom, and Gannett. In San Francisco alone, the company owns seven radio stations, controls half of the city's billboards, and (as the owner of Bill Graham Presents) has exclusive rights to promote concerts at most of the big venues. The idea of giving Clear Channel exclusive control over newspaper distribution – and ad space on the back of the news racks – in the city is extremely troubling.

And the contract between the city and Adshel has serious problems. For starters, it's a 20-year deal – an eternity in the fast-changing media world. The contract allows Adshel to make unlimited profits and give the city nothing. And while the city will be stuck with the deal until 2022, Adshel has several ways to back out early – leaving local newspapers with no effective distribution system at all.

The supervisors can, and should, demand some changes in the Adshel deal.

The contract should state very clearly that the vendor must give the city detailed financial information, including audited statements of profits coming from the contract, and that information must be made public. The city should cap the allowable profits and require Adshel to turn over any excess to the city, and the city should use the money to defray the cost of administering the contract. That would help smaller papers survive in the local market. There should be an opportunity for the city to renegotiate the deal every five years. And Adshel should be barred from censoring ads on the pedmounts on the basis of political content.

The deal would give Clear Channel a huge new market to monopolize. That's bad for both publishers and the public. So the company should be required to disclose fully the details of its local and national media ownership, and the supervisors should ask the budget analyst to evaluate how much of the local market the company already controls.

There are serious First Amendment implications to any move to regulate news racks, so this deal needs the strictest scrutiny and ongoing monitoring. This is a sweeping plan: once the pedmount program rolls out, a private monopoly vendor with no interest except its own profits will control many of the key distribution points for every newspaper in the city.

Clear Channel wants this deal and is likely to accept some reasonable changes. The district-elected board should tell the city attorney to go back to the company and renegotiate the contract – or the whole deal is off.