Justice pursues New Times-VVM inquiry
Are alternative newspaper chains cutting news coverage to save money?

By Camille T. Taiara

Federal and state Justice Department officials are aggressively pursuing an antitrust investigation of New Times Corp., owner of the SF Weekly and the East Bay Express, and Village Voice Media and are looking into whether the two alternative newspaper chains are cutting back on news coverage.

The inquiry is the result of a horse-trading deal last October in which each of the two firms agreed to shut down one of its papers in a city where they competed. The arrangement between the nation's two largest alternative newsweekly chains left Los Angeles and Cleveland with only one citywide weekly each.

Among the most noteworthy issues investigators are raising, according to a Dec. 21 article by Tim Rutten in the Los Angeles Times, is whether the chains' move to kill competition and create single-newsweekly towns is accompanied by a cutback on hard-hitting news coverage and analysis – particularly on the local level.

If so, the trend would be one more sign that weekly newspaper chains are moving farther away from their progressive, grassroots origins and acting more like the gargantuan daily newspaper conglomerates they were meant to provide an alternative to in the first place.

"Witnesses familiar with the L.A. Weekly's finances say the paper came under increasing pressure from CEO David Schneiderman to emphasize its profitable entertainment and lifestyle coverage after the Sept. 11 attack, which deeply depressed advertising revenue at the Village Voice," wrote Rutten, who has been following the proceedings in Los Angeles and Cleveland and interviewed insiders in both cities.

On Nov. 8, the U.S. Justice Department demanded that New Times and VVM hand over copies of all documents and communications relating to the deal, according to a Nov. 16 article by Rutten. Federal and state attorneys began questioning former executives and staffers of the publications involved immediately thereafter and conducted formal depositions in Cleveland last month. Depositions begin this week in Los Angeles.

Marc Haefele, a former political columnist for the LA Weekly who resigned from the paper within a month after the New Times-VVM deal, was first approached by justice investigators in mid November. "The LA Weekly to a large extent is being edited under New York oversight at this point in time," Haefele told the Bay Guardian. "This was basically going on before they made the [deal]. I was asked about whether I felt that had an effect on the content of the paper ... and I said that, yeah, I thought the paper was basically run from New York by New Yorkers, and it was a paper about Los Angeles, and that did not necessarily work out all the time."

Haefele, who continues to report on local politics for KPPC-FM radio and is scheduled to be deposed Jan. 6, says he hasn't seen an LA Weekly reporter at Los Angeles's City Hall or at the county offices since he left the publication.

"The function that took it from a little throwaway paper in the 1980s into the respected institution it had become by 2000 was not reporting on new dresses and rock bands and so on, but was reporting on things like Governor Gray Davis and City Hall," Haefele notes. "It was made over as a politically active, progressive, pro-union, all-that-kind-of-stuff paper."

LA Weekly editor in chief Laurie Ochoa, however, insists that executives at VVM corporate headquarters have been maintaining a hands-off approach to the paper's editorial content.

"If anything, we've been putting more resources into news coverage," she says. "We've increased our national and international coverage, and we're maintaining our local coverage." Ochoa points out that the LA Weekly recently dedicated an entire issue to an exposé of the Los Angeles Police Department. The LA Weekly did a similar package on the drug war in 2001. And when Sept. 11, 2001, hit – on a Tuesday, the weekly's production day – editorial staff scrapped the paper's prior content and turned around an entire issue on the attack within 24 hours.

What's more, "alternative papers have always been about covering politics and culture," argues Ochoa, who began her journalism career at the LA Weekly in the mid 1980's, then worked as food editor for the Los Angeles Times and as executive editor of Gourmet magazine in New York before making the move back to the LA Weekly in February 2001. "Style is an important part of culture here in Los Angeles. There are some really interesting things happening, and we wouldn't be doing our job if we were ignoring it, or ignoring film or music. That doesn't make sense either."

Los Angeles Magazine editor in chief Kit Rachlis agrees there's been an editorial shift at the LA Weekly but says he thinks it has nothing to do with who owns the paper or the deal cut by the two chains. Rachlis worked as executive editor of the Village Voice in the 1980s and, later, as editor in chief of the LA Weekly when it was still independent.

Rachlis says he agrees the deal between the two chains "clearly raises all sorts of antitrust questions" and should be investigated. But he says he's suspicious of the political context in which the investigation is taking place.

"There's a terrible irony in the John Ashcroft Justice Department investigating the alternative press when, in fact, they have allowed far larger corporate entities to get away with transactions that have certainly raised a lot more antitrust issues than the LA Weekly-New Times deal has, and which had far greater effect on society," he says. "I don't think it's too paranoid to say that they're looking into the alternative press for political reasons."

Indeed, the U.S. Justice Department has done nothing to derail the endless media mergers that have taken place between corporate giants in recent years, and has yet to block a single joint-operating agreement between competing newspapers since the Newspaper Preservation Act was passed in 1970.

Nonetheless, media watchdogs find the chaining of the alternative press a troubling trend. And if the government allows the New Times and VVM chains to get away with cutting deals to kill competition, they say, it's cause for serious alarm.

"An independent publication is driven primarily by the concerns of the owner, and a lot of times those folks get into [the journalism business] because they're really invested in the local community – not because they really see this as a lucrative moneymaker," says John Anner, executive director of the S.F.-based Independent Press Association, which represents about 400 independent magazines. By contrast, chains are owned by big corporations and venture capitalists who require a set level of return on their investments. When times get tough, chain publications are under greater pressure to cut costs or risk being shut down.

"News is expensive," Anner continues. "Good reporters are expensive. People who really know the local political scene are hard to come by.... The tendency is for chain publications to devolve toward relatively low-cost and low-controversy kinds of coverage that doesn't really deal with the hard issues."

Witnesses who have been talking to prosecutors say investigators in Los Angeles and Cleveland "appear keenly interested in fashioning a remedy, perhaps by way of a settlement, that would restore competition to both cities' alternative press markets," Rutten writes.

Don T. Hibner Jr., an attorney with the Los Angeles-based firm of Sheppard, Mullin, Richter and Hampton who has 40 years of experience in antitrust law and has commented on the case in the Los Angeles Times as well as legal publications, agrees the New Times-VVM deal warrants an antitrust investigation.

"If the two companies cut an agreement to divide their territories or their customers such that they agreed not to compete with each other, that would constitute a per se violation of the Sherman Anti-Trust Act," Hibner said. Although the act allows for both civil and criminal charges, Hibner explains, "I would imagine they'll try to settle the case on a civil basis."

(Ironically, the firm Hibner works for, Sheppard, Mullin, Richter and Hampton, is the same one that is representing New Times and the SF Weekly in a legal dispute with the Bay Guardian over allegations of anticompetitive practices by the Weekly. See "The Predatory Chain," 3/6/02).

Neither VVM CEO David Schneiderman, New Times chair and CEO Jim Larkin, nor New Times executive editor Michael Lacey returned the Bay Guardian's calls by press time.

Asked if he thought chain-owned publications are more likely to downplay local news reporting in favor of more lifestyle and entertainment coverage, SF Weekly editor John Mecklin said, "Everybody's entitled to an opinion, even if it's stupid."

P.S. To read Rutten's stories as well as other media coverage of the New Times-VVM deal, go to www.sfbg.com/37/14/news_new_times_links.html.