Chain gang
Rumors of big alt-weekly merger raise media consolidation issues

By Tim Redmond

Opponents of newspaper consolidation – including me – are starting to worry about the flurry of rumors and unconfirmed reports that there's some sort of merger in the making between the nation's two largest alternative newspaper chains.

The concern may be premature: Nobody at New Times, which owns 11 papers, including SF Weekly, or Village Voice Media, which owns six, would so much as hint that a deal is under consideration. Most of what I've heard about this is barely above the level of gossip and speculation.

But some industry analysts and insiders say that both chains are under financial pressure and that a deal makes a certain amount of sense. Consider:

New Times tried to buy VVM several years ago, when the chain was sold to a consortium headed by Village Voice publisher David Schneiderman, but the offer was rebuffed.

Two people who say they have direct knowledge of the situation have told me that a merger deal was close to being finalized about nine months ago but fell through because of a disagreement about who would run the merged company.

Jeff Koyen, the former editor of the New York Press, a Voice competitor, reported in the Guardian of London April 18 that sources in New York say a deal may be imminent. "The whispers became urgent earlier this year with fresh reports of closed-door meetings and furrowed editorial brows in the Village Voice office," he wrote. "The most plausible rumor says New Times will assume a controlling interest in VVM later this year."

New Times and VVM have done business together in the past: in 2002 the two companies conspired to shut down competing papers in Los Angeles and Cleveland in a scheme the U.S. Justice Department found to be illegal (see "New Times Nailed," 1/29/03).

It's tricky even reporting this, since none of the sources I've spoken to will say anything on the record, and none want their names used. Neither New Times executive editor Mike Lacey nor VVM CEO David Schneiderman would respond to our calls and e-mails, although in April, Schneiderman told Seattle Weekly, a VVM paper reporting on Koyen's article, "As a matter of policy, we never comment on rumors."

But in an industry where ownership consolidation has been rampant over the past decade, and in which the independent voices that once defined the alternative press are constantly threatened, the prospect is alarming.

One obvious problem: The Village Voice is a good – sometimes great – paper, and VVM papers tend to be more openly progressive political publications that take stands on local and national issues. If New Times – which eschews activism, disdains editorials and endorsements, and holds a somewhat libertarian political philosophy – took control of the nation's most venerable alt-weekly, there's reason to fear that the best of the Voice and the other VVM papers would be destroyed.

Another equally serious issue: Village Voice Media is one of the anchor members of the Alternative Weekly Network, a cooperative that places national ads in 106 weeklies around the country, and VVM's two flagship papers, the Voice and LA Weekly, are in the nation's two largest media markets, making national sales through AWN attractive.

That helps smaller AWN papers in secondary markets get a share of big national ad buys.

New Times runs the competing Ruxton Group – and if VVM and New Times merged, and the Voice joined Ruxton, the New Times firm would become a national powerhouse controlling alt-weekly ad buys in New York, L.A., Miami, Denver, Seattle, Phoenix, and seven other cities, potentially starving out AWN and costing smaller papers desperately needed dollars.

(Full disclosure: We have a direct interest in the issue. The Bay Guardian is an AWN paper, and our competitor, SF Weekly, is a New Times-Ruxton operation. We are currently suing New Times for predatory pricing (see "Bay Guardian Sues New Times Chain," 10/20/04).

I'm not the only one worried.

Brian Hieggelke, publisher of Chicago Newcity and the president of AWN, told us he hasn't given the idea of a New Times-VVM merger a lot of thought, but he had little doubt that it would hurt his paper and other alt-weeklies around the country.

"I don't think it's a good thing," he said. "I don't think any consolidation of power into too few hands is a good thing."

Vince O'Hern, publisher of Isthmus, in Madison, Wis., added: "The biggest problem I see is that they would have a stranglehold on the larger markets. It would make it difficult for any of the other [alternative] papers to secure a national representation for ad sales."

Both chains have significant debt, and both are partly owned by venture capital firms that may by tiring of financial results that continue to lag. Alta Communications is an investor in New Times, and Weiss, Peck and Grier has an interest in VVM.

If the two chains decided to merge, some reports say, the current talks would have New Times essentially buying the VVM papers – something the two principals in the Phoenix-based chain, Mike Lacey and Jim Larkin, have wanted to do for some time.

In fact, some say the only reason it hasn't happened already is that Schneiderman, Lacey, and Larkin have a history of personal animosity. "There's so much ego in the deal," one source told us. "So many dicks wagging around that it's hard to come to any kind of settlement."

But in the end, one industry insider with a long history in the alt-weekly business told us, "It's pretty much inevitable.

"Both organizations are controlled by big banks. They're making money, but not as much as the bankers want. "Each has big corporate overhead – and the banks will say, this is how you make your return on investment."

Under a consent decree signed to settle Justice Department charges in the L.A.-Cleveland case, the two companies are barred for five years from doing business together – unless they give the Justice Department 30 days' notice. That's a pretty weak requirement, since the department doesn't even have to specifically approve any deal. And Laura Sweeney, from the Justice Department's press office, told me that even if the chains notified the government of a pending deal, the department would not make that information public.

Additional research by Matthew Hirsch.

E-mail Tim Redmond