Losing a 'Voice'

Why regulators should block the Village Voice-New Times deal

By Tim Redmond

"Sometimes," Village Voice Media CEO David Schneiderman announced in a memo to his staff Oct. 24, "rumors turn out to be true."

His memo, which was quickly published on the Village Voice Web site, confirmed what the Bay Guardian first reported Aug. 31: The nation's two largest alternative newspaper chains are planning to merge in a deal that will give Phoenix-based New Times Media control over 17 alt-weeklies.

The new company, which will keep the Village Voice Media name, will be run by New Times Executive Editor Mike Lacey and CEO Jim Larkin. Schneiderman, who has been with the Village Voice for more then 20 years, will run the Internet division.

A source close to VVM's side of the merger talks, who has provided reliable information in the past, told me that most top VVM executives will leave within 60 days and receive separation bonuses.

The deal still requires approval by the US Justice Department, and the California attorney general's office is reviewing it. The two chains announced the merger earlier than planned, insiders told me, because the publicity that was generated by our stories has left staffers anxious and unhappy and because the constant "no comment"s in the face of pretty clear evidence were starting to make the parties look silly.

In an era of increased news media consolidation, when major news outlets are the print and broadcast equivalent of McDonald's, the pact could bring more homogeneity to the last bastion of irreverance and print muckraking. It ought to be a matter of public concern.

It's still not final, though – and when the federal and state regulators sit down to review the deal, they might want to start with a few basic facts:

1. The combined New Times-Village Voice Media company would reach between 22 and 25 percent of the total circulation of the 126 members of the Association of Alternative Newsweeklies, according to AAN figures. That's a phenomenal market share and would make the new corporate behemoth a force far more dominant in its market than any of the giant daily newspaper chains are in theirs. Gannett, the largest of the daily operations, claims a circulation of 7.6 million, which is just 13.8 percent of the 55 million paid daily circulation in the nation.

2. New Times, which is in effect taking over the six VVM papers, has a strict content formula that all of the papers in the chain follow – and that means the six papers in the VVM chain, including the Village Voice, the 50-year-old granddaddy of all the alt-weeklies, will become part of the New Times cookie-cutter template.

The Voice has had lots of owners, including the likes of Rupert Murdoch, but all of them have recognized that the activist liberal paper has a successful market niche and didn't try to change it. Lacey will almost certainly mess with the product. The New York Times quotes Jane Levine, an alt-weekly veteran and former publisher of the Chicago Reader, a paper with business ties to New Times, as saying "there may well be changes to the content of the papers being bought, and there will be people who think they are negative, in part because New Times doesn't endorse political candidates." (Lacey, as is his practice, did not respond to our questions.)

Eliminating political endorsements from VVM papers will eliminate an important source of political discussion and debate that goes far beyond the VVM markets of New York, Los Angeles, Orange County, Seattle, Minneapolis, and Nashville.

3. The combined company will operate not only 17 newspapers but a national advertising sales operation called the Ruxton Group and a growing online classified ad program known as backpage.com. With the addition of the VVM papers, Ruxton will control alt-weekly advertising in nearly all of the top media markets in the country, making it difficult for the competing Alternative Weekly Network to stay in business. That will have a negative impact on businesses that want to reach the young, affluent, urban alt-weekly audience.

4. New Times has a history of attempting to stifle competition. In fact, the Justice Department and the attorneys general of Ohio and California had to swat down an illegal New Times-VVM market-fixing arrangement in 2003 that led to the closure of papers in Los Angeles and Cleveland. SF Weekly, the New Times affiliate in San Francisco, has been engaged in a pattern of anticompetitive activity that violates state law, a Bay Guardian lawsuit is charging.

All of that could easily be interpreted as violating the 1976 Hart-Scott-Rodino Act, which requires federal government approval for any merger of acquisition that could lessen competition in the marketplace.

The US Justice Department declined comment on the merger except to say, through a spokesperson who asked not to be named, "We are aware of the situation." Nathan Barankin, a press aide to California attorney general Bill Lockyer, was a bit more forthcoming: "We have received notice of the proposed merger," he told me, "and we have opened a preliminary inquiry into any antitrust concerns."

Final approval is expected to take several months.

PS: The merger announcement came just 10 days after Richard Goldstein, the onetime Village Voice executive editor, who had worked at the paper for 38 years, filed a scathing legal complaint charging the paper's management with sexual harassment and alleging antigay slurs. The lawsuit, sources in New York say, has roiled the newsroom and created considerable buzz in the heated New York media gossip world. The text of the suit is available on The Smoking Gun (www.thesmokinggun.com).

PPS: For our original story on the merger, go to www.sfbg.com/Extra/merger.html. For our early reporting on the merger rumors, see www.sfbg.com/39/34/news_new_times.html. For the text of the New Times press release, see aan.org/gyrobase/Aan/ViewArticle?oid=oid%3A152193. For David Schneiderman's statement see villagevoice.com/news/0543,memo,69258,2.html.

E-mail Tim Redmond at tredmond@sfbg.com.