Mike Lacey, waving, is flanked by attorneys Ivo Labar and H. Sinclair Kerr, left, and Don Moon (who actually IS wearing a puffy coat) right, after hearing testimony about how Lacey told SF Weekly staffers that he wanted to put the Guardian out of business. Photo By Luke Thomas, fogcityjournal.

Three witnesses have testified in the Guardian v. SF Weekly trial that they heard Mike Lacey, a top executive with the chain that owns the Weekly, say he wanted to put the Guardian out of business.

That’s a key part of the case: The Guardian has to prove that the Weekly sold ads below cost – which isn’t much in dispute, since the chain has essentially admitted it – for the purpose of injuring a competitor. The evidence that Lacey, executive editor and one of the two primary owners of Village Voice Media (formerly New Times) intended to damage the Guardian bolsters that point.

The witnesses, former Weekly sales rep Jennifer Lopez, former Weekly co-publisher Carrie Fisher, and former Weekly editor Andrew O’Hehir, all described a January 1995 meeting at which Lacey arrived to tell the staff that New Times had bought the Weekly.

Lacey, along with Jim Larkin, the chain’s other top exec, marched into the Weekly office on Brannan street “with a very intimidating entrance,” Fisher testified. With Lacey and Larkin were Hal Smith, who headed up the chain’s ad sales, and Patty Calhoun, the editor of Westword, a New Times paper.

Lacey launched into a profanity-laced diatribe, Fisher testified, “insulting the office space, insulting the neighborhood and making comments on the quality of the writing” in what was then a small locally owned paper.

At one point, she said, Lacey picked up a copy of the Bay Guardian, threw it on the floor and said “we don’t just want to compete, we want to put the Guardian out of business.” While she said she couldn’t swear to the exactly language Lacey used, “the gist of what he said was very clear.”

Jennifer Lopez, who was a sales rep, testified to the same point yesterday.
Andrew O'Hehir, who was editor of the SF Weekly at the time of New Times purchase in l995, confirmed that story, describing Lacey throwing the Guardian on the floor and saying that the New Times was coming to San Francisco to "bury the Bay Guardian."

O'Hehir said that Lacey told the Weekly staff that the New Times had "deep pockets and deep resources" and would compete aggressively on both editorial and business fronts with the Guardian, the dominant alternative in San Francisco.

"We intend to beat the Guardian," he quoted Lacey as saying. In answer to a question a question about the "future relations with the Guardian," Lacey said that "we are going to bury the Bay Guardian. We would like to put the Bay Guardian out of business." O'Hehir is now living in New York City and working as columnist for Salon, the online magazine.

H. Sinclair Kerr, attorney for VVM/New Times, sought to minimize the impact of Lacey's quote by suggesting that Lacey was like a coach coming in to "fire up the team." No, replied E. Craig Moody, Guardian attorney -- in the case of the old Weekly the team was "quickly disbanded."

In fact, O'Heir was soon fired and most of the rest of the staff either quit or were fired.

The last event of the day was the reading of the deposition of Jim Larkin, the CEO of VVM/New Times. Richard Hill, a Guardian attorney, read the questions from the deposition that he took earlier this year in Larkin's Phoenix, Arizona office. Ralph Alldredge, another Guardian attorney, sat in the witness box and played Larkin to Hill's questions.

Larkin admitted in his deposition that the New Times was in a rate battle with the Bay Guardian in San Francisco, but refused to acknowledge that the chain had an advantage because of its size and assets.

Larkin had trouble remember lots of things. He couldn't remember the Bay Guardian Report that the Weekly publisher prepared each week and sent to him. He was at the Lacey meeting but he couldn't remember what Lacey about the Guardian or even what Lacey said about anything at the meeting. He denied ever saying he was "going to run the Bay Guardian out of business."

Larkin also refused to say if he ever put a floor under the Weekly's below cost sales.

"I try to make money," he said. "I try to break even. I don't do things this way."

Well, if Larkin and his publishers at the SF Weekly and the East Bay Express were operating under Larkin's mandate to make money, something was going very wrong, because the chain lost $25 million dollars over 11 years, without having one profitable year.

The Guardian claims this is no coincidence – the chain was willing to lose money through below-cost sales in an effort to harm a local competitor, which is illegal under California business law.

The jury trial continues Monday morning at 8:30 before Superior Court Judge Marla Miller.

PS: Andy Van De Voorde is not only nasty, he has no sense of humor. Jesus, Andy, I’m nowhere near cool enough to wear a puffy coat. I do, however, put either my Langlitz Leathers bomber jacket (made by a locally owned independent business) or a waterproof ski jacket over my clothes when it’s pouring rain.

Lighten up, Andy.

Here we are, awash in the shivers and shudders of another (incredibly fatiguing) election cycle. And although reports are streaming in of another Hillary sob session, the big news on the gushing front is that new star-studded "Yes We Can" vid, produced by Black-Eyed Pea frontman will i. am (ew) and Bob Dylan's son Jesse, featuring several earnest Hollywood and Billboard players singing along to Obama's semi-concession speech in New Hampshire.

Dammit, it made me weep a little, despite the fact that the incredibly high-flown rhetoric is a bit suspect (Obama's really twisting the King gears here) and has absolutely nothing to do with how, exactly, "we can." Other than voting for Obama with the stars?

700,000+ YouTube views in 48 hours can't be wrong

Question: What would a John Kerry number have sounded like? Why, oh why, did Dan Fogelburp have to die?

Alas for my enthused bandwagonismy, I foolishly, delightedly lived through the age of Live Aidquarius, and was bonkers as a child over the intensely disingenuous, not to say slightly racist, "Do They Know It's Christmas".

Christopher Cook, one of my predecessors as city editor of the Bay Guardian, sent out one of the more intriguing appeals that I've read today (among the many election eve missives that have been sent my way). It's a call to vote for John Edwards, even though Edwards dropped out of the race. While I still happily voted for Obama, I think Chris makes good points about the need to keep pushing the Democratic Party candidates to adopt more progressive positions, something that will become even more important in the coming months if Obama and Clinton remain neck-and-neck and we head into a brokered convention.

Bill Clinton always excelled at telling stories. Facing a tough question from a somber-looking vet? Tell a story. Bleary-eyed after hitting several California cities in a single day campaigning on behalf of your wife? Tell a story. Trying to convince undecided voters your family isn't an inhuman band of relentless over-achievers that hasn't experienced what most Americans might consider a normal day in decades? Tell a story.

Joined by Gavin Newsom, that's what Bill Clinton did again for voters yesterday at the Ferry Building in San Francisco. Told a bunch of stories.

What didn’t make sense was why Bill Clinton spent so much time on Monday canvassing California when Hillary’s people have acted as if the state was a lock. By the way, who are the badasses working for her that so brilliantly managed to make C.W. Nevius the vehicle of a localized, anti-Obama whisper campaign? Those bastards are earning their keep.

Hillary's latest commercial

Today promises to be the most dramatic California Democratic presidential primary vote in...well, maybe ever. To say that the future of our country hangs in the balance probably isn't even hyperbole. And that's a good thing because otherwise we're looking at a fairly boring and inconsequential ballot, which the Guardian will covering live, as we have every election day since the birth of this whole Internet thing. That's right, we were "live blogging" before anyone invented that stupid term. But I digress.

So check back here this evening as the numbers start rolling in from all the Super Fat Tuesday primaries. We'll have coverage from all the election night parties in town and commentary on the larger issues at play and the unique role Californians are playing in shaping this race. Or if you want to attend the parties yourself, here's a partial list of what we've come up with so far:

*** Barack Obama's campaign seems to be throwing the swankiest party in town, renting out the Fairmont Hotel (950 Mason Street) Grand Ballroom (as well as The Avalon down in Hollywood) to host supporters. The candidate himself will be in Illinois, but this pair of parties seems to show that he's already acting like the president-elect.

*** Hilliary Clinton's campaign is going to be more muted locally with what sounds like a fairly low-key party at their local campaign headquarters at 1122 Howard Street. They seem to instead be blowing their wads on an event in a couple hours at the Ferry Building featuring ex-prez Bill Clinton and Mayor Gavin Newsom, sort of a Philanderer's Ball in support of Clinton II, The Sequel.

*** Republican Ron Paul, who has a chance to get San Francisco's Republican delegates thanks to a vocal and visible local campaign, is being feted at a campaign party at Thai Stick Restaurant, 925 O'Farrell Street @ Polk.

*** The most significant San Francisco campaign, which is seeking to pass the Prop. A parks bond, will be gathering at the Boudin Bakery on Jefferson Street in Fisherman's Wharf.

* And finally, you can watch the results with staff from the Guardian at Kilowatt bar, 3160 16th Street in the Mission District.

Belly on up and take a big drink of democracy, baby.

If, as seems fairly likely at this point, John McCain comes out of Super Fat Tuesday with a lock on the Republican nomination, the most important question for Democrats is who can beat him. Most polls have Barack Obama narrowly beating McCain and Hillary Clinton narrowly losing to him, although it's pretty early in the process and the margins are too narrow to put too much stock in them at this point. But there's good reason to believe that Obama would have a far easier time beating McCain than Clinton would.
And that's something primary voters should think seriously about before casting their ballots today.

It was a casual dinner affair for the supporters of Ron Paul on election night, with roughly thirty people showing up for dinner under the big screen at Thai Stick, 925 O’Farrell St. As the results came in from around the country, party-goers casually looked up from their animated conversations to remark at the TV screen.
George Gaboury, self-described “media support”, struggled with a projector and screen, but was finally able to set up a slide show of the groups’ past exploits – including the staged Ron Paul “TeaParty” in December. The projected video showed attendees throwing boxes with words like “Patriot Act” and “WTO” written on them off of a pier near the Ferry Building.
“For people who have been abused by the government for so long, this is almost therapy,” Gaboury said, watching the screen.

The first numbers have come in and Barack Obama appears to have won a decisive victory in Georgia -- with early results giving him a 2-1 edge over Clinton -- a key test of whether he can carry the south. On the GOP side, McCain, Romney and Huckabee finished in a tight pack.

Camped out at campaign headquarters for the past week, Hillary supporters looked bleary-eyed but fervent early this afternoon as they speed-dialed calls to their vast Democratic database. Even if California results wouldn’t be available for several hours, some said, many of the mostly gray-haired women amongst the 70 or so volunteers, were optimistic Clinton would nail the nomination.

Tuesday, 9:09pm

In anticipation of guzzling free Stella, the Kilowatt has been jammed with voting drinkers since 6pm – well before the Guardian-sposored "Dodge the Drafts" party’s official start time. As for who these drinkers supported today, it’s impossible to guess -- even tho I’m surround by fellow Guardian employees, and within eyesight of a woman lustily fingering Obama's Audacity of Hope. The Obama supporters sharing my table say that the bartenders have informed them that we’re in "Clinton territory." Who knows?

One thing's for sure: it’s all about voting and drinking at the mission district bar. The free Stella ran out within an hour.

Tonight's real winner?

I did get some insight from Tim Paulson. The San Francisco Labor Council head tells me that although there’s no official endorsement from his organization, most laborers he know were in support of John Edwards (perhaps because Edwards marched with striking hotel workers three years ago), and that many of those votes are now going to Obama. Nevertheless machinists and teachers endorsed Clinton, while the SEIU favored Obama.

About 75 Democrats clenching glasses of beer and wine gawk at plasma TV’s at Jillian’s bar in SOMA tonight predicting which candidate will win California and eventually the presidency.

San Francisco based Democracy Action is hosting the party for Democrats who eagerly await the primary results. They debate whether Obama or Clinton is the better choice.

“It’s too early to say who’s going to win,” Alec Bash, President of Democracy Action, told the Guardian. “Back in ’04, we thought Kerry would win by a landslide.”

San Francisco City Hall -- normally a beehive of activity on election nights -- is nearly empty. One reporter (Rick Knee, stringing for AP), a couple of political junkies ... and that's about it. The Department of Elections doesn't even have its usual display screen for election results.

Frankly, nobody's paying attention to the local election. California's a big deal tonigh, and the state primary is huge news; municipal elections are lost in the whirlwind. (Of course, let's remember that the state's delegate total, which is what really counts, will probably be split pretty close to even, whoever "wins" the state; Paul Hogarth has a good analysis here.

But there IS a local election, and there are results, and we can pretty much call the three ballot measures now.

Prop. A, the parks bond, needs 66 percent of the vote, and has 64.9 percent in the (generally conservative) absentees. That should pass. Prop. B, the police retirement plan, is a slam dunk and will probably get 70 percent of the vote. The rather wacky Prop. C, the Alcaraz "peace center," is toast, with 73 percent voting no.

An interesting note the the local vote: Hillary Clinton's absentee-vote effort had paid off, big time. 65,000 people voted absentee, and Clinton is ahead in those votes, 53-38. I think we're going to see this statewide -- Obama will probably win on election day, but Clinton has a huge bank of absentees that he will have to overcome.

"Our time has come. Our movement is real and change is coming to America," Barack Obama told his crowd of supporters and it just seemed possible. He used his strong showing today to sound his themes: "Yes we can...This time can be different...We are the ones we've been waiting for."
It reverberated between Obama and the crowd, "Yes we can."

The California results aren't in, but it's clear that nationwide, nobody dominated Super Tuesday. Clnton and Obama have split the big states, and will split the delegates in California (even if one of them wins the popular vote). Same for the GOP -- there's no clear winner tonight.

So it looks to me right now as if there's a very good chance that both parties will go into their nominating conventions without a clear nominee. For the first time in my adult life, the conventions may actually mean something. We could have a pair of brokered conventions, perhaps even with no winner on the first ballot.

Could be wild.

CNN is projecting that Clinton will win California. If that's the case, it will be thanks to her agressive absentee program; she banked a lot of votes over the past month, long before Obama began to pick up momentum.

That's a big political bounce for Clinton, even if it won't amount to a huge difference in delegates.

Where's the numbers from CA and SF? Hold on, folks, we're watching and waiting and we have people around town waiting to report and comment.

Piggybacking on the turnout from the presidential election was one of the reasons that Prop. A, the $185 million parks bond, was targeted for this first ever February ballot, San Francisco Recreation and Parks Department director Yomi Agunbiade told me at the Yes on Prop. A party at Boudin's Bakery in Fisherman's Wharf. "We're definitely riding that wave, " he said minutes after the proposition posted its first real numbers at 67.6 % in favor, surpassing that always difficult 66.6 % it needs to win. Attending the shindig are Sup. Sean Elsbernd, financier Warren Hellman, Neighborhood Parks Council director Isabel Wade, and campaign consultant Patrick Hannan. They say it's been very hard to get people's attention for the measure, but they're pleased that it appears headed to victory.

"This is fantastic. This is going to benefit San Francisco all over the city, improving and repairing old infrastructure and creating new open space," Elsbernd said.

Hannan credit Eslbernd and Hellman with "carrying the ball" on the campaign, along with parents, athletic leagues and the Fisherman Wharf Merchants Association, which is going to benefit from the measure through improvements at Pier 43. (Sarah Phelan)

Prop. 92, the community college set aside, is going down hard and the Indian gaming contacts are uniformly ahead with about a million votes each, or 58 percent of turnout thus far.

Finally settled in at the Fairmont downtown after searching fruitlessly in the beginning for a wireless connection.

The most significant thing I've seen so far tonight is Oakland City Attorney John Russo throwing his weight behind Obama and MCing tonight's event. Last night we saw San Francisco City Attorney Dennis Herrera at a rally for Hillary attended by Bill Clinton, Gavin Newsom, Carole Migden and Oakland Vice Mayor Henry Chang.

So now at least we know who wants to return has-been bureaucrats to Washington and who might actually be interested in some original ideas at the federal level. We haven't seen much talk from analysts about what an Obama cabinet might look like, but for some of us, that's one of the most intriguing questions of all.

I often find Fat Tuesday a dizzying night. And some of the usual factors are in play: beads around my neck and a cocktail within reach. But that's not why I'm reeling. Holy shit, this Super part of Fat Tuesday is overwhelming, with so many numbers coming in from so many states, with all of it being sliced and diced by so many talking heads and number crunchers. And as I watch the swirl of data, the main impression I get is that nothing much changed today, except for the fact that we're inching our truly weird democratic process toward an uncertain conclusion. I think I need to freshen my drink. Laissez les bonnes temps roulez!

By around 9:30 pm it seemed clear at Hillary's campaign HQ that she had won the popular vote in California. A full room and diverse crowd gathered around the blaring TV, cheered and chanted her name. Rev. Amos Brown spoke to deafening cheers as he questioned the substance behind Obama's rhetoric but praised the "two fine democratic competitors." Assessor-Recorder Phil Ting spoke briefly.

California may be Clinton country, but Barack Obama has won San Francisco, home of Speaker of the House Nancy Pelosi and more than a half-dozen delegates. True, it's a symbolic win, but symbols are what we're looking at tonight. Mayor Gavin Newsom was a high profile Hillary backer, but the progressives on the Board of Supervisors and other bodies backed Barack. Numbers now in SF are Obama 52 % and Clinton 44% with 78 % counted.

Ruth Dewson, the owner of Mrs. Dewson's Hats at Fillmore St. and California St., where former Mayor Willie Brown gets many of his signature head coverings, used the term "mind-boggling" to describe the lack of support black leaders in the this state have given her presidential candidate, Barack Obama. She specifically called out preachers.

"When a politician comes to your church, you don't owe them anything," Mrs. Dewson said. She added that so many local black ministers support Hillary Clinton simply because they backed Bill Clinton in the '90s. She spoke with us from the Obama campaign party at the Fairmont Hotel Grand Ballroom.

A large, dispersed crowd pressed towards the projector-sized screen at the front of the Grand Ballroom in the Fairmont Hotel when they saw that CNN was interrupting coverage of John McCain's speech (yawn) to go to Barack Obama's headquarters in Chicago.

The Democratic presidential candidate was making his way towards the stage, and the audiences here and on TV were equally ecstatic. Chants of "O-BA-MA!" rang out. CNN took the cue and dropped McCain entirely. A series of roars accompanied Obama's speech, especially when he made the declaration that "Change is coming to America!"
That slogan was reiterated numerous times throughout the night. After Obama finished in Chicago, the attention in San Francisco turned to the front podium. Numerous elected officials took the stage to express their support of Obama.

Congresswoman Barbara Lee promised and re-promised, "California will never be the same because of what we've done in this movement. It will never be the same. Never."

The crowd here grumbled loudly when CNN announced that Hillary had a substantial lead in California. But the state is far from lost to Clinton. A massive portion of California's voters submitted absentee ballots that have not been counted. And as we pointed out earlier, even if the rest of the state's Democratic establishment goes for Hillary, San Francisco would rather share a tumbler of bourbon with Obama. Here are some images from his Super Tuesday party at the Fairmont Hotel in downtown SF:

It was a wild day in court in the Guardian’s lawsuit against the SF Weekly. Bruce Brugmann took the stand. He generally made the SF Weekly’s lawyer look silly – but the Weekly’s out-of-town hit man, Andy Van De Voorde, was almost giddy with his attempts to say that Bruce Brugmann did poorly as a witness.

I’m biased, of course (so is the hit man), but I have to disagree: Bruce laid out the Guardian’s history, explained how the Weekly had attacked us, and stood up remarkably well under a cross-examination that may have given Van De Voorde something to write about, but didn’t really present many relevant facts to the jury.

Several times during cross examination, Weekly attorney H. Sinclair Kerr tried to pull the legal equivalent of a “gotcha.” He kept pushing the notion that the media marketplace in San Francisco is so crowded with so many competitors that the Weekly and the Guardian really aren’t fighting over a discrete slice of that market. Bruce had none of it. Kerr kept trying to get Bruce to talk about competition in general and kept trying to get him to admit that the Weekly isn’t our biggest or most important competitor; Bruce would have none of it.

“I’m talking about competition in general,” Kerr said at one point.
“Well, I’m talking about competition with New Times,” Bruce replied.

Kerr tried to say Bruce wasn’t much of a publisher because he didn’t go on sales calls, but Bruce made quick work of that, too, saying that he was the Guardian’s editor as well, that editors generally don’t do sales calls, that we have a sales staff to do that, and besides “I’m a busy guy – I’m blogging.”

The jury members laughed.

We know that Barack Obama and Hillary Clinton basically split California, with the latter winning the popular vote by about 10 percentage points. But it's interesting to look at how they split the Golden State using this map.

Clinton's margin of victory seems to be counties with lots of Latino voters, which have been slow to warm to Obama. She posted her biggest numbers in the Central Valley counties of Stanislaus (60%), San Joaquin (58), Merced (59), Tulare (60), and Madera (56), and in the border county of Imperial (67).

Los Angeles Mayor Antonio Villaraigosa delivered his county for Clinton (55 to 41.5), but Mayor Gavin Newsom failed to do so in San Francisco, where Obama won by 8 points. The candidates split the Bay Area, with Alameda, Marin, and Sonoma counties joining SF in backing Obama and San Mateo, Santa Clara, Solano, and Contra Costa counties going for Clinton. Obama got Sacramento and Yolo counties, while Clinton took sprawling San Bernardino County by a large margin

Interestingly, coastal counties were more supportive of Obama, both on the liberal North Coast and more conservative San Luis Obispo and Santa Barbara counties. If there is one lesson to be learned, it is that Obama is going to have to make inroads with Latino voters, both in the primary and the main event if he gets there, particularly given John McCain's reasonable immigration stance (as opposed to the hysterical and racist approaches of the other GOP contenders).

What?!? Amber Lee Ettinger, Ms. "I Got a Crush on Obama," didn't even turn in a ballot?

Up until now, I took her commitment to politics so seriously ...

Original title: "I Got a Crush on Free Publicity"

Some interesting evidence emerged in the Guardian's lawsuit against the SF Weekly and its corporate parent today, most of it in the form of depositions from witnesses. If you were looking for the kind of drama we had yesterday, this was fairly mundane stuff -- but if you listened to what a former publisher of the Weekly said in his depositions, it showed exactly why this case has gone to trial.

Before I start on that, though, one note: I'm trying to play this fairly straight, and not get into personality stuff, but I have to say: The Weekly's hit man, Dandy Andy Van De Voorde, is ... how else can I say this? Making stuff up.

From the lead of his blog (if you can call it that) tonight:

After yesterday’s fireworks from Bruce Brugmann, Guardian attorneys returned to their plodding ways Wednesday, subjecting the jury to an entire day of testimony from witnesses who weren’t there.

Brugmann, who treated the court to a three-hour display that included spluttering, shouting and fist pounding yesterday, sat quietly in the gallery as his lawyers put on a noticeably dull performance that had at least two jurors visibly napping at times

Um ... I was there yesterday, and I can say with absolute certainty that Bruce Brugmann never once pounded anything with his fist and never shouted. That's just wrong. It didn't happen. (I don't know what "sputtering" is, so I can't comment on that.)

And Andy: Most bloggers use links to connect to other stuff they're talking about. You've blasted me a few times, but your poor readers don't have the help of these simple little bits of HTML code that let you go from one blog to another so they can see what you're attacking. It's not that hard; I bet someone at your 16-paper chain could teach you how to do it.

Now then, back to the story:

Most of the morning was devoted to the (admittedly unexciting) reading of the deposition of Chris Keating, who until early 2007 was publisher of the SF Weekly and group publisher for the Weekly and the East Bay Express. Keating started out the deposition insisting that when he came to San Francisco (and to a paper that was losing lots of money) he was determined to control expenses and bring them into line with revenues.

In fact, he testified, one of his primary goals was to raise ad rates.

But somehow, that didn't happen. The losses kept rising -- and, apparently with Keating's permission, the Weekly continued to sell ads below cost.

In fact, Keating admitted that "given the level of costs, [the Weekly was] not pricing at a level to cover those costs."

In other words, the Village Voice Media chain, which owned the Weekly, was selling ads below what it cost to produce them.

There are three elements required to prove the Guardian's case: The Weekly and Express had to be selling ads below cost, for the purpose of harming a competitor, and there had to be damages.

Keating as much as admitted to the first part.

Then he proceeded to come close to admitting to the second.

In a Sept. 26, 2005 email that was presented to the jury, Keating, discussing a national ad buy, said the Weekly and Express "would give the most amount of rate break to get the business over the Guardian. If that means I net $18 an inch I'll take it."

Keating had previously said that the Weekly needed to sell ads for at least $18.75 to $19.25 an inch to make any profit.

And his deposition was filled with references the the Guardian as the Weekly's main competitor (a fact that undermines the chain's argument that the San Francisco market is so diversified that the head-to-head between the Guardian and the Weekly is only a small part of the competitive landscape.)

Evidence admitted this morning showed that the Weekly prepared regular "Guardian reports" on how the locally owned paper was doing in ad count -- and that there was no other competitor that rated that sort of treatment.

The Guardian lawyers also presented parts of the deposition of Jed Brunst, the chain's top financial officer, who was asked what happened when the Weekly was losing money and couldn't pay its bills. Simple, he said: The Weekly got "cash advances from the parent."

Did those "advances," he was asked, come with promissory notes or anything else that would suggest they were loans?

No, Brunst said. Nothing like that.

In other words, the chain was propping up a money-losing operating in San Francisco, which was selling ads below cost in an effort to get the business away from the Guardian.

That's quite a set of admissions. Sorry Dandy Andy was bored.

Welp, the boardroom Mormon is out, and now it's up to Bridge Over River McCain and Huckabee Hound to feast on his Republican delegates' innards. (I think. These caucus rules are so twisted I'm sometimes wishing we were back before the days of Hubert Humphrey McGee.)

I must say I rejoiced when Giulievil bit it, even though I wanted him in as a spoiler. There must be a lot of backroom arm twisting (waterboarding?) among the Reps right now to get Huck out of the race as well, before the rest of the religious unright leap right into his sweaty drag queen man hands.

A side note: has anyone else noticed how much Romney and McCain both look like waxen marionette creations from Thunderbirds?

Eeeeery

Anyway, Romney said "If I fight on in my campaign, all the way to the convention, I would forestall the launch of a national campaign and make it more likely that Senator Clinton or Obama would win. And in this time of war, I simply cannot let my campaign, be a part of aiding a surrender to terror," according to the AP.

He also said he had to step aside "Because I love America in this time of war ..."

I think that says it all for the Republicans in general, no?

The jury in the Guardian's lawsuit against the SF Weekly got a primer today on how prdatory pricing by a big chain works.

Guardian controller Sandy Lange took the stand, and outlined the results of information she'd compiled on below-cost sales by the Weekly and the East Bay Express. The Guardian is charging that Village Voice Media, formerly known as New Times, which owns the Weekly and until recently owned the Express, has been selling ads below the cost of producing them to harm a competitor.

That's a violation of California law.

Lange explained how she and other Guardian staffers and legal assistants had entered into an Excel spreadsheet some 20,000 sales transactions from the Weekly and the Guardian, involving 128 accounts, over eight years, from 1999 to 2007. In each case, the computer tracked whether the Weekly's ads were sold below cost -- and how often those cut-rate sales were linked to the Guardian either losing a client or being forced to cut prices to salvage the deal.

The spreadsheet showed that in 91 percent of the transactions, the Weekly's sale price was below cost. That's consistent with data Lange presenting showing that the Weekly had consistently lost money. In 2003, she noted, the cost of producing a page of the SF Weekly was $1,936.17 -- and the paper's revenue was just $1,634.36. That meant the Weekly was losing about $300 for every page it produced. A few years later, the gap had grown: The cost of producing a page was $2,730 and the revenue was $1,900 -- meaning the Weekly was losing $800 a page.

How was this possible? Simple: The chain kept pouring in money from its 15 other markets to prop up San Francisco and the East Bay.

Then Lange explained her correlation report: In 34 percent of the transactions involving below-cost sales, the Weekly's rate-cutting was associated with the Guardian deeply discounting its own ads (threatening the financial viability of a local paper with no deep-pockets parent). And when she added in the accounts that the Guardian lost entirely after the Weekly's predatory pricing, the total came to 66 percent.

In other words, in two-thirds of the cases where the Weekly had sold below cost, the Guardian had either had to follow suit and sell for less than the ads were worth -- or lost the account and the business.

Lange also presented charts that showed how the predatory behavior had eroded the Guardian's share of the local alternative-weekly ad market.

On cross-examination, Weekly attorney Ivo Labar tried to argue that the market itself had shrunk. In 2000, he pointed out, the two papers together sold $13 million worth of display ads. By 2007, that number had shrunk to $8.8 million. "Isn't it true," Labar asked, "that advertisers chose to spend only $8.8 million in 2007?"

Lange said she disagreed with the premise of the question. "Because of your predatory pricing," she testified, "you put negative pressure on the market." In other words, the Weekly depressed the costs of all alt-weekly ads in San Francisco.

Labar then pointed to a handful of accounts in which the Weekly either sold ads for a higher price than the Guardian or the Guardian appeared to have lost the business for reasons that had nothing to do with price, and tried to discredit the entire report on the basis of a few examples. That's been the Weekly's practice in this case: Take a clear trend (years of below-cost pricing) and clear results (damage to the Guardian) and try to poo-poo it by saying there are a few cases here and there that don't fit the pattern.

Lange's testimony will continue tomorrow morning.

I missed the trial on Friday, so if the SF Weekly’s hit man, Andy Van De Voorde, wants to take a swing at me for posting information on the testimony, fine: I’m smiling, Andy. (I’m also not the only person in the courtroom from the Guardian who knows what’s going on and can take notes.)

But before we get to the day’s events, let me do my all-too-regular Van De Voorde correction file. From his most recent blog:

“What’s your official title?” asked Weekly attorney H. Sinclair Kerr Jr. in what is a traditional first question for witnesses.

“I’m the executive editor of the company and apparently the mascot,” Lacey replied.

The remark was a reference to testimony from Guardian executive editor Tim Redmond, who last week said under oath he thought of Lacey as a New Times mascot.

Um, no Andy. I didn’t say that, under oath or otherwise. That testimony was from Jennifer Lopez, who used to work for the SF Weekly.

And jeez, Andy’s in court every day.

Another correction:

[Guardian attorney Ralph] Alldredge was also skeptical about why [New Times CEO Jim] Larkin hasn’t attended the trial—an odd question given that he could have subpoenaed the New Times executive.

Actually, Andy, you might check with your lawyers: This is a California case, and as long as Larkin doesn’t live here and can’t be found within the borders of the state, we can’t subpoena him. Interesting that he hasn’t shown up once for the trial; if he had, we could have compelled him to take the stand and answer a few questions.

Now then, since we have that cleared up, let me go to the day’s events. Here's our report:

Mike Lacey took the stand in the Guardian's predatory pricing trial against the SF Weekly and had some trouble answering some key questions.

The editor in chief of the SF Weekly's parent chain, the VVM/New Times/SF Weekly, said at one point that the SF Weekly was a better paper in "most all respects" to its competitor, the Guardian.

Lacey said that the Weekly was better in layout, stories, design, graphics, readers, everything. Also, he said that the Guardian was "obsessed with City Hall and City Hall minutiae" and the city was full of young people who didn't vote and weren't interested in politics and they came to the Weekly.

If the Weekly is such a better paper, Guardian Attorney Ralph Alldredge prodded on cross examination, why does the Weekly sell its advertising at rates so much lower than the Guardian? Why doesn't a Weekly advertising sales person sell its advertising space at a rate higher than the Guardian? Why doesn't the Weekly command a premium price?

Lacey ducked the questions.

Budget Analyst Harvey Rose says he couldn’t believe it when he got a call from the San Francisco Chronicle reporters on Feb. 8, asking him to comment on a draft report that Mayor Gavin Newsom had just released -- five days before the Board of Supervisors was scheduled to see the report’s final, authorized version.

Rose’s draft, which Newsom did not invite the Guardian to read, reportedly slams the Mayor for taking more than $1 million a year from the budgets of several city departments, including the Human Services Agency and the Municipal Transportation Agency, and using these funds to pay the salaries of 11 staffers.

“I was absolutely appalled, because I never issued that report,” Rose told the Guardian, explaining that, in the interests of objectivity, he lets audited departments see a draft before he delivers the final version to the Board.

“It’s totally inappropriate to discuss a not yet signed report,” Rose said.

Sup. Jake McGoldrick who commissioned the report, called Newsom’s leak, “a serious breach of trust, a Karl Rovian move.”

“They wanted to spin the story their way, do a character assassination on Harvey Rose, instead of having a civil, open discussion,” McGoldrick said. “It’s not so much the report that disturbs me, as the way the Prince formerly known as the Mayor is handling the report.”

Even Newsom ally Sup. Sean Elsbernd said the Mayor broke normal auditing procedures.
“Usually, reports aren’t released until the t’s are crossed, and the i’s are dotted,” Elsbernd said.

Guardian reporter Sarah Phelan reports from City Hall that the Board of Supervisors has voted 8-3 (with supervisors Michela Alioto-Pier, Sean Elsbernd and Carmen Chu in dissent) to reject the reappointment of Ryan Brooks to the San Francisco Public Utilities Commission. But in a surprising and inexplicable move, Sup. Chris Daly flipped his vote on the reappointment of Dick Sklar, providing the swing vote in favor of the nominee of Mayor Gavin Newsom. Sklar, with lots of supporters present, was approved 7-4.
Daly's move surprised those who have sought to reject the pair and there's now widespread speculation on what kind of deal Daly cut with the high-profile Sklar supporters (even Sen. Ted Kennedy was making calls on Sklar's behalf), but Daly made few credible comments to reporters. Check back here later for Sarah's full report.

P.S. The board also failed to muster the votes to block the mayor's three new Municipal Transportation Agency appointments. All in all, it was one of Newsom's better days at the board since he moved into Room 200.

Another fascinating day in court in the Guardian’s predatory-pricing lawsuit against the SF Weekly and its corporate owner. The Weekly is now well into its defense case, and the lawyers for the 16-paper chain that owns the paper are making the same arguments they’ve made all along. And they aren’t holding up very well.

The Guardian, as readers of this blog know by now, is claiming that the Weekly and Village Voice Media, the chain formerly known as New Times, sold ads below cost in an effort to harm the local competitor.

Today’s main witness was Jed Brunst, the company’s Phoenix-based CFO. H. Sinclair Kerr, the Weekly’s lead attorney, asked Brunst why New Times decided to buy the Weekly in 1995. “We saw San Francisco as a very vibrant market,” Brunst testified. “We saw it as an opportunity to make money and to practice good journalism.”

It was clear that Brunst was well prepared – much of his testimony seemed pre-rehearsed, which is not terribly surprising. Lawyers in a case like this typically make sure their own witnesses aren’t going to surprise them.

But Brunst got out of the box with a big problem: He said the chain saw San Francisco as a good opportunity to make money. And it became clear as the day went on that the Weekly had never made any money at all. Neither had the East Bay Express, which New Times bought in 2001. Both lost huge amounts of cash.

Before we get to the juicy details of how much money Team Newsom is taking home, it's worth noting that Mayor Gavin Newsom spent last Friday handing out draft copies of the report in which these figures can be found--a report that Budget Analyst Harvey Rose drew up at Sup. Jake McGoldrick's request to figure out the impacts that staff changes within the Mayor's Office would have on the City's budget--changes Newsom announced Jan. 4.

It's also worth noting that Rose didn't know that Newsom Chief of Staff Phil Ginsburg was standing around last Friday telling the press that his report was a piece of “bull-.”, until the press called him later that same day and asked him for a comment.

And that all this unauthorized report distribution and undefended "bullshit" calling was happening just five weeks after Newsom announced that the City is facing a $229 million budget deficit and that therefore the city must implement an immediate hiring freeze and across-the-board departmental budget cuts.

Unlike Sups. Chris Daly or Aaron Peskin, who are more typically the targets of the mayor’s famously snippy wrath, Rose isn’t a politician, but a widely respected analyst, and so Team Newsom could hardly accuse him of “political theater”.

Instead, Ginsburg told the Chronicle that, “The budget analyst has no understanding of how salaries work in this city,” while Newsom made the vague claim that, “It’s personal.”

But however much they tried to put a negative spin on Rose report, Team Newsom could not deny that it paints an unflattering picture of the Mayor’s Office as a place that is using over $1 million from other departmental budgets to make new hires and increase the salaries of staff that are assigned to the Mayor.

As Rose reports “The Mayor’s practice of including positions assigned to the Mayor’s Office, but funded in the budgets of the Municipal Transportation Agency, the Human Services Agency and the Planning Department Budgets, understates the Mayor’s Office’s budgeted and actual costs for such positions, while such costs are overstated in those three other Departmental budgets.”

Rose’s report found that

a) The estimated total increased annual salary and fringe benefits costs of the 17 newly-appointed department directors to replace existing directors, and the ten Mayor’s Office staff appointments, two of which are completely new functions, are $553,716.

b) Other City departments fund about $1.34 million in annual salary and fringe benefits for ten positions assigned to the Mayor’s Office, including the mayor’s new climate change director Wade Crowfoot and new Homelessness Policy Director Dariush Kayhan.

c) The costs of appointing Ed Harrington, as General Manager of the SF Public Utilities Commission, Ben Rosenfield as Controller, Mirian Saez, as Interim Director of the San Francisco Housing Authority, and Jordanna Thigpen, as Acting Director of the Taxi Commission have yet to be announced.

d) Terminating Susan Leal, General Manager of the SF PUC, without cause, as is Newsom’s stated intention, will add a further $401,392 to City costs.

e) the mayor’s Office is also recruiting for a replacement to the CityBuild Director, at a cost of $144,596.

In face of these dicey accounting practices, Rose suggests that the Board of Supervisors rescind funding for positions assigned to the Mayor’s Office but included in other departments’ budgets, and the cost of these positions, estimated to be $898, 718, could then come from the Mayor’s General Fund monies.

The Board, says Rose, could also eliminate MTA funding for Mayor’s Office positions which do not directly benefit the MTA’s core functions. Those positions could then be funded, Rose reports, to the tune of $240,943, from the Mayor’s Office’s General Fund monies.

Rose’s report also notes that, “The newly appointed Climate Protective Initiatives Director is a new function unrelated to the MTA’s Safety and Training Unit,” even though the position if currently being funded through monies set aside for that unit.

And now, here are the figures, taken directly from Rose’s report, which show who, on Team Newsom, is making more or less, compared to previous directors and appointees:

Team Newsom t heads making more than Predecessors (the “Gimmee More” gang)

Kevin Ryan, Mayor’s Office of Criminal Justice: $160,862—$42,848 more.

Joyce Hicks, Director Office of Citizen Complaints: $$171,262—$42,276 more.

John Rahaim, Director Planning Department, $210,000—$34,422 more.

Michael Cohen, Director Mayor’s Office of Economic And Workforce Development,
$193,570—$33,930 more.

Mike Farrah, Director Mayor’s Office of Neighborhood Services: $120,900—$28,340 more

Adrienne Pon, Director Mayor’s Office of Community Development: $143,123—$12,993 more.

Luis Cancel, Arts Commission Director: $140,000—$8,648 more.

Chris Iglesias, Director Human Rights Commission: $149,058—$3,146 more.

Team Newsom members making less than Predecessors:

Ed Reiskin, Director, Department of Public Works: $195,000—$25,419 less

Fred Blackwell, Director, SF Redevelopment Agency: $178,724—$18,000 less

Nancy Alfaro, Director, 311, $149,058—$15,942 less

Micki Callahan, Director, Human Resources, $195,000—$9,672 less.

Anita Sanchez, Executive Director, Civil Service Commission, $128,752—$6,986 less.

Cristine Soto-DeBerry, Mayor’s Liasion to the Board of Supervisors: $91,000—$6,084 less.

Appointments to New Functions

Dariush Kayhan, Homeless Policy Director, $169.624
Wade Crowfoot, Climate Protection Initiatives Director, $130,112

Appointments to Existing Functions

Nancy Kirschner Rodriguez, Director of Government Affairs, $143,123—$19,207 more.

Dwayne Jones, Director of Community Engagement and Communities of Opportunity: $143, 123—$14, 371 more.

Catherine Dodd, Deputy Chief of Staff for Health and Human Services: $143, 123—$4,513 more.

Maya Dillard-Smith, Violence prevention Director, $91,520—$4,342 more)

Astrid Haryati, Greening Director, $111, 228—no change.

Jason Chan, Mayor’s Liasion to Commissions, $81,276 ($13,442 less.

Erin Hicks, State and Federal Affairs, tba.

The Salary ‘To Be Announced” Gang.
Ed Harrington, General Manager, SF PUC—tba
Ben Rosenfield, Controller
Mirian Saez, Interim Director, SF housing Authority,
Jordanna Thigpen, Acting Director, Taxi Commission.

Five years ago next month, San Francisco was essentially shut down by protests as the United States invaded Iraq, capping a series of large demonstrations urging our leaders not to launch an offensive war that we knew would be a disaster. The Guardian offered the most comprehensive coverage of those protests, and now we're reexamining that momentous time to explore what it meant -- then, now, and for the future.
I've written a bit about the project here, and I'm now conducting interviews with some of the significant players and thinkers from that time, but I also want to hear from you. How did you make your voice heard before the war? What did it mean to you? How has it affected you to watch all of our worst predictions come true? What does it mean to the future of this country and to the notion of democracy?
Feel free to share your thoughts in the comment section, or send them to me at steve@sfbg.com. Thanks.

The former publisher of the SF Weekly admitted today to a key part of the Guardian's lawsuit against the Weekly and its corporate parent.

Chris Keating, who was the Weekly publisher between 2004 and 2006, was on the stand for cross-examination by Guardian lawyer Ralph Alldredge. After a lengthy discussion in which he discussed numerous examples of efforts to win ads away from the Guardian by cutting rates, Alldredge asked him directly:

"You knew those [prices] were below your cost, right?"

Keating replied, "Yes."

That's a significant admission: The Guardian is claiming that the Weekly sold ads below cost with the intent to harm the locally owned paper. That's a violation of California law.

The battle over the future direction of the San Francisco Public Utilities Commission took a dramatic turn Feb. 12.

A super majority of the Board voted to reject mayoral appointee Ryan Brooks, but Sup. Chris Daly joined mayoral allies Sups. Michela Alioto-Pier, Carmen Chu, Chris Daly and Sean Elsbernd, thus leaving the Board one critical vote short of the super majority currently required to reject mayoral appointees to the PUC, the city agency that wields control over Hetch Hetchy water and power, and San Francisco’s sewage and waste water systems.

DIck Sklar testifying before the Board, as he battled for his PUC seat

These votes came after Sups. Sophie Maxwell and Bevan Dufty declared it was time for new blood on the board, Sup. Sean Elsbernd argued that the PUC-related charter amendment, which the Board has just placed on the June ballot and which requires only six Supervisors to reject a PUC appointee, is a better way to secure a new commission, and the 73-year-old Sklar, who has been ill with pancreatic cancer, appeared in person to deny, amongst other things, allegations that he is a PG&E flak.

The chain that owns the SF Weekly brought its star witness to court today, a Harvard economist with a stack of academic credentials who typically works for oil companies and who charges $1,075 an hour. He delivered quite a lecture on his own economic theory of predatory pricing – and then was laid low by a little newspaper called the Bodega Bay Navigator.

Some background before we get into the juicy details.

I was an economics major way back when. I have sat through many lectures by learned economists, have read their learned papers, and have tried to keep up somewhat on the dismal science. And I can say without hesitation that most academic economists live in a world devoid of reality.

Economists try to study human behavior as it’s manifested in markets, but they don’t want to be confused with people who actually study human behavior. They will tell you they aren’t (gasp) sociologists; they want to make everything fit in nice little mathematical theories.

To do that with such non-mathematical concepts as the actions of a small business and its owners in a community, you have to make a lot of assumptions. That’s what economists do; they make assumptions. They assume, for example, that all the participants in a market have the necessary knowledge and information to make the proper decisions. They assume that random factors like politics, love, passion, pride, anger, envy or simple nastiness are never part of the economic equation. They assume that everyone in a marketplace acts “rationally.”

That, of course, is an irrational assumption, particularly when it comes to small businesses (and even more so when it comes to the alternative press). If all of us in this business had acted rationally, there would be no Bay Guardian. There would be no SF Weekly, New Times or Village Voice Media. The entire alternative press exists because some utterly irrational people with little background in business and no rational hope for success decided to start little newspapers. They were – and many still are – motivated by politics, community service, excitement and a lot of other things, but rational business motives were never really high on the list.

Which brings us to the eminent Dr. Joseph Kalt.

vs.
During last night's City Desk News Hour, the Chronicle's Marshall Kilduff, Cecelia Vega, Rachel Gordon, Marisa Lagos, and I were discussing SFPUC appointments and the ouster of manager Susan Leal -- which I blamed at least in part on PG&E's influence -- when suddenly the power went out in the television studio. Wow, we joked, PG&E was really playing hardball now. The lights and cameras came back on after about 10 minutes and we finished the show, careful not to again anger those with power (well, OK, not really).

Yet the real news on the SFPUC/PG&E/Leal front was made on the second half of the show (which is actually taped earlier in the day, whereas our part is live) when host Barbara Taylor interviewed Leal, her first extended comments since she was inexplicably fired by Mayor Gavin Newsom and then hit by a car in front of City Hall. Leal said she was more shocked than anyone that she was sacked by Newsom -- who, to her face, said she was doing a fine job -- and she still doesn't fully understand it. But she did lay out some possibilities, including her public power moves that upset PG&E and innovative green programs that upstaged the moribund Mayor's Office.
If you have Comcast cable, check out the show on Channel 11 when it replays tonight and Sunday night, both at 8:30 p.m.

Looks like this is the time and date that Leal's future as SF PUC general manager will be decided:

2/20/08 Agenda Special Meeting San Francisco Public Utilities Commission
Published: 02/15/2008 | Updated: 02/15/2008
Published By: Commission

MAYOR

Susan Leal
GENERAL MANAGER
Michael Housh
SECRETARY
ORDER OF BUSINESS:
1. Call to Order
2. Roll Call
CLOSED SESSION
3. Public comments on matters to be discussed in Closed Session.
4. Motion on whether to assert the attorney-client privilege regarding the matter listed below as Conference with Legal Counsel.

THE PUBLIC UTILITIES COMMISSION WILL GO INTO CLOSED SESSION TO DISCUSS THE FOLLOWING ITEM:
5. Pursuant to Government Code section 54957 (b)(1) and San Francisco Administrative Code section 67.10 (b), discussion and possible action on a Public Employee Dismissal, Number of Employees Affected: 1.

FOLLOWING THE CLOSED SESSION, THE PUBLIC UTILITIES COMMISSION WILL RECONVENE IN OPEN SESSION.
6. Announcement following Closed Session.
7. Motion regarding whether to disclose the discussions during Closed Session.
ADJOURNMENT

Good to see the plan to spray the Bay Area with Little Brown Apple Moth-related pesticide get major ink in the Chronicle.

While the debate rages over as to whether spraying a pheromone-containing pesticide over urban areas is an efficient and public health-protective way to deal with the moth, one thing is for sure.

Having small planes fly low over your home for hours on end is extremely unpleasant.

“It was like an air raid,” is how a friend who lives in Santa Cruz described her experience of the aerial spraying that took place in Santa Cruz last fall, using crop dusters. in a questionable effort to completely eradicate this tiny moth.

“Their engines sounded like motorbikes, only overhead,” says my source, adding that though she did experience any adverse health effects, “the experience was very invasive.”

“The worst part is knowing it could happen again and again, for years,” she adds.

To find out what the California Department of Food and Agriculture is planning for your region, check their website

And to see what citizens opposed to the spraying think, check out the California Alliance to Stop the Spray's site.

OK, this is just priceless. Our celebrity Mayor Gavin Newsom and his fiance actress, Jennifer Siebel, on Saturday went weightless during a flight out of Moffett Field as part of a promotional effort by a company charging $3,500 per head to experience zero gravity in a diving airplane. The Zero G Experience send out this picture in a press release that contained this purple prose: "During the unforgettable weightless escapade, Newsom and Siebel flew like Superman, flipped like Olympic gymnasts and enjoyed 10-times more hang-time than the world’s best basketball player. The newly engaged duo floated on cloud nine as they danced mid-air in the rare and exalted state of weightlessness."
It's good to be the mayor.

What is Gavin looking for? A way off the train? Or a way to spend MTA money on hiring himself a climate change director?

"Crashes involving MUNI and pedestrians have nearly doubled in the past two years: in 2005, there were 34 crashes involving a MUNI vehicle and a pedestrian; while 2007 saw 62. These numbers include 3 fatalities in 2005 and 7 fatalities in 2007. This is a disturbing statistic."

Manish Champsee of Walk For San Francisco, a pedestrian advocacy group, included this stat in an email to Mayor Newsom, by way of explaining his group's concerns with the Mayor using MTA safety money to hire a climate change director.

Champsee's email (included below) is worth reading for the way he avoids denigrating anyone working in the Mayor's Office. Yes, those folks are doubtless trying to do great and wonderful things for the planet, but could they please do that with money from the Mayor's budget, not from overloaded public transportation agencies?

Subject: Restore Funding for a Safety and Training Manager
To: gavin.newsom@sfgov.org
Cc: boardofsupervisors@sfgov.org, Nathaniel Ford

Dear Mayor Newsom:

This letter is to voice our concern regarding reports that staff in your office are being paid for by MTA funds meant for the hiring of a Safety and Training Manager for the SFMTA.

With a downward safety record at the MTA regarding collisions with pedestrians, we advocate that this MTA funding in particular be applied to Safety and Training Management. As advocates for a walkable, more livable city,
we strongly support the role of a Greening Director.

We welcome an opportunity to speak with you regarding the current spike in injuries to pedestrians.

Sincerely,

Manish Champsee
Walk San Francisco President

Newsom swore in a new batch of his appointed commissioners on Friday.(photo from sfgov.org)
Mayor Gavin Newsom's effort to fire Susan Leal (slated for tomorrow morning) has grabbed some attention over the last week, as well as some pushback from anonymous Mayor's Office minions over the weekend (read the second item in M&R's Monday column, which was likely a response to the Leal comments I discussed here).

But that's not the only front for the Newsom offensive, or even the only one scheduled for tomorrow morning. At the same 9 a.m. start time as the SFPUC meeting, just one floor up in Room 416, the Building Inspection Commission will be meeting and voting for its new president. And the word from our City Hall sources is that Newsom's proxies have been actively lobbying against current president Debra Walker (a progressive, artist, tenant advocate, and likely candidate to replace Sup. Chris Daly), pushing instead for developer Mel Murphy to take the reins.

Debra Walker, from an image at www.alicebtoklas.org.

The publisher of the SF Weekly took the stand Friday and today in the Guardian’s predatory-pricing suit and presented all of the Weekly’s positions as if he’d been rehearsing for weeks.

And in fact, Fromson has been sitting in the courtroom watching most of the trial so far. Most witnesses in legal cases don’t get to watch the proceedings until after they’re done with their turn in the box – it might influence their testimony – but Judge Marla Miller has been pretty lax on that front. She’s allowed one representative from each paper to sit in for the entire case, and Fromson has apparently been the Weekly’s designate.

(She’s also allowed me to sit there and watch, and then write about, the proceedings even though it’s theoretically possible that the Weekly’s lawyers will try to put me back on the stand.)

I have no objection to any of this; I’m simply pointing it out because Fromson’s testimony was carefully targeted to hit all the major points where the Weekly has been weak.

But his carefully buffed lines, delivered like the salesman he is, don’t exactly jibe with the evidence.

Fromson’s line – and the line of the lawyers for the 16-paper chain now known as Village Voice Media – is that the poor beleaguered Weekly was trying really hard to raise its ad rates so that it wouldn’t be selling below cost and would be starting to make a profit. The company, he said, is “concerned with rate growth, revenue growth, and increased profit.”

But the facts show that over the 12 years the chain has owned the Weekly, the paper has never made a profit. In fact, for every one of those years, the Weekly has been selling ads below cost.

Fromson tried to argue that in many cases, the Guardian’s ad rates were actually lower than the Weekly’s, and that he as publisher has had to cut prices to meet the competition from the Guardian. But again, the evidence shows otherwise – while there are no doubt a few cases here and there where the Guardian rates were lower, the overall financial statements from both companies make very clear that the Weekly’s rates were consistently below the Guardian and consistently below cost.

Then he tried to argue that he was cutting rates to meet other competition. In fact, the notion that the Guardian was not the Weekly’s prime competitor – that there were dozens of other media outlets fighting for every ad dollar – is central to the Weekly’s defense.

Fromson talked about fighting with the Onion, the neighborhood newspapers and SFStation.com, among others, for ads, and cited some cases in which he said he’d had to lower rates to meet those competitors’ prices.

But again, the evidence doesn’t lie. The Weekly publishers before Fromson all had to prepare regular special reports on the Guardian – and on no other competitor. Fromsom filed some “Guardian reports” of his own – and he couldn’t point to a single similar report he’d filed on any other competitor.

And anyone with any common sense knows that there’s a market niche for alternative weeklies; if there weren't, neither the Guardian nor the New Times/VVM chain would have survived and grown over the past three decades.

In fact, Fromson as much as admitted that on cross-examination. Guardian attorney Rich Hill asked if any of the neighborhood papers, or the Onion, were members of the Association of Alternative Newsweeklies or represented by either of the two national ad firms that specialize in alternative weeklies. No, he acknowledged. The neighborhood papers, Hill asked, have much lower circulation and very different types of editorial, don’t they? Yes, said Fromson.

“Are there serious investigative pieces in the Onion?” asked Hill.

“They don’t see themselves doing that,” Fromson replied.

In other words, Hill said, those supposed competitors are actually quite different products, right?

“I don’t agree with that,” Fromson said.

But it became very clear during cross-examination that Fromson did, indeed, see the Guardian as his chief competitor – and that he and the top executives at New Times/VVM were looking for ways to hurt the competitor.

Hill took Fromson through the paper’s finances. In 2005, when he arrived, the Weekly lost $1.8 million. In 2006, with Fromson at the helm, the loss was $2.5 million. And the steep losses continued in 2007.

Hill pointed to several memos showing how Fromson and his bosses, chain president Scott Tobias and CEO Jim Larkin, saw the competition with the Guardian. In one memo, dated Feb/ 24, 2006, Larkin warned Fromson that the Guardian had more ads in the paper. “No way they should be ahead of us in ad count like this,” Larkin wrote.

“They won't," replied Fromson. “That is the loudest drum I am beating around here.”

The point of that exchange: Fromson and the higher-ups were concerned not with increasing their rates or making a profit, but with making sure they had more total ads than the Guardian.

“I’m not OK with losing to anyone, least of (sic) Brugman (sic),” Fromson’s email continued.

In July, 2006, Fromson sent an email back to corporate headquarters stating that “we are doing a great job, all things considered.” That came at a time when Fromson’s paper had lost more than a million dollars in just the previous six months.

In November, 2006, Fromson wrote that he was “feeling good about working them over the rest of the year.” Who, Hill asked, is the “them” referred to in that message?

“I imagine it would be the Guardian,” Fromson said.

That same month, while the Weekly was losing $179,000, Larkin wrote to Fromson and said: “great work, let’s keep it going.”

And in Fromson’s Nov. 30,2006 “Guardian report” to Larkin, he wrote: “As you can see, we are winning the battle locally and nationally.”

Since that clearly wasn’t a battle to be profitable or a successful business, Fromson had to be referring to something else. As Hill put it: “Is that the battle to wreck the Guardian?”

Fromson: “There was no battle to wreck the Guardian.”

One of the things the jury will have to do is decide is which witnesses are telling the truth, and which ones, as the lawyers say, lack credibility.

They met in one of the smallest rooms in City Hall, but within ten minutes, the board that oversees the San Francisco Public Utilities Commission managed to make a huge decision that will cost tax payers $400,000, when they voted to fire SFPUC General Manager Susan Leal, this morning.

SFPUC General Manager Susan Leal talks to the press about her record at the agency, the lack of stated reasons for her termination and her future aspirations.
Photos by Charles Russo

“It’s a sad day when someone doing a good job gets removed to the tune of $400,000 from rate payers for no stated reason,” Sup. Bevan Dufty told the Guardian, after the vote to fire Leal, his friend and political ally, went down.

Commissioner Dick Sklar told reporters, “We’re not discussing it,” as Commission staff distributed copies of an unsigned PUC resolution that cites Leal’s August 23, 2004 employment agreement. That contract allows the Commission to terminate Leal’s agreement “without cause, and without stating any reasons therefore, and upon at least 30 days written notice.”

Commissioner Anne Moller Caen said that with Leal gone, people could expect, “ a change of policy, a change in direction.”

Meanwhile, Leal, a former supervisor and City Treasurer, expressed few regrets, other than wishing that the agency had done a biofuel program three years ago, instead of during the past year. Oh, and wishing she'd been wearing an old suit, the day she got run over outside City Hall.

"I Iost a good suit," Leal joked.

An accountant with more than 30 years experience analyzing damage claims in lawsuits testified today that the SF Weekly’s practice of selling ads below cost damaged the Bay Guardian badly – and he put the financial toll at between $5 million and $11 million.

Clifford Kupperberg took the stand in the Guardian’s predatory-pricing suit against the SF Weekly and its corporate owner. The Guardian is charging that the Weekly for more than seven years violated the state law barring companies from selling a product below cost for the purpose of harming a competitor.

Guardian attorney Ralph Alldredge walked Kupperberg through the detailed process of how he evaluated the Weekly’s and the Guardian’s costs, the price of display ad space in the two papers, and the projections he made of how much the Weekly rate-cutting had harmed the locally owned paper.

If the jury finds that the Weekly and Village Voice Media, the chain formerly known as New Times, broke the law, Kupperberg’s calculations will be the basis for awarding monetary damages.

Yesterday, Mayor Gavin Newsom announced he was appointing Ryan Brooks to the Planning Commission.
That announcement necessarily meant that someone else on the Planning Commission was about to get bumped.

And today, the Planning Commission announced that the Mayor had accepted the resignation of Planning Commission President Dwight Alexander.

The latter move wasn’t entirely unexpected, given the shenanigans that occurred behind the scenes at the Planning Commission earlier this year.
And nor was the former, given that Sups. Sophie Maxwell and Bevan Dufty both expressed support for the idea of appointing Brooks to another commission, when they rejected his reappointment to the San Francisco Public Utilities Commission last week.

But with Alexander gone, it remains to be seen who ends up as the new Commission president, and what course the Commission—and the Planning Department's new director John Rahaim—choose to steer in 2008…Stay tuned.

Lawyers for the SF Weekly and its corporate parent tried mightily today to discredit the testimony of the Guardian’s expert on the damages caused by the chain’s predatory pricing in San Francisco.

It was a classic legal strategy: The Weekly lawyers tried to find flaws in Clifford Kupperberg’s detailed damage report, then brought in their own expert to argue that our expert was wrong.

But in the end, I didn't see anything presented that undermined the Guardian's basic argument: The Weekly's below-cost sales damaged the local paper, and those damages were in the millions of dollars.

The crux of the attack on Kuppergberg’s data: The projections he showed for lost profits during 2001-2007, the period when the Guardian is charging the Weekly was selling ads below cost, exceeded the level of profits the paper had made in the previous few years.

Projecting damages in a case like this is an inexact science: You have to try to establish what would have happened if the illegal conduct hadn’t happened. Kupperberg used a series of different models to do that, and came up with damages of between $5 million and $11 million.

How, Weekly attorney Rod Kerr asked, could Kupperberg suggest that the Guardian would have made profits of well over 10 percent a year when the most the paper had earned in the previous decade was about 5 percent?

Well, Kupperberg noted, the 1990s were a period of rapid growth for the Guardian and the alternative press in general, and during periods of rapid growth, many companies re-invest profits in expanding their infrastructure. When a market starts to level off and mature, those investments pay off; that’s a period he called the “profit maximization level.”

So it wouldn’t be at all unreasonable to assume that, after spending money to expand in the 1990s, the Guardian might have been able to hold costs down and see real economic gains in the next decade.

The other point, of course, is that the Guardian’s owners, Bruce Brugmann and Jean Dibble, have never looked for high profits – all the money has been re-invested in the paper. So the money that the Guardian lost to SF Weekly’s predatory pricing might not have appeared on a balance sheet as “profit” – it might have appeared as higher expenses associated with improving the paper.

Kupperberg made another important point in his testimony: Ralph Alldredge, the Guardian’s lawyer, asked him directly: “Is there any doubt in your mind that the SF Weekly sold a significant percentage of its ads below cost during this period?”

“No,” said Kupperberg.

Then the Weekly brought in it’s expert, Everett Harry, who did the opposing-expert-witness thing and tried to say that Kupperberg’s figures were all wrong. His basic line was the same thing the Weekly has been retailing all along: The early part of this decade was marked by a recession, 9/11 and the rise of the Internet, all of which hit local newspapers and led to a decline in revenues.

But other weekly newspapers in the region (and weeklies all over the country) came out of the recession fairly quickly and saw revenues (from display ads, which are what this case is about) come back strongly. And between 2001 and 2007, there is no evidence that the Guardian lost any display ads to the Internet.

The San Francisco alternative weekly market was unlike markets anywhere else: One competitor, with $13 million in chain money to back it up, was systematically depressing the price of display ads. And the Guardian suffered damages as a result.

I have more when Harry finished his testimony and is cross-examined tomorrow.

An expert witness for the SF Weekly put a bunch of charts before the jury Friday, trying to undermine the Guardian’s predatory pricing case – but every one of the charts seemed to prove exactly what we’ve been trying to say.

The Guardian is suing the Weekly and its corporate parent, Village Voice Media, for predatory pricing. The claim is that the 16-paper chain poured millions into propping up the San Francisco paper, which for 12 years has lost money while it sold ads below the cost of producing them. That, we argue, was done to harm the locally owned competitor.

Clifford Kupperberg, the Guardian’s expert witness, put the damages at between $5 million and $11 million.

Everett Harry, an accountant who specializes in analyzing damage claims in litigation, tried to take apart Kupperberg’s analysis. One of his weapons: A series of “scattergrams,” graphic representations of large numbers of sales transactions for clients that have advertised in both the Weekly and the Guardian.

Harry tried to use the charts to argue that the Guardian wasn’t losing business to lower-priced Weekly ads. But the stunning fact was that every single scattergram showed that the Weekly was indeed selling ads below cost.

I’ll start with a correction: I wrote last week that Cleveland and San Francisco were the only two cities where the chain that owns the SF Weekly faces direct competition from another alternative paper.

Actually, Village Voice Media, which used to be called New Times, owns the Seattle Weekly. The Stranger, owned by Tim Keck, competes directly against the Weekly.

And the LA Weekly, also a VVM paper, competes against the much smaller Los Angeles City Beat.

My point – and the point that we brought up in trial – was that VVM does very well in markets where there is no direct, head-to-head competition from another alternative paper of the same size and market share, but does badly when it faces real competition. I’m not the only one who thinks this; allow me to quote a Jan 27, 2003 filing by the U.S. Department of Justice, which had accused New Times and VVM, which were still separate companies, of conspiring to kill competition in two cities.

“In markets where they faced no direct alternative newsweekly competitor," the federal complaint reads, "both defendants had double-digit annual profit margins. However, in Cleveland and Los Angeles ... their profit margins were pinched."

So I think that’s pretty clear.

The bigger story, of course, is that testimony ended today in the Guardian’s predatory-pricing case against the SF Weekly and its corporate parent. Judge Marla Miller has set closing arguments for Thursday morning. Then the case, which has been pending since 2004, will finally go to a jury.

The Weekly’s lawyers pulled a weird move at the very end of the trial, recalling Guardian publisher Bruce Brugmann to the witness stand and asking him a question that had almost nothing to do with the issues at hand. Brugmann had testified early in the trial, and on cross-examination, he was asked if he knew that the San Francisco Chronicle had lost some $300 million over the past few years.

No, Bruce said; Hearst Corp, which owns the Chron, is a privately held corporation and nobody’s sure exactly what the numbers are.

This time around, Weekly lawyer H. Sinclair Kerr pulled out a Guardian story from a year ago that reported on court records showing a $330 million Chronicle loss. I guess the implication was the Bruce didn’t remember what was in his own paper (frankly, I didn’t remember the exact figure either; I review almost every one of the hundreds of news stories we run every year, but I can’t swear to recall every detail of every single one).

Bruce’s response: Sure, we reported on the best figures we could find. And the point was?

Of course, the Weekly is trying to argue that since some daily newspapers are losing money, it would be reasonable to expect any an alternative newspaper in San Francisco to lose money, too. And thus any financial hit the Guardian has taken over the past seven years is the fault of market conditions, not predatory pricing by a big Phoenix-based chain.

The final witness in the case – Bill Johnson, the publisher of the Palo Alto Weekly, called by the Guardian to rebut the Weekly’s financial experts – made a strong case that the whole “dailies-are-losing-money-so-the-weeklies-should-too” line of argument is deeply flawed.

Johnson, whose company also owns the Pacific Sun and four community papers, testified that “there are big differences between the way market forces have affected dailies and non-daily papers.”

He pointed out that dailies have been hit much harder by the Internet: Before sites like Craiglist emerged, a large percentage of the revenue of daily papers came from classified ads, most of which have moved to the web. Weeklies were never as dependent as classified, he said.

Perhaps more important, much of the information that readers used to get from their morning daily paper – national and international news – can now be found just as easily on the web.

But papers like the Guardian still offer unique local content that can’t be found anywhere else. “Local papers have this connection with their local audience,” he explained. In fact, he said, “most non-daily publishers I know have done very well” during the past seven years, the time period the lawsuit covers.

He explained that the Palo Alto Weekly saw its display-ad revenues drop in 2002, but quickly rebounded. The dot-com bust and 9/11 had an impact, of course, he said, but after a year or so, “we held our ground and regained ground.” That was also true of his other Bay Area papers, Johnson said.

Johnson also discussed the Weekly’s theory that the San Francisco market is so full of media that the two alternative papers aren’t direct competitors in their own market. “Those two papers are looking for the same audience,” he said.

Johnson, who sat through the testimony of Harvard economist Joseph Kalt, completely dismissed the eminent professor’s theory that it would be irrational for the Weekly to try to damage the Guardian through below-cost selling. If one paper has deeper pockets and can drop its prices, it will gain market share. The smaller competitor will be forced to lower its prices, and both papers will start to lose money. But the paper with greater resources can continue to grow, showing advertisers that it’s becoming dominant in the market, and the paper with no source of outside capital won’t be able to keep up.

“It happens all the time,” Johnson said.

Kerr objected, and Judge Miller ordered that last remark stricken from the record.

Beds Are Burning by Midnight Oil

Poor Gavin Newsom. Even when he finally finds a seemingly noncontroversial, competent, normal guy to hire as planning director, John Rahaim, he turns out to have a whack job boyfriend.

Lance Farber is still in jail after allegedly setting the bed on fire in the historical SF Fire Chiefs Residence, where Rahaim was staying, and smearing canned tomatoes on the walls.

I met Rahaim, who came from Seattle, last month at an href="http://www.sfbg.com/blogs/politics/2008/01/newsom_prioritizes_politics_ov.html">open space forum and invited him to stop by the Guardian to share his vision for the city (John, you never called). But he seemed like a good guy: personable and smart, if not the most dynamic speaker in the world. I actually wondered at the time how such a button down guy would fare in such a high profile position in this combative town.

But apparently, greedy developers and angry activists are the least of his concerns.

Our Nov. 19, 2003 cover story
It’s bad enough that Ralph Nader is running for president yet again, but whatever. He’s already ruined his once stellar reputation and nobody was going to take another sequel that seriously. Yet I’m truly saddened by today’s news that Matt Gonzalez has agreed to be Nader’s running mate and angry about Matt’s deceptive, preemptive effort (in a guest editorial in yesterday’s Beyond Chron) to knock Barack Obama down a few notches.

That seems to signal this independent, ego-driven campaign’s desire to once again paint the Democrats and Republicans with the same broad brush, denying the obvious difference between Obama and John McCain, as well as the need to be strategic in running for this high-profile office during such a divisive era. In doing so, they undermine the legitimate and desperately needed feeling of hope that Obama is inspiring, sowing cynicism and giving McCain a chance to win the White House.

Nader has always bristled at the “spoiler” label, saying he has a right to run and force a debate on his issues. That’s true. But when Gonzalez characterizes Obama’s campaign as, “one of accommodation and concession to the very political powers that we need to reign in and oppose if we are to make truly lasting advances,” it’s clear that they really aren’t aiming much higher than spoiler.

And if they help spoil an ascendant Obama campaign, they will do irreparable harm to the peace movement, the chance for fundamental change, efforts to bring together progressives and communities of color, people’s sense of hope, and to their own reputations.

Bad partiers! Go to your room!

Today our former pAArtying mayor (bitter?), himself a nightlife magnate, proposed some rather sketchy "Nightlife Reform Legislation" aimed at, he says, curbing all the violence going on in the vicinity of clubs. Because nightclubs are really the ground zero of violence in this city, of course.

The only violence we see here is the muffin top on the right.

The proposed legislation will now go to the Board of Supervisors for approval, was co-sponsored by Supervisor Sophie Maxwell (in whose district a recent shooting at Jelly's occurred), and was announced this afternoon by Newsom alongside Police Chief Heather Fong, members of the Entertainment Commission and local nightclub owners and promoters. We're all for stopping the violence, but we're also all for being able to throw a party free of governmental intrusion -- hey, we're nightlife libertarians! -- and price tags in the thousands, both of which may be incurred by the below. Send an email to your supervisor now in protest -- this legislation could wipe out a ton of independently produced parties, folks.

****It will be illegal, between the hours of 9pm-3am, to loiter within 10 feet of any nightclub (no word yet on bars). People waiting for the bus are excluded. What about people waiting for taxis? Or talking on the phone? And better drag on those smokes pretty quick! And hey, bangers, you'll just have to shoot each other in the parking lot across the street, k? Update: according to SF Gate, people waiting for taxis and smoking will also be exempted

****Promoters will be held directly responsible for any incidents that happen at nightclubs they're throwing parties at (Is that why local nightclub owners are excited about it?)

****The legislation proposes that ALL promoters who throw more than two parties a year obtain permits (wonder how much those will cost -- and if the "promoters" in on the talks were high rollers looking for an easy way to quash competition?)

****All afterhours nightclubs will have to create "security plans" to be approved by the Executive Director of the Entertainment Commission (again, no word on what the cost will be).

We'll clear up some of the details above and follow the story here. Full proposed legislation press release after the jump.

Andy Van De Voorde, the Denver-based hit man for the Village Voice Media chain who is out here to cover the Guardian’s trial against the SF Weekly, rambles on at great length in print, using nasty personal attacks to fuel his vitriolic blogs.

But when you try to ask him a question in person, he’s not quite as forthcoming.

I tried to engage him outside of the courtroom yesterday. I had a question for Andy, and it went like this:

Isn’t it standard journalistic practice and basic professional ethics to call the other side for comment when you do a story? And when you dredge up a story that’s 30 years old just to try to smear the people who dared to sue your almighty employer for predatory pricing, doesn’t basic decency require that you check the facts before you go to print?

Van De Voorde refused to answer the question. The tough-sounding writer who excoriates his foes in print couldn’t handle a simple question from a reporter. “You write what you want and I’ll write what I want,” he said.

There’s a reason I confronted Mr. Van De Voorde yesterday morning. One of his blog posts from earlier in the week contained some startling inaccurate information about a fascinating battle the Guardian was involved in back in the late 1970s and early 1980s. The hit man dredged up information that was more than a quarter-century old to try to make some point about the Guardian (although I’m still not quite sure what it was or how it relates to this trial), and in the process, stuck his foot into a political and journalistic swamp that he clearly didn’t understand.

I understand it all too well. I was right in the middle of it, right after I started working for the Bay Guardian.

The Guardian's case against the SF Weekly finally went to the jury yesterday.

A little after 1 pm, Judge Marla Miller called in a bailiff, explained the verdict form to the jurors, and dismissed the panel to begin deliberations.

The move came after both sides presented detailed closing arguments, seeking to tie together weeks of testimony, reams of exhibits and contradictory opinions from a total of five expert witnesses.

Judge Miller started the day by describing the applicable law to the jurors and explaining how they should interpret the facts. Then Ralph Alldredge, representing the Guardian, opened by explaining that the Weekly, its corporate parent (Village Voice Media, the chain formerly known as New Times) and the East Bay Express (until recently owned by VVM/New Times) were all jointly liable for any damages. "If the SF Weekly didn't have the ability to get money from the corporate parent to cover its losses, it would have gone out of buinsess," Alldredge said.

Then he ran through the basic facts of the case.

Photo courtesy of National Press Club
I got a call from Matt Gonzalez this morning and he wasn’t happy about my post yesterday on his decision to run for vice president, which wasn’t surprising. But I was surprised to hear him sound so wounded and to say that my tone “was almost like a personal animosity.”

Displaying such thin skin is an inauspicious way to begin a presidential campaign, particularly one in which they’re arguing for the right to compete on the same playing field as the heavily scrutinized Democratic and Republican nominees. Ralph Nader was going to run anyway, Gonzalez said, and “if I’m his running mate then we’ll be talking about electoral reform.”

Less than a half-hour after our conversation, Gonzalez and Nader appeared on KQED’s Forum, in which the host brought up my criticisms, to which Gonzalez answered, “That particular journalist needs a basic civics lesson.” Nader also used the “civics lesson” barb against other critics.

Nobody is questioning their right to run, and I don’t dispute the need for electoral reforms that would chip away at the two-party hold on power. But Civics 101 also teaches that in electoral politics, it’s not enough to be right. You still must find a way to coalesce majority support behind your ideas, and at this point in history, a Nader-Gonzalez campaign might just be counterproductive to that goal.