Alldredge asked Lacey, if the Weekly were such a good paper, why was it suffering huge annual losses? He also asked Lacey who was covering the annual losses.

Lacey tried to duck the questions but Alldredge zeroed in and asked Lacey about the losses and if he knew who was covering the losses. Lacey finally admitted that, even though he was a major owner of the chain, he had "never had a financial statement." In fact, he said that he "couldn't read one." Had Lacey ever "looked at a financial statement" for the New Times? No, he replied.

So where did the money come from to cover the losses? Lacey said he "presumed" the money came from other papers in the 16-paper chain.

Lacey also had trouble remembering what he had said during a tumultuous meeting in l995 when Lacey and other New Times executives out of the Phoenix headquarters marched into the offices of the SF Weekly, which the chain had just purchased. Former Editor Andrew O'Hehir, former associate publisher Carrie Fisher, and Classified ad representative Jennifer Lopez had earlier testified that Lacey had blasted the Guardian, tossed a paper on the floor and stomped on it, and said he wanted "to be the only game in town."

Lacey said he couldn't remember "anything specific about the meeting." Did you mention that the chain had "deep pockets" to plow into the competitive battle with the Guardian? Alldredge asked.

Lacey said he couldn't remember saying this, but testified that he did say the chain would put money into building the paper and its editorial content.

The former SF Weekly employes had testified that Lacey's speech was intimidating, aced with profanity, and inappropriate for such an introductory meeting with the staff. Lacey tried to explain his approach by telling the court that he was "the prick," because he didn't like the Weekly or its staff and because he was telling them he was going to make immediate changes and do layoffs. His use of the word "prick" did not sit well with either the judge or the jury.

Patty Calhoun, a founder of and current editor of Westword, a New Times paper in Denver, testified that she was at the meeting but that she couldn't remember anything either about Lacey's comments. Under prodding from Guardian attorney Richard Hill, she specifically said that she couldn't remember Lacey mentioning the Guardian.

Nor, she said, could she remember Lacey using the Guardian as a prop, or "throwing it on the floor and stomping on it," as Hill put the summary of the testimony of the three former Weekly employees. Calhoun also said that she had not talked to Lacey about his statements before she appeared in court.

Lacey was the first Weekly witness as the Weekly started presenting its case on Friday.

The trial resumes at 8:30 Monday before Superior Court Judge Marla Miller.

The Weekly now has the challenge of dealing with the serious evidence the Guardian has presented: How did the New Times chain buy two profitable papers (the Weekly in 1995 and East Bay Express in 2001) and turn them into big financial losers? How did a big chain with deep pockets and resources and expertise and publishers selling ads manage to lose $25 million on two papers over 11 years, without a single profitable year? The Guardian contends this is evidence of selling advertising below cost to injure the Guardian and put it out of business, which would be a violation of California business law.

The Guardian is represented by Ralph Alldredge and Richard Hill and Craig Moody of the San Francisco firm of Moody and Hill. The Weekly is represented by H. Sinclair Kerr and Ivo Labar of the San Francisco firm of Kerr and Wagstaffe.

Postscript l: Damages to the Guardian: Lacey said, "You don't run newspapers out of business. It's not about putting them out of business. The sum total of his injury is to his [Bruce Brugmann's] vanity."

Postscript 2: Scaring New Times: Alldredge then tried to get in the killer information about how New Times and Village Voice Media conspired two years ago to kill their papers in Los Angeles and Cleveland to create two monopolies in two big markets.And the U.S. Justice Department sued under the Sherman Anti-trust act. This was an embarrassing fact that showed the New Times pattern of predatory behavior and the chain's attorneys were desperately trying to keep it of the trial. The Weekly attorney, H. Sinclair Kerr, cut Alldredge off with an objection and the judge ruled in his favor.

Postscript 3: Where's Larkin: Alldredge asked where CEO Jim Larkin was? "Larkin is flying all over the country selling ads," Lacey replied.

Postscript 4: Who owns what? Lacey said that he and Larkin have been longtime partners with an equal amount of stock. They now own about 60 per cent of the stock, down from 70 per cent, he said.

Postscript 5: General Motors losses: Guardian Controller Sandy Lange ended her testimony Friday and stood up well under stiff under cross examination on her survey of a sampling of 128 Weekly advertising accounts and 20,000 transactions. She testified she found 91 per cent of the accounts were selling below cost. At one point, Weekly attorney Ivo Labar blurted out, "How much did General Motors lose?"

Lange smiled and said not a word in response. It was a telling moment that capsuled the Guardian's case.