Our expert, their expertLawyers 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.
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Comments (7)
hey there, i know you have a court battle going on with the sf weekly, so i thought i'd send along this completely RACIST, INSULTING and INAPPROPRIATE comment posted TODAY from one of the weekly's editors responding to an earlier comment i posted on a blog post ... the racist shit is in the LAST comment in the thread, from the URL below ... PLEASE call them them on this ... this scum deserves to go down
http://blogs.sfweekly.com/thesnitch/2008/02/nonlethal_laser_torture_and_yo.php#comments
Anonymous says:
what does this have to do with san francisco or ANYTHING relevant to us? you need to get a clue
Posted at: February 20, 2008 1:07 PM
David Downs, Web Editor, SF Weekly says:
Well, Anonymous Coward:
-Wired is from SF.
-Our pinko locals care about torture issues.
-We think lasers are cool.
But mostly, we like getting your stupid ass to comment.
It's good for page views.
Fuck you kindly,
The Editor
Posted at: February 20, 2008 3:52 PM
Anonymous says:
i can see the sf weekly has a very good editorial strategy
- write about totally irrelevant topics
-piss off potential readers
- expose yourselves as the morons you are by responding to criticism with childish, knee-jerk reactions
you call yourself an editor? no fucking wonder the sf weekly publishes such stupid bullshit.
Posted at: February 20, 2008 6:24 PM
David Downs, Web Editor, SF Weekly says:
Anonymous Coward,
-We get paid to write about whatever we want. When you comment, you pay us more, dumbass.
-And Fuck readers. It is SFWeekly.com's policy that the reader is a moron and should be flogged publicly whenever possible. You are our Kunta Kinte. Take it, lil' beatch!
Love,
David "Atop Your Mom" Downs
SF Weekly
185 Berry St. San Francisco, CA.
Posted at: February 21, 2008 7:07 PM
Posted by anonymous | February 21, 2008 11:46 PM
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.
Well, Tim, you're not on the jury, so your opinion - while duly noted - will hardly be relevant in the deliberations on this case.
Posted by sfcitizen | February 22, 2008 02:57 PM
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.
First, Tim, New Times had WAYYYYY more than $13MM in money (what the hell is "chain money?") to back it up as it fought for a foothold in the market.
Second, you say "depressing the price of display ads," I say, "kept prices competitive" - as would any other advertiser in the market at the time.
Posted by sfcitizen | February 22, 2008 03:05 PM
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
In California it is not illegal to sell below cost, only to do so to injure a competitor.
Posted by logic blast | February 22, 2008 07:22 PM
tim,
it kind of looks like you and the guardian have rolled it in and called it quits on the lawsuit reporting. some of us who've asked question haven't earned a response from you. we're starting to think you're in settlement talks with the Weekly, hoping they won't get awarded attorney fees. good luck.
Posted by student | February 24, 2008 06:51 PM
No., I haven't called it quits and will post another piece tonight. I must have missed your question; what was it?
Posted by tim redmond | February 24, 2008 07:12 PM
And by the way: We have consistently reported that the law says below-cost selling is illegal only if done to injury a competitor. That's the heart of our case.
Posted by tim redmond | February 24, 2008 08:08 PM