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Thursday, March 28, 2024

Charleston newspaper antitrust suit might be nearing end

CHARLESTON –- Department of Justice antitrust lawyers and owners of Charleston's Gazette and Daily Mail newspapers asked for three weeks to settle civil charges that the Gazette created an illegal monopoly when it bought the Daily Mail.

On Oct. 26, the government and the dailies asked U.S. District Judge John Copenhaver to extend a stay of proceedings to Nov. 17.

"The parties represent that serious settlement discussions are continuing, and that a stay will permit the parties to determine whether those discussions can be brought to a successful conclusion," 10 attorneys attested.

"The stay would be subject to further extension, if necessary, should the parties continue to make progress toward settlement."

The government sued the dailies in 2007, claiming the Gazette's purchase of the Daily Mail in 2004 violated the Sherman Act and the Clayton Act.

The suit named the Daily Gazette Company and Media News Group, former owner of the Daily Mail, as defendants.

The dailies moved to dismiss. Copenhaver denied the motion last year, ruling that the government raised issues worthy of discovery.

He set trial for this October. But in January, he delayed it at the request of all parties.

The dailies and the government will raise First Amendment issues if they don't settle because the suit touches thorny questions about the value and purpose of news.

In 1958, the 85-year-old Gazette and the 78-year-old Daily Mail combined their printing, advertising, subscription and circulation operations.

They formed a joint operating committee as equal joint venture partners, and they agreed to split profits or losses equally.

They copied their joint operating agreement from other cities where morning and afternoon papers had merged all departments except newsrooms.

The U.S. Supreme Court held in 1969 that a joint operating agreement in Tucson, Ariz., violated the Sherman Act and the Clayton Act.

The Court held that the dailies illegally fixed prices, pooled profits and divided markets.

The decision would have affected millions of readers every day and altered forever the fortunes of the news business, if it had held up for more than a moment.

In 1970, Congress passed the "Newspaper Preservation Act" exempting joint operations from antitrust law.

In 1998, the Gazette and Media News Group adopted an amendment allowing the Gazette to match any third party offering to buy the Daily Mail.

Media News Group received a $55 million offer, and in 2004 the Gazette matched it.

Soon after, the Daily Mail quit publishing on Saturdays, and it didn't replace reporters who left. All of its promotions, discounts, and solicitations of new readers ended. Daily delivery stopped for thousands of customers.

According to the government, Gazette owners tried to lure Daily Mail subscribers to the Gazette subscription list.

In less than a year, according to the government, Daily Mail circulation fell from 35,076 to 23,985.

The government's suit alleged that Gazette actions tended to create a monopoly in violation of the Clayton Act.

The government alleged violations of the Sherman Act through unreasonable restraint of trade and anticompetitive exclusionary conduct.

The Gazette answered in its motion to dismiss that editorial competition is not commercial and as such is beyond the reach of antitrust law.

When Copenhaver denied the motion last year, he noted "vigorous debate" over whether news and editorials of the dailies remained under separate control.

"In this connection, the continued viability of reportorial competition is worthy of further scrutiny with the benefit of a developed evidentiary record," he wrote.

"Economic reality indicates that a joint operating agreement does not eliminate all commercial competition," he wrote.

Discovery proceeded, with each side taking 15 depositions.

Magistrate Judge Mary Stanley tried mediation in February with no result.

In March, Copenhaver stayed proceedings for 30 days. Since then he has granted a series of extensions.

As talks continue, no one knows whether the joint operating agreement exists.

The government insists it ended when the Gazette bought the Daily Mail, and the Gazette insists it didn't end.

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