Gazette, Daily Mail want DOJ antitrust suit dismissed

By John O'Brien | Jul 26, 2007

Charleston Newspapers' offices in downtown Charleston. CHARLESTON – The owners of Charleston's two daily newspapers want an antitrust lawsuit filed against them by the Department of Justice dismissed.

Charleston Newspapers' offices in downtown Charleston.

CHARLESTON – The owners of Charleston's two daily newspapers want an antitrust lawsuit filed against them by the Department of Justice dismissed.

In May, the DOJ filed the civil suit against the Daily Gazette Company and MediaNews Group, saying the 2004 sale of the Charleston Daily Mail violated antitrust laws. The lawsuit, filed in U.S. District Court in Charleston, seeks to reverse the $55 million sale of the afternoon newspaper from Denver-based MediaNews to the Daily Gazette Co. and restore the competition that existed between the Daily Mail and Charleston Gazette.

To read the original complaint, click here.

In the motion to dismiss, the Daily Gazette and MediaNews deny the DOJ's charges.

To read the newspaper owners' memorandum, click here.

"In this lawsuit, the Justice Department declares that it has set out to rescue the Mail, but its misguided attempt is more likely to destroy the Mail than to save it," the July 23 memorandum says. "No case like this one has ever been brought, and for good reason. The case unavoidably will entangle the Court in evaluations of the content and quality of constitutionally protected expression by the two Charleston newspapers.

"Never before has the Justice Department sued the newspapers in an ongoing JOA, and never before has the Justice Department contended that newspapers in a JOA have forfeited the antitrust immunity conferred on them by Congress in the Newspaper Preservation Act."

The May DOJ suit says the transaction "eliminated all remaining competition" under a plan "to terminate publication of the Charleston Daily Mail and thereby force upon consumers in Charleston a single newspaper."

The DOJ says the two companies entered into a arrangement that gave MediaNews Group "nominal responsibility for the news and editorial content of the Charleston Daily Mail, but gave the Gazette Company ultimate control over the budgets, management, and news gathering and reporting of both newspapers, as well as the right to receive all the profits of both newspapers. The arrangement also gave Gazette Company the unilateral right to shut down the Charleston Daily Mail."

The DOJ says the sale eliminated competition between the Gazette and Daily Mail and was done "as part of a plan to terminate the publication of the Charleston Daily Mail and leave Charleston with a single daily newspaper."

In their motion, the newspaper owners explain the joint operating agreement, or JOA, the papers have worked under since 1958.

"The only competition in this or any other JOA is non-commercial editorial competition -- the competition of 'thoughts and ideas' -- that is beyond the scope of the antitrust laws and impossible to adjudicate without doing grave damage to First Amendment principles," the motion states.

"In short, the complaint's fundamental allegation is that the 2004 transaction left the Mail as a weakened editorial voice in Charleston. As the court and any newspaper reader in Charleston know, however, both newspapers continue to be published today, with distinct voices, content and editorial policies."

The owners said the theory does hold water because editorial competition can't be measured.

"How would a court measure market power in the marketplace of ideas, or make a judicial determination -- a finding of fact -- that competition in 'thoughts and ideas' has been reduced?" the owners' motion states. "If both newspapers covered the same story, how would a court arrive at the judgment that one newspaper's coverage was better than the other's?

"If one newspaper covered a story, and the other chose not to cover it, how would a court determine that the second newspaper's decision reflected a reduction in competition rather than an exercise of editorial judgment?"

The owners also said budget and staff cuts at the Daily Mail after the sale are common in today's newspaper industry. They say those cuts did not affect the quality of the product, noting that the Daily Mail won statewide first place General Excellence awards in 2004 and 2005.

"Editorial quality is simply not directly proportional to budget or staff size," the motion states. "Moreover, budget and staff reductions are endemic today to the newspaper industry, which is struggling with sharp declines in readership; Charleston is no exception."

The owners also say there never was a plan to close the Daily Mail, and they said they "will be prepared to put the Justice Department to its proof on that issue."

Still, the newspaper owners say the DOJ's suit could have an impact on the Daily Mail's future.

"In addition to the usual costs that would be borne by the parties and the court in this case, there is the added potential that the litigation itself may imperil the continued survival of two daily newspapers in Charleston," the motion states. "If this litigation undermines the financial viability of the JOA, it may irretrievably damage the prospects for continued publication of the Mail."

U.S. District Judge John Copenhaver Jr. to presiding over the case.

More News

The Record Network