Honolulu Paper Gets a Reprieve
But long-term survivability remains in doubt
By Jason Ma

In an unprecedented move by a federal court to intervene in the dissolution of a joint operating agreement, the district court in Honolulu granted the state attorney general’s request for a preliminary injunction, delaying the Star-Bulletin’s Oct. 30 closure.

Citing the public interest in preserving separate editorial voices, Judge Alan Kay granted the restraining order Oct. 13 against Gannett Pacific, Liberty Limited Partnership Group and the Hawaii Newspaper Agency. Hawaii’s attorney general had requested the order less than a week before, seeking to maintain the Star-Bulletin’s news racks, the continued sale of ad space and subscriptions, and the afternoon paper’s staff.

“It’s an unusual and unexpected development that the attorney general of a state intervenes,” said UC Berkeley journalism professor Ben Bagdikian. “That certainly freezes the dissolution of the JOA until there can be more arguments in court.”

Without an injunction, said Deputy Attorney General Rod Kimura, the Star-Bulletin would be dismantled before the courts could hear the state’s lawsuit, filed last week to stop the paper’s closure. A group of citizens calling themselves Save Our Star-Bulletin (SOS) has also filed a lawsuit.

On Monday, SOS asked the Ninth U.S. Circuit Court of Appeals not to heed the requests of newspaper owners to lift Kay’s order, which Kimura said was needed “to seek meaningful relief.”

Otherwise, he said, “All we would have is the cadaver. It’s important to preserve the status quo.”

Noting that the $26.5 million that Gannett gave to Liberty was not spent to purchase anything at the Star-Bulletin, Kimura added, “It’s an inducement to Liberty to get out of the market and leave Gannett as the only paper. Everything I know suggested that Liberty was profitable.”

Both owners filed an emergency appeal with the Ninth Circuit in San Francisco on Friday, according to Diane Hastert, a lawyer for Liberty. She declined to comment further, and lawyers representing Gannett did not respond to numerous requests for interviews this week.

In court papers, however, both Gannett and Liberty have contended that the First Amendment protects Liberty’s right to close its paper and that the government cannot force either company to continue printing a paper if it does not want to.

Kimura retorted that the First Amendment does not “immunize a combination to restrict trade.”

‘LEGALLY IMMATERIAL’

The state alleges that the $26.5 million that Gannett is to pay Liberty is an illegal payoff to eliminate competition, but some law experts say the owners also have a strong argument.

“The government cannot require companies to publish papers they don’t want,” said Stephen Barnett, a law professor at UC Berkeley. “This is a violation of the public trust, but whether it’s a legal question -- I don’t agree with that.”

Further weakening the state’s argument, Barnett said any sums of money Gannett paid to Liberty are irrelevant, contradicting Kimura’s point that the monetary payment is what makes the closure suspect in the first place. Kimura had said last week that if Liberty was in financial trouble and could not afford to publish, legal action to block the closure would not have been necessary.

But while Bagdikian admitted the payment represents Gannett’s giving money to Liberty “to go out of business,” he said such a transaction falls under their contractual obligations.

“Usually [the JOA] is a partnership; there’s a contract between the two,” he said. “One buys the contract from another if someone wants to go out of that contract.”

Indeed, Kimura said that under the JOA, Liberty was entitled to a “guaranteed stream of income” from Gannett, in which it paid roughly $2 million a year until 2012. All totaled, the $26.5 million from Gannett corresponds with the amount it would have had to pay through the time the JOA was to have run.

“If it’s legal to close the Star-Bulletin, any price that Gannett wants to pay is OK and not a matter for the government to judge,” he said. “The question is whether Liberty has a right to stop publishing before the JOA expires, and the price is legally immaterial.”

PROSPECTS FOR A BUYER

At most, many experts believe, the courts could force Liberty’s general partner, Rupert Phillips, to make an attempt at selling theStar-Bulletin. The citizens group SOS has contended that Liberty has not sought an independent buyer.

Proposals have already been put forward by a community group to have the City of Honolulu claim ownership of the Star-Bulletin in the name of “urban renewal” and give it away to a public interest consortium, according to Kekoa Kaapu of SOS.

But Bagdikian said the paper is not an attractive investment, because of daunting difficulties facing most afternoon papers and the nature of the Honolulu JOA itself.

“It’s not very attractive, given the difficulty of afternoon papers in big cities,” he said.

Because of technological and lifestyle shifts, said Bagdikian, afternoon papers across the country are in decline. Most people want their morning paper and their nightly TV news. Moreover, more commuters drive (and listen to news on the radio), as opposed to 50 years ago, when they read papers while riding home on streetcars and buses.

And under the JOA, Gannett would get all production, circulation and advertising functions, according to Kimura. As a result, a buyer would have to provide the costly distribution capacity -- trucks, racks, presses, etc. -- on its own. “There’s no JOA to step into,” Kimura said.

‘A GLIMMER OF HOPE’

Employees of the Star-Bulletin, most of whom would prefer to stay in Hawaii rather than move elsewhere to work, say they’re pessimistic about the chances for long-term survival. Still, they are trying to stay positive.

“This is still a fluid situation; nothing is settled,” said features writer Cynthia Oi. “This doesn’t mean the Star will stay open, but there’s still a glimmer of hope.”

Oi agreed with Bagdikian’s assessment about the future of afternoon papers in general and noted that they were closing “left and right across the country.” She added that she could think of no one who would be willing to spend the money to buy the Star-Bulletin and keep it in operation.

Facing such newspaper business realities, Oi lamented the consequences that a closure of Honolulu’s only other daily newspaper would have on the relatively isolated and dispersed island communities.

If one paper does not have satisfactory coverage, she said, it is almost impossible to go to read another community’s newspaper.

“We don’t have other towns,” said the 23-year veteran of the Star-Bulletin. “We’re out here by ourselves. You can’t just go to another town. You have to get on an airplane. You have no choice.”

The Associated Press contributed to this report.