Moves Made To Prevent Newspaper Merger
By Janet Dang

San Francisco politicians intensified their efforts to keep the city a two-daily town by urging the city attorney to look into possible legal actions to block the potential merger between the Examiner and the Chronicle and calling for a group of investors to buy the Examiner themselves. Meanwhile, a former mayoral candidate and political consultant filed a lawsuit to block the sale of the Chronicle to the Hearst Corp.

Both the mayor and the board of supervisors brought up the possibilities for intervening in the buy-out proposal between the Chronicle and the Examiner last week. Without intervention, a buy-out would result in the folding of the Examiner if its parent company, the Hearst Corp., can’t find a buyer.

Last August, the Hearst Corp. announced plans to buy the Chronicle and sell the Examiner. If a buyer for the Examiner isn’t found, the company plans to merge both papers -- a move some critics argued would be detrimental to news competition and news coverage.

On Monday, the board of supervisors voted unanimously in favor of a resolution urging the city attorney to explore possible legal actions against the newspaper companies to block a proposed merger.

The latest call for the city attorney to take action came after a closed session meeting between the board and representatives from the city attorney’s office.

Some members of the newspaper’s union also came to voice support for the resolution, saying that they fear their jobs would be cut should a merger take place.

The board’s resolution is the latest in a number of symbolic resolutions passed by the board urging city officials to intervene in the newspaper’s possible merger.

Last December, Board President Tom Ammiano introduced a resolution unanimously approved by the board urging the district attorney and the state attorney to probe the merger.

Though the city attorney’s office has been examining the merger deal, no actions have been taken.

Also, Mayor Willie Brown stepped up his commitment to preserve the Examiner. During his inaugural speech last Saturday, the mayor said he wants to form a committee to buy the afternoon paper, saying that it’s crucial to maintain two separate editorial voices.

Though the mayor’s plan remains nebulous, said the mayor’s spokeswoman, Kandace Bender, it is the first step toward preserving a “civic treasure.”

“The mayor thought the Examiner is worth saving,” she said. “If [the city] can put together a ‘Save the Giants’ committee, why can’t [it] put together a ‘Save the Examiner’ committee.” Bender, however, did not offer what kind of committee it would be or a timeline for it. “It’s still in it’s very early stages,” she said.

U.C. Berkeley Journalism Professor Ben Bagdikian said that any effort to preserve the newspaper “would be good for everybody in Northern California,” that is, “as long as the newspaper was not overly influenced by any new owners,” he said. The mayor’s effort “would be worth it.”

“The public would then have to judge, whether or not the new owner is putting out a good paper.”

If the mayor is successful in finding buyers, that would only be “the first step,” Bagdikian said. He referred to a more “extraordinary and hopeful” situation in Honolulu where an impending closure of one of its two dailies, the afternoon Star-Bulletin, was blocked by the 9th U.S. Circuit Court of Appeals.

In that case, the state attorney general and community groups sued the owner of the Star-Bulletin -- Liberty Newspaper -- saying it had conspired with Gannett to create a monopoly.

The court upheld a preliminary injunction from the state that, for the time being, allows the Star-Bulletin to continue printing until an anti-trust case brought by the state attorney general is resolved in trial. Hawaii Attorney General Earl Anzai is scheduled to present to the court his argument in September.

Mayor Brown’s plan, added Bagdikian, is nevertheless “a sign along with many other signs that people want a second paper to exist.”

The San Francisco Examiner sale has not been challenged in court, but is being reviewed by the U.S. Department of Justice, the California attorney general, and the San Francisco city and district attorneys.

reilly files suit

A day after the board of supervisors voted in favor of the resolution urging the city attorney to consider lodging a lawsuit to block the merger, former San Francisco mayoral candidate Clint Reilly filed a federal antitrust lawsuit on Tuesday seeking to block Hearst Corp.’s planned buy- out of the San Francisco Chronicle.

The lawsuit against the Hearst Corp. and Chronicle Publishing Co. claims that the $660 million sale would result in closure of Hearst’s San Francisco Examiner and leave the city with only one daily newspaper.

Reilly alleges in the lawsuit that the closure would give Hearst “a monopoly of the daily newspaper market in San Francisco” in violation of federal antitrust laws.

The lawsuit, filed in U.S. District Court in San Francisco, asks for preliminary and permanent injunctions blocking the sale. Reilly’s lawyer, Joseph M. Alioto, said he expects a hearing on the request for a preliminary injunction in February or possibly sooner if the defendants agree to an earlier date.

Alioto said he plans to file papers by early next week requesting the hearing from U.S. Judge Vaughn Walker, who was assigned to the case.

Chronicle Publishing Co. President John Sias declined to comment on the lawsuit, saying “It’s not our policy to comment. Our lawyers will be studying the lawsuit.”

A Hearst Corp. spokesman was not immediately available for comment.

Reilly, a former political consultant who ran unsuccessfully for mayor last fall, filed the lawsuit as a newspaper reader and potential advertiser.

The suit claims the merger would deprive readers of “free and open competition in the sale of daily newspapers and their differing editorial and reportorial voices’’ and would deprive advertisers of “free and open competition in the market for differentiated advertising audiences.’’

The lawsuit is filed under two federal antitrust laws, the Sherman Antitrust Act and the Clayton Antitrust Act.

It alleges that the agreement between the two publishers is: “an unreasonable restraint of trade” in violation of the Sherman Antitrust Act; “a conspiracy by defendants to monopolize and an attempt by the Hearst Corp. to monopolize in violation of the same law; and “an unlawful acquisition by the Hearst Corp.” in violation of the Clayton Antitrust Act.

Bay City News Service contributed to this report.