Hearst Corp, MediaNews Group lose bid
to squash Reilly antitrust suit
By Julia Cheever, Bay City News Service
April 10, 2007
SAN FRANCISCO (BCN) - A federal judge in San Francisco
today turned down a bid by MediaNews Group Inc. and the Hearst
Corp. for dismissal of a newspaper antitrust lawsuit filed by
businessman Clint Reilly.
The ruling by U.S. District Judge Susan Illston keeps the lawsuit
filed by Reilly last year on track for an April 30 trial in Illston's
MediaNews, based in Denver, owns 10 Bay Area newspapers including
the San Jose Mercury News, the Oakland Tribune and the Contra
Costa Times. New York-based Hearst owns the San Francisco Chronicle.
Reilly, a San Francisco real estate investor and former political
consultant, claims that deals in which MediaNews acquired the
San Jose Mercury News and Contra Costa Times last year violate
antitrust laws by reducing competition.
Hearst participated in the transactions by providing MediaNews
with $263 million in financing in exchange for a stake in the
company's newspapers outside the Bay Area.
The two media companies asked Illston to dismiss the lawsuit,
arguing that Reilly as a reader suffered no economic harm from
the transactions and therefore had no standing to sue under the
But the judge said in an order issued today that Reilly does
have standing because he is "an active consumer in the Bay
Area newspaper market, in which he alleges there is anti competitive
Reilly contends that reduced competition will decrease newspaper
quality and choice for Bay Area residents and increase prices
up geographic markets.
In December, Illston issued a preliminary injunction barring
MediaNews and Hearst from going ahead with plans to combine their
Bay Area distribution operations and national advertising sales.
The preliminary injunction will remain in effect until after
the April 30 trial.
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