Clint Reilly, MediaNews and Hearst
settle antitrust lawsuit
Clint Reilly and Attorney Joseph M. Alioto today announced a settlement
in Reilly's antitrust lawsuit against MediaNews Group Inc. and
By Julia Cheever
April 25, 2007
San Francisco businessman Clint Reilly today announced a settlement
of an antitrust lawsuit he filed against the owner of 11 Bay Area
daily newspapers and the owner of the San Francisco Chronicle.
Under the settlement, MediaNews Group Inc. and the Hearst Corp.
will drop plans to cooperate in local distribution and national
advertising and Internet advertising for their newspapers.
Reilly's attorney, Joseph M. Alioto, said, "Competition
is now preserved in the Bay Area."
Jospeh Alioto (right)
MediaNews, based in Denver, owns 11 Bay Area newspapers, including
the San Jose Mercury News, Oakland Tribune and Contra Costa Times.
New York-based Hearst owns the San Francisco Chronicle.
Reilly's lawsuit, filed in federal court in San Francisco last
year, claimed that deals in which MediaNews acquired the San Jose
and Contra Costa papers last year violated antitrust laws by reducing
competition and paving the way for higher prices, lower quality
and less choice for readers.
Hearst participated in the transactions by providing MediaNews
with $263 million in financing in exchange for a stake in the
company. Alioto said that in another part of the settlement, Hearst
and MediaNews will rescind Hearst's right to convert its stock
to have any interest in the Bay Area newspapers owned by MediaNews.
Hearst spokesman Paul Luthringer said, "As part of the settlement,
Hearst and MediaNews Group agreed to make certain changes to the
terms of the transaction."
Luthringer said the two companies had already decided to make
most of the changes during the course of an antitrust review by
the U.S. Department of Justice.
"The changes have no material effect on Hearst's investment
in the non-Bay Area assets of MediaNews Group. While the Department
of Justice continues to review the transaction, Hearst is optimistic
that its investment in MediaNews Group will be allowed to proceed,"
Reilly said the pact also allows him to serve on the editorial
board of a MediaNews paper and to recommend private citizens to
serve on the boards of the other Bay Area papers during the next
Reilly will also receive a quarter-page of space for personal
comments in the local section of each local MediaNews paper once
a week for three years.
He said that after three years, any new attempt to combine newspaper
operations would be subject to a new Department of Justice review
and an almost certain lawsuit from Reilly.
The two companies will also pay Reilly's legal fees, Alioto said.
A representative of MediaNews was not immediately available for
In addition to the San Jose, Contra Costa County and Oakland
papers, MediaNews owns the Hayward Daily Review, Alameda Times-Star,
Fremont Argus, Tri-Valley Herald, San Mateo Times, Vacaville Reporter,
Vallejo Times-Herald and Marin Independent Journal.
Reilly said those 11 newspapers and the San Francisco Chronicle
are every paid circulation daily newspaper in the Bay Area.
The antitrust case had been scheduled to go to trial before U.S.
District Judge Susan Illston in San Francisco on Monday.
Although the lawsuit originally sought to undo the acquisition
transactions, Reilly said that he and his lawyers decided that
demand would be unsuccessful and they would not pursue it during
Reilly, a real estate investor, former political consultant and
former mayoral candidate, said his main goal was to preserve competition
between the Chronicle and the other newspapers.
He said, "Locally, our Bay Area newspapers record the ongoing
debate about almost every public issue facing us. They are critical
to our way of life.
"I hope this lawsuit in 2007 will guarantee competition
among newspapers for another generation in our city and the Bay
Area," he said.
In November, Illston barred MediaNews and Hearst from going ahead
with a plan to combine local distribution operations and national
and Internet ad sales.
That ruling came after Reilly's lawyers during evidence gathering
obtained a copy of an April 26, 2006, letter in which senior executives
of the two companies agreed "negotiate in good faith"
on agreements to combine national advertising and local distribution
In 2000, Reilly filed another antitrust lawsuit seeking to block
the sale of the Chronicle to Hearst. U.S. District Judge Vaughn
Walker allowed the sale to proceed.
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