Antitrust Lawyer Blog Commentary on Current Developments

DOJ SETTLES LAWSUIT AGAINST CHARLESTON WV NEWSPAPER DEAL

On January 20, the Department of Justice reached a settlement with the Daily Gazette Company and MediaNews Group Inc. (now known as Affiliated Media Inc.), that requires the companies to restructure their newspaper joint operating arrangement (JOA) and take other steps to remedy the anticompetitive effects of the 2004 transaction, which was originally challenged by the DOJ in May 2007.

In May 2007, the Antitrust Division filed a civil antitrust lawsuit alleging that the transaction violated the Clayton and Sherman Acts by consolidating ownership and control of the only two local daily newspapers in Charleston, West Virginia. Prior to the combination, the two newspapers had been separately owned and controlled, while operating within a newspaper joint operating agreement under the Newspaper Preservation Act. The Antitrust Division alleged that the transaction was part of a plan by the Daily Gazette Company to terminate publication of the Charleston Daily Mail and leave Charleston with a single daily newspaper, the Charleston Gazette.

The proposed settlement requires the companies to restructure their 2004 transaction to address the Antitrust Division’s competitive concerns. Upon settling and restructuring their arrangement, MediaNews Group (Affiliated Media Inc.) will regain independent control over the operations of the Charleston Daily Mail and economic incentives to grow the newspaper. Additionally, the settlement requires the companies to offer substantial discounts of the Charleston Daily Mail in order to rebuild its subscriber base and prohibits the Daily Gazette Company from discriminating against the Charleston Daily Mail in circulation, advertising sales, and other key joint activities. The settlement also requires the companies to continue publishing the Charleston Daily Mail as long as it has not failed financially.

The proposed settlement is interesting because it attempts to resolve the DOJ’s antitrust concerns of a combination of two newspapers that were working under a JOA previously. Under the Newspaper Preservation Act of 1970, newspapers in the same market can ask for federal approval to combine business, production and distribution operations while keeping competing newsrooms. The Charleston papers have been operating under the JOA since well before there even was a Newspaper Preservation Act. The non-compete partnership between the morning Gazette and afternoon Mail has run since 1958. Across the country, newspapers have been terminating JOA agreements like this because of the economic realities of running newspapers and the DOJ has allowed them to do so. The settlement agreement appears to have a goal of having the Daily Mail succeed as the second paper in a county that has 54,000 people. This case does not seem to make much sense given that the Antitrust Division has conceded in a number of instances that a second paper in various local markets could not survive.

For some reason, Charleston, West Virginia was different. The Antitrust Division demanded the sale of the Daily Mail be unwound, suggesting that staff had uncovered a conspiracy to kill the Daily Mail. It seems as though that this evidence led to a different decision by the Antitrust Division.


Andre Barlow

(202) 589-1834
abarlow@dbmlawgroup.com