DOJ orders newspaper merger breakup


In the same week that MediaNews Group announced plans to file Chapter 11 for its newspaper holding company, Affiliated Media, it’s been ordered by the US Department of Justice (DOJ) to re-enter the daily newspaper business in Charleston, WV.

The DOJ announced that it has reached a proposed settlement with the Daily Gazette Company and MediaNews Group that requires the companies to restructure their newspaper joint operating arrangement and take other steps to remedy the anticompetitive effects of a 2004 transaction, which the DOJ charged 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.”

Three years after the transaction, in May 2007, DOJ 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, W.Va., under the Daily Gazette Company and eliminating competition between them. Previously, the two newspapers had been separately owned and controlled, while operating under a joint operating agreement (JOA).

Under the new settlement, MediaNews Group 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.

“Today’s settlement resolves the department’s antitrust concerns and allows readers to continue to have a choice between two independent local daily newspapers – the Charleston Gazette and the Charleston Daily Mail,” said Christine Varney, Assistant Attorney General in charge of DOJ’s Antitrust Division.

The proposed settlement has been filed in US District Court in Charleston, WV.

RBR-TVBR observation: We note the final sentence of the DOJ announcement: “At the conclusion of the 60-day comment period, the court may enter the proposed final judgment upon a finding that it serves the public interest.” Just suppose what would happen if the judge were actually to investigate whether it was, indeed, in the public interest to keep a second daily newspaper operating on life support in Charleston and said no to the DOJ. Would the government bureaucrats then wake up to reality?