By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Never before had all the employees of the L.A. Weekly been asked to assemble in the parking lot. But then, it isn‘t every day that the boss from New York City has the thorny job of explaining that he definitely is not a capitalist pig, while also reassuring his leftie crew that the company’s capitalist bottom line is doing just fine thank you.
David Schneiderman, CEO of Village Voice Media, jetted in Tuesday to answer questions about the settlement of the antitrust case against his company (which owns the Weekly) and New Times, the company that is usually his main competitor.
The nation‘s two largest chains of alternative weekly newspapers agreed this week to pay close to a million dollars to settle alleged violations of state and federal antitrust law. Neither company admitted wrongdoing, but both chains submitted to terms, as part of a consent decree, that are designed to help launch or assist competing weekly newspapers in Los Angeles and Cleveland.
Investigators had accused New York--based Village Voice Media and Phoenix-based New Times of carving up markets in Los Angeles and Cleveland, the two cities where they competed head-to-head. This collusion, said authorities, resulted in illegal regional monopolies, which drove up advertising rates and deprived readers of diverse news and commentary.
The probe began last October, when New Times shut down its paper in Los Angeles. In exchange, Village Voice Media closed its publication in Cleveland and paid a net sum of $9 million to New Times, according to government documents. The transaction left both cities with one major, citywide alternative publication.
In the parking lot, under threatening skies, Schneiderman told Weekly employees that he’d have had a 5050 chance of persuading a judge that the company had done nothing wrong. But that it wasn‘t worth millions of dollars in legal fees -- or worse -- to find out.
Aside from the hassle and cost of the investigation, he noted, the end result was “what we wanted to accomplish in the first place.”
He had a point.
In the settlement itself, both the media companies and the government could claim a victory of sorts. For their part, investigators touted one of the largest civil antitrust penalties in California history and a remedy that could foster competition. The two chains must sell assets of the closed papers, including office equipment, software, advertiser lists and archives of articles. The government must approve the buyer during a 30-day sale period. If no legitimate buyer comes forward, a trustee will hold the assets pending later offers.
The companies agreed to pay California fines of $305,000 each and to split investigation costs of $140,000. In Ohio each company agreed to pay $20,000 in attorneys fees and $45,000 in civil forfeitures. Schneiderman also acknowledged “at least a few hundred thousand dollars” in attorney fees.
“This was unbelievably time consuming, a huge distraction, and it was costing a ton of money in legal fees,” Schneiderman said.
Still, the weeklies negotiated a quick exit from costly litigation that, in the end, did little to impede the regional market dominance that each coveted. Village Voice Media got the big prize it sought -- the coveted L.A. market without competition from New Times. And New Times pocketed millions from a hated competitor while dumping a business that hemorrhaged millions. The settlement makes no attempt to rewrite history, so New Times gets to keep the Voice’s money -- which left New Times executive editor Mike Lacey room to gloat.
“This development will lead to an inevitable news blitz and general media caterwauling over the next day or two,” wrote Lacey in a company memo. “Well, never mind the noise. The heads you see on the sticks aren‘t ours.”
Nonetheless, there is some potential competition in the wings, both in Cleveland and in Southern California. In L.A., one upstart weekly paper already is expanding, while former Mayor Richard Riordan is starting another. Neither paper was thwarted by the deal-making of the two major chains, and neither is likely to benefit from the settlement.
Riordan told the Weekly that the consent decree “makes no difference” for his debuting publication, which would serve an upscale Westside readership. “I can get lists of advertisers by looking at the ads in the newspaper.” He might want to purchase the licenses to news racks or archived articles from New Times, such as pieces by Jill Stewart, who may continue her column in his paper.
Another local editor saw little value in the New Times L.A. masthead or its archives. “We didn’t see the closing of New Times as an opportunity to fill their shoes,” said Yvette Doss, editor of the biweekly Silver Lake Press, which launched in April 2002, about half a year before New Times closed. “We‘re not coming from a neoconservative place, like New Times.”
Doss is pushing ahead with plans to expand distribution from the Silver Lake area to Highland Park, Eagle Rock, downtown and Hollywood. The paper re-launches on February 19 as the L.A. Alternative Press.
“If they’re talking about making news racks available for resale,” she added, “so what? We can get news racks.”