San Francisco – ap Inc. and the San Francisco Chronicle plan to consolidate some of the business operations of their Bay Area newspapers but will refrain from doing so pending the outcome of a federal antitrust trial challenging the deal, both companies said Wednesday.
Last week, U.S. District Judge Susan Illston tentatively blocked MediaNews, owner of The Denver Post, and the Chronicle’s owner, Hearst Corp., from merging local distribution and national ad sales.
Illston said such a deal could pave the way for “price manipulation” and make it harder for new competitors to enter the market.
New York-based Hearst Corp. has invested $300 million in a complex deal that gives Media News three more Bay Area newspapers – on top of the seven it already owns, including the Oakland Tribune.
Hearst’s investment helped Denver-based MediaNews finance the purchase of Hearst rivals the Contra Costa Times, the San Jose Mercury News and the Monterey County Herald earlier this year.
In issuing the temporary restraining order against the alliance, Illston said she had been under the impression that Hearst’s investment was solely an equity stake, but an April 26 memo had surfaced suggesting it actually was a bid to merge operations.
Illston’s comments bolstered San Francisco businessman Clint Reilly’s federal antitrust claims against the publishers.
In court briefs and in interviews Wednesday, the publishers said they planned to move forward with the consolidation by winning the right to do so at trial by proving the plan is not anticompetitive.
Executives have said the two companies had not engaged in any discussions to merge operations since the letter was written.
“Reilly’s allegations are hyperbole and don’t have any substance,” Hearst attorney Daniel Wall said in an interview. “We do intend to prove, at trial, that nothing we contemplated would be unlawful.”
Joseph Alioto Jr., Reilly’s attorney, said the publishers “have no chance” of pulling that off.
The publishers said in the court briefs that advertisers and readers have other venues besides newspapers.
