Denver-based ap and Hearst Corp. have settled a lawsuit filed by a San Francisco businessman who accused the newspaper publishers of creating an anti-competitive business partnership in the Bay Area.
MediaNews, owner of The Denver Post, and Hearst agreed to rescind an April 2006 letter in which they discussed jointly offering national advertising for their Bay Area newspapers and consolidating distribution networks in the area.
New York-based Hearst owns the San Francisco Chronicle. MediaNews holds a 54.23 percent stake in California Newspapers Partnership, which owns a number of dailies in the greater Bay Area, including the San Jose Mercury News and the Contra Costa Times.
MediaNews president Joseph Lodovic said the settlement won’t prevent the companies from pursuing a business partnership “down the road.”
“We’ve agreed for the time being to tear up the letter,” Lodo vic said.
Real estate investor and one-time San Francisco mayoral candidate Clinton Reilly filed the lawsuit last year, alleging that the collaborative operation between the publishers would reduce choices for readers and advertisers.
The suit came after Media News announced its purchase of the San Jose Mercury News, the Contra Costa Times and other papers for $736.8 million from McClatchy Co. At the same time, Hearst acquired the St. Paul Pioneer Press in Minnesota and the Monterey County Herald in California for $263 million from McClatchy and agreed to trade them to Media News for a 30 percent stake in MediaNews’ assets outside the Bay Area.
A provision in the deal that would have allowed Hearst to exchange the interest at a later date for a comparable stake in the entire company has been eliminated, Hearst attorney Dan Wall said Wednesday.
That change, however, had already been planned before settlement discussions began with Reilly, Wall said.
The companies decided to eliminate the provision based on “input that we received during the regular Justice Department review of the transaction,” Wall said.
The Justice Department’s review is ongoing.
The settlement, finalized Tuesday, also calls for each of Media News’ Bay Area papers to have a citizen serve on its editorial board. Reilly will have the right to recommend citizens – including himself – to serve on the board, though they would be subject to approval by the respective editorial boards.
Reilly will also receive notice of any planned discussion of cooperative efforts between Media News’ Bay Area operations and the Chronicle or any non-MediaNews paid daily newspaper.
The agreement also allows Reilly, at his discretion, to receive one-quarter of a page of paid space for “personal copy” in the local section of each of MediaNews’ Bay Area papers. The ads would be in substantially the same place on the same day once a week for three years.
Joe Alioto, Reilly’s attorney, said Reilly would not have to pay for the ad space. Lodo vic, however, disputed that claim.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
