Some interesting evidence emerged in the Guardian’s lawsuit against the SF Weekly and its corporate parent today, most of it in the form of depositions from witnesses. If you were looking for the kind of drama we had yesterday, this was fairly mundane stuff — but if you listened to what a former publisher of the Weekly said in his depositions, it showed exactly why this case has gone to trial.
Before I start on that, though, one note: I’m trying to play this fairly straight, and not get into personality stuff, but I have to say: The Weekly’s hit man, Dandy Andy Van De Voorde, is … how else can I say this? Making stuff up.
From the lead of his blog (if you can call it that) tonight:
After yesterday’s fireworks from Bruce Brugmann, Guardian attorneys returned to their plodding ways Wednesday, subjecting the jury to an entire day of testimony from witnesses who weren’t there.
Brugmann, who treated the court to a three-hour display that included spluttering, shouting and fist pounding yesterday, sat quietly in the gallery as his lawyers put on a noticeably dull performance that had at least two jurors visibly napping at times
Um … I was there yesterday, and I can say with absolute certainty that Bruce Brugmann never once pounded anything with his fist and never shouted. That’s just wrong. It didn’t happen. (I don’t know what “sputtering” is, so I can’t comment on that.)
And Andy: Most bloggers use links to connect to other stuff they’re talking about. You’ve blasted me a few times, but your poor readers don’t have the help of these simple little bits of HTML code that let you go from one blog to another so they can see what you’re attacking. It’s not that hard; I bet someone at your 16-paper chain could teach you how to do it.
Now then, back to the story:
Most of the morning was devoted to the (admittedly unexciting) reading of the deposition of Chris Keating, who until early 2007 was publisher of the SF Weekly and group publisher for the Weekly and the East Bay Express. Keating started out the deposition insisting that when he came to San Francisco (and to a paper that was losing lots of money) he was determined to control expenses and bring them into line with revenues.
In fact, he testified, one of his primary goals was to raise ad rates.
But somehow, that didn’t happen. The losses kept rising — and, apparently with Keating’s permission, the Weekly continued to sell ads below cost.
In fact, Keating admitted that “given the level of costs, [the Weekly was] not pricing at a level to cover those costs.”
In other words, the Village Voice Media chain, which owned the Weekly, was selling ads below what it cost to produce them.
There are three elements required to prove the Guardian’s case: The Weekly and Express had to be selling ads below cost, for the purpose of harming a competitor, and there had to be damages.
Keating as much as admitted to the first part.
Then he proceeded to come close to admitting to the second.
In a Sept. 26, 2005 email that was presented to the jury, Keating, discussing a national ad buy, said the Weekly and Express “would give the most amount of rate break to get the business over the Guardian. If that means I net $18 an inch I’ll take it.”
Keating had previously said that the Weekly needed to sell ads for at least $18.75 to $19.25 an inch to make any profit.
And his deposition was filled with references the the Guardian as the Weekly’s main competitor (a fact that undermines the chain’s argument that the San Francisco market is so diversified that the head-to-head between the Guardian and the Weekly is only a small part of the competitive landscape.)
Evidence admitted this morning showed that the Weekly prepared regular “Guardian reports” on how the locally owned paper was doing in ad count — and that there was no other competitor that rated that sort of treatment.
The Guardian lawyers also presented parts of the deposition of Jed Brunst, the chain’s top financial officer, who was asked what happened when the Weekly was losing money and couldn’t pay its bills. Simple, he said: The Weekly got “cash advances from the parent.”
Did those “advances,” he was asked, come with promissory notes or anything else that would suggest they were loans?
No, Brunst said. Nothing like that.
In other words, the chain was propping up a money-losing operating in San Francisco, which was selling ads below cost in an effort to get the business away from the Guardian.
That’s quite a set of admissions. Sorry Dandy Andy was bored.