The publisher of the SF Weekly took the stand Friday and today in the Guardian’s predatory-pricing suit and presented all of the Weekly’s positions as if he’d been rehearsing for weeks.
And in fact, Fromson has been sitting in the courtroom watching most of the trial so far. Most witnesses in legal cases don’t get to watch the proceedings until after they’re done with their turn in the box – it might influence their testimony – but Judge Marla Miller has been pretty lax on that front. She’s allowed one representative from each paper to sit in for the entire case, and Fromson has apparently been the Weekly’s designate.
(She’s also allowed me to sit there and watch, and then write about, the proceedings even though it’s theoretically possible that the Weekly’s lawyers will try to put me back on the stand.)
I have no objection to any of this; I’m simply pointing it out because Fromson’s testimony was carefully targeted to hit all the major points where the Weekly has been weak.
But his carefully buffed lines, delivered like the salesman he is, don’t exactly jibe with the evidence.
Fromson’s line – and the line of the lawyers for the 16-paper chain now known as Village Voice Media – is that the poor beleaguered Weekly was trying really hard to raise its ad rates so that it wouldn’t be selling below cost and would be starting to make a profit. The company, he said, is “concerned with rate growth, revenue growth, and increased profit.”
But the facts show that over the 12 years the chain has owned the Weekly, the paper has never made a profit. In fact, for every one of those years, the Weekly has been selling ads below cost.
Fromson tried to argue that in many cases, the Guardian’s ad rates were actually lower than the Weekly’s, and that he as publisher has had to cut prices to meet the competition from the Guardian. But again, the evidence shows otherwise – while there are no doubt a few cases here and there where the Guardian rates were lower, the overall financial statements from both companies make very clear that the Weekly’s rates were consistently below the Guardian and consistently below cost.
Then he tried to argue that he was cutting rates to meet other competition. In fact, the notion that the Guardian was not the Weekly’s prime competitor – that there were dozens of other media outlets fighting for every ad dollar – is central to the Weekly’s defense.
Fromson talked about fighting with the Onion, the neighborhood newspapers and SFStation.com, among others, for ads, and cited some cases in which he said he’d had to lower rates to meet those competitors’ prices.
But again, the evidence doesn’t lie. The Weekly publishers before Fromson all had to prepare regular special reports on the Guardian – and on no other competitor. Fromsom filed some “Guardian reports” of his own – and he couldn’t point to a single similar report he’d filed on any other competitor.
And anyone with any common sense knows that there’s a market niche for alternative weeklies; if there weren’t, neither the Guardian nor the New Times/VVM chain would have survived and grown over the past three decades.
In fact, Fromson as much as admitted that on cross-examination. Guardian attorney Rich Hill asked if any of the neighborhood papers, or the Onion, were members of the Association of Alternative Newsweeklies or represented by either of the two national ad firms that specialize in alternative weeklies. No, he acknowledged. The neighborhood papers, Hill asked, have much lower circulation and very different types of editorial, don’t they? Yes, said Fromson.
“Are there serious investigative pieces in the Onion?” asked Hill.
“They don’t see themselves doing that,” Fromson replied.
In other words, Hill said, those supposed competitors are actually quite different products, right?
“I don’t agree with that,” Fromson said.
But it became very clear during cross-examination that Fromson did, indeed, see the Guardian as his chief competitor – and that he and the top executives at New Times/VVM were looking for ways to hurt the competitor.
Hill took Fromson through the paper’s finances. In 2005, when he arrived, the Weekly lost $1.8 million. In 2006, with Fromson at the helm, the loss was $2.5 million. And the steep losses continued in 2007.
Hill pointed to several memos showing how Fromson and his bosses, chain president Scott Tobias and CEO Jim Larkin, saw the competition with the Guardian. In one memo, dated Feb/ 24, 2006, Larkin warned Fromson that the Guardian had more ads in the paper. “No way they should be ahead of us in ad count like this,” Larkin wrote.
“They won’t,” replied Fromson. “That is the loudest drum I am beating around here.”
The point of that exchange: Fromson and the higher-ups were concerned not with increasing their rates or making a profit, but with making sure they had more total ads than the Guardian.
“I’m not OK with losing to anyone, least of (sic) Brugman (sic),” Fromson’s email continued.
In July, 2006, Fromson sent an email back to corporate headquarters stating that “we are doing a great job, all things considered.” That came at a time when Fromson’s paper had lost more than a million dollars in just the previous six months.
In November, 2006, Fromson wrote that he was “feeling good about working them over the rest of the year.” Who, Hill asked, is the “them” referred to in that message?
“I imagine it would be the Guardian,” Fromson said.
That same month, while the Weekly was losing $179,000, Larkin wrote to Fromson and said: “great work, let’s keep it going.”
And in Fromson’s Nov. 30,2006 “Guardian report” to Larkin, he wrote: “As you can see, we are winning the battle locally and nationally.”
Since that clearly wasn’t a battle to be profitable or a successful business, Fromson had to be referring to something else. As Hill put it: “Is that the battle to wreck the Guardian?”
Fromson: “There was no battle to wreck the Guardian.”
One of the things the jury will have to do is decide is which witnesses are telling the truth, and which ones, as the lawyers say, lack credibility.