Curious deal creates alternative weekly monopoly
By Tim Redmond
I’m a little late on this, but it’s taken me a while to figure out the back story.
The parent company of the SF Weekly, which a few months ago sold off the East Bay Express, is shedding another money-losing paper — in the process, ending alternative weekly competition in Cleveland.
Village Voice Media will sell the Cleveland Scene to Times Shamrock, a chain that owns five other alternative weeklies. Times Shamrock is also buying the Cleveland Free Times, and will merge the two papers under the Scene name.
“It’s a sad day,” David Eden, former Free Times editor, told me. “This is a strong voice that being silenced.”
It’s also a curious new chapter in a six-year-old saga involving the nation’s largest alternative weekly chain, the U.S. Department of Justice and a scheme to wipe out competition in two markets.
The Scene was losing gobs of money, more than $1 million last year alone, according to documents filed in court as part of the Guardian’s lawsuit against VVM. The Free Times, owned by The Times-News of Erie Pennsylvania, was also struggling, publisher Matt Fabyan told me, “although we were much closer to stable.”
Still, there’s been talk of shutting the Free Times for months now: Back in December, 2007, Justice Department lawyers contacted Eden and asked him if he thought the Cleveland market was big enough for two competing alternative papers. “I told them it was,” Eden said.
Among the proposals on the table: VVM was interested in buying the paper and merging it with the Scene. But federal regulators wouldn’t allow it.
The reason: Back in 2003, the Justice Department and the attorneys general of California and Ohio filed suit against New Times, then the owner of the Scene, and VVM, which owned the Free Times. The two chains, which have since merged, had entered into a shady – and, it turns out, illegal – arrangement to create alt-weekly monopolies in Cleveland and Los Angeles. VVM agreed to shut its paper in Cleveland, and in exchange, New Times shut a paper in Los Angeles that was competing with the VVM-owned LA Weekly.
Justice forced the chains to sell the Free Times to a group of investors who vowed to keep it open and continue competition. The consent decree the chains signed bared them from taking any further anticompetitive actions in Cleveland or L.A.
But although VVM couldn’t create a monopoly, another newspaper outfit apparently can.
Fabyan said he had been in contact with the Times Shamrock people for some time, and that “I told them you really want to buy both papers. I don’t think this is a market big enough for two alternative weeklies.”
Eden was willing to try to save the Free Times: He said that he’d raised enough money to make a “substantial offer” for the paper: “I’m told that VVM had offered $450,000 for the Free Times,” he said. “We were close to that figure.” But his bid was turned down.
Don Farley, who runs the alt-weekly group at Times Shamrock, said he couldn’t comment on the details of the negotiations except to say that “we’ve been back and forth looking at the Free Times, and Scene became available as well.”
That was clearly part of the appeal: Running a paper that has no competition is typically more lucrative. “We can serve the community better this way,” said Fayan, who will be publisher of the Scene.
Andy Van De Voorde, executive associate editor at VVM, told me that his company didn’t see this as a three-way deal. “We sold our paper to Times Shamrock, and that’s our only role,” he said.
But he also confirmed that VVM had wanted to buy the Free Times and merge the two papers, but had run afoul of the Justice Department. “I’ll leave it to you to speculate on why we couldn’t do this deal, but Times Shamrock could,” he said.
Well, for one thing, Times Shamrock isn’t a previous offender, under a consent decree to stop trying to monopolize markets. But I’m also curious why Justice is allowing this to happen.
I’ve been trying to get a comment out of the Justice Department since Friday. The PR people keep telling me they’ll get back to me. I’ll let you know if I hear anything.