By Tim Redmond
I run into Bill Lockyer, the former state Attorney General (now treasurer) waiting his chance to get on stage. I explain to him that his successor, Jerry Brown, has formally closed any investigation in to the merger that gave Dean Singleton control over almost every daily newspaper in the Bay Area. “Any thoughts on that?” I ask.
His response:
“No. He’s elected, and I’ve moved on.”
Good to know your heart was in it, Bill.
By Sarah Phelan
Lennar has been giving contractors a choice between a rock or a hard place: reduce your unpaid invoices by up to 20 percent—or be excludedfrom bidding work for a minimum of six months. Nice, real nice.
Marc McGuire, a tile contractor from San Diego, and CALPASC’s Brad Diede on CNBC yesterday to discuss accusations that Lennar is extorting contractors
Three top Lennar executives sent these demands to contractors in Southern California in a letter dated January 16, 2007. So far, no similar letters have emerged locally, but that doesn’t mean similar demands haven’t been happening here, warns Brad Diede. Diede is executive VP of the Sacramento-based California Professional Association of Specialty Contractors, which represents 500 trade contractors and construction suppliers nationwide.
Outraged, Diede fired off a letter to Attorney General Jerry Brown, in which he wrote,
“We believe this potentially criminal act is a flagrant example of the abuses of power builders exercise over trade contractors in the State of California.”
But so far, Lennar has not been found guilty of civil or criminal violations in this case.
By Bruce B. Brugmann
The Guardian and Media Alliance won a major victory in federal court to unseal the records in the Reilly vs. Hearst antitrust trial but it didn’t last long: Hearst and Singleton quickly went into overdrive to maintain their cloak of secrecy and monopolize the news in the latest round in court.
Here’s how they did it: The newspaper chains that are trying to kill daily competition and impose regional monopoly in the Bay Area tried to knock Reilly out of court by claiming in a specious argument for summary judgment that he was just a lone reader, poor soul, and thus did not have standing in court. Reilly and his attorney Joe Alioto are suing to block the Hearst/Singleton deal.
The San Francisco Chronicle story on the filing, by Bob Egelko, laid out the publishers’ case in detail with lots of quotes in a page 2 story in the Bay Area section. He didn’t report the Reilly side of the story because (a) he didn’t contact either Reilly or Alioto for comment and (b) Reilly’s legal response was under court seal and Federal Judge Susan Illston allowed them to stay under seal despite her earlier ruling to open.
The publishers, who usually are bellowing away about courts and government suppressing documents, submitted declarations in support of keeping the documents secret from Daniel S. Ehrman, vice president of planning and development for Gannett, and Joseph J. Lodovic, president of Singleton’s Media News Group.
And then, in virtually identical proposed orders to seal, they laid out the “compelling reasons to maintain the documents and excerpts of documents…under seal.”
So the Hearst/Singleton side of the story got published in their papers, not the Reilly side. And then on Saturday April 7 the Chronicle continued the publishers first coverage with a short story on the hearing the day before.
“Mr. Reilly’s injury here is pure speculation,” the Chronicle quoted Gary Halling, Singleton attorney, as saying.
The Reilly/Alioto comments were at the end of the story. The story reported that Illston was inclined to allow Reilly to sue as an individual, which is likely to be her ruling.
Hey, Citizen Reilly here is representing the public and he, as well as the rest of us, deserve to know the grisly details of how the barons got together and how they are dividing and clustering up the Bay Area newspaper market to their financial advantage and to the public’s disadvantage. So our attorneys, James Wheaton, David Greene, and Pondra Perkins of the First Amendment Project in Oakland, went back into court to reup their court victory and try to open up the records and maintain a public policy of sunshine in the courts.
The key journalistic and public policy point: not one iota of the Hearst/Singleton’s repeat move for secrecy was considered newsworthy by any of their papers. The first time around, as attentive Bruce blog readers will remember, they mangled the story, made it look as if the Guardian lost our motion to open the records, and we even had to ask the Associated Press, their wire service, for a correction.
Stay tuned. B3
P.S. The Hearst/Singleton reasons for secrecy and stonewalling are delicious, so delicious that tomorrow I will put them up on line for readers to savor in the original (I am a typewriter fugitive and need help on these things.)
A preview of coming attractions: the proposed order to seal the documents says, for example,
that “the court finds that the Subject Documents contain information that was not prepared not for public consumption but to analyze the proposed acquisition of the McClatchy newspapers and to negotiate a single equity investment by Hearst. these documents contain detailed non-public financial information about MediaNews and/or CNP (the special partnership arrangement), including valuations of certain company assets, projections for future earnings, pro forma financial information about the company’s current and future business plans. MediaNews and CNP do not publicly disclose information of this nature.”
Tough: if you want to monopolize an entire region, and seriously undercut the marketplace of ideas principle underlying the First Amendment the big boys love to quote, then you’d better be prepared to disclose these basic documents in court when you are sued in a public-spirited antitrust case.
P.S. Repeating for emphasis: Where is the U.S. attorney’s office, which was so quick to put Josh Wolf in jail and keep him there for 226 days, when the real lawbreakers in the publishing business are making monopoly millions by eliminating competition? And where is Atty. Gen. Jerry Brown, who lives in Oakland under the shadow Dean Singleton’s Oakland Tribune?
By Tim Redmond
The CoCo Times has this beauty of a report on the missing records from the mayoral administration of Jerry Brown. This kind of crap has been commonplace in San Francisco — exiting officials grab anything that might be negative or incriminating and flee with it — but I didn’t expect that from Jerry, who is not the state’s attorney general. Bad news.
By Tim Redmond
The CoCo Times has this beauty of a report on the missing records from the mayoral administration of Jerry Brown. This kind of crap has been commonplace in San Francisco — exiting officials grab anything that might be negative or incriminating and flee with it — but I didn’t expect that from Jerry, who is not the state’s attorney general. Bad news.
By Tim Redmond
The CoCo Times has this beauty of a report target=”blank” on the missing records from the mayoral administration of Jerry Brown. This kind of crap has been commonplace in San Francisco — exiting officials grab anything that might be negative or incriminating and flee with it — but I didn’t expect that from Jerry, who is not the state’s attorney general. Bad news.
EDITORIAL The evidence is now clear and compelling: the two biggest newspaper chains in the Bay Area have been plotting for years to eliminate local competition. The details that have come out of the Clint Reilly lawsuit point to almost textbook antitrust violations, the exact sort of behavior that state and federal laws prohibit. (See "What We Know Now," page 13.)
The public had no knowledge of how MediaNews Group and the Hearst Corp. were conspiring to join ad sales and distribution deals. But the federal and state regulators knew all about it; the records show that Hearst executives laid out the entire plan back in early 2006.
And yet the deal that allowed MediaNews to buy up every major daily in the region except the San Francisco Chronicle won approval from both the California and the US attorneys general — in part on the grounds that Hearst’s Chronicle would remain as a serious competitor in the market.
Which leads to some pretty obvious questions: What were the investigators and lawyers in Sacramento and Washington, DC, doing? And now that this is all out in public, will California’s new attorney general, Jerry Brown, put a stop to it?
When the McClatchy company sold the Contra Costa Times and the San Jose Mercury News to Dean Singleton, who already owned the Oakland Tribune and the Marin Independent Journal, critics immediately began to cry foul. Singleton’s strategy has always been to buy up adjoining media properties, combine as many of their assets as possible, share reporters and stories, and improve the bottom line through deep cuts. Suddenly, instead of four reporters covering events in the Bay Area, there would be just one, with one perspective and one story running in all four papers.
The same would go for advertising — instead of having several options in the region, businesses could wind up having to deal with one centralized agency that sets prices and sells ads for all four big dailies (and a bunch of smaller ones that Singleton also owns).
Still, the federal and state regulators declined to challenge or block the deal. If Reilly hadn’t sued to stop it, the machinery would already be in motion for what could be a single company, or a partnership that operates like a single company, controlling all of the daily newspapers from San Jose to Marin County, from San Francisco to Contra Costa County.
But now this is all open and visible. We don’t have much faith in the Bush Justice Department, but the new California attorney general has a history (at some moments) of showing the willingness to stand up to powerful interests and take strong political stands. This is his first and perhaps most important test. Brown needs to go into court immediately and file to block the entire deal. *
By Bruce B. Brugmann
To get the citizen’s point of view, I have long maintained that every reporter and every editor and every publisher ought sooner or later to be the center of a story and see how the media works.
I found the exercise most instructive when the Media Alliance and the Guardian, represented by the First Amendment Project (Attys. James Wheaton, David Greene, and Pondra Perkins), went into federal court on Thursday to intervene and seek to unseal key records in the Reilly vs. Hearst/Singleton antitrust trial. Our three P.S. organizations put out a press release with the spokespersons listed for contact (Jeff Perlstein from the Media Alliance, James Wheaton and David Greene from FAP, and myself from the Guardian.)
I got several calls from the Associated Press (Terence Chea, who did an excellent story that ran around the country), Kate Williamson of the Examiner, James Allen from the alternative paper Random Lengths in San Pedro (who was rightly agitated about the Hearst/ Singleton deal to buy the Daily Breeze in Torrance and further encroach on his turf), Mark Fitzgerald of Editor and Publisher was in touch, and others. Significantly, even though Hearst and Singleton have a lock on the Bay Area press, not one of their many reporters nor editors contacted me. (Subtle point: that is the wave of the future with these folks). Nobody from Hearst or Singleton even called or checked in to try to make the point that, even though they have five law firms and l2 or so attorneys in federal court heaving and sweating mightily to argue they really aren’t collaborating, they don’t even have to make a show of doing the journalistic minimum of doing an honest story. More: they didn’t even have to put on a show even though the lawsuit was aimed at their Achilles heel: their secret documents of collaboration. And of course they didn’t quote me or, when they did in the case of the Examiner, they mangled my point about why we were suing.
For the record, I said in the press release and in interviews with reporters: “Our intent here is to ensure that the naton’s biggest chains (Hearst, Singleton, McClatchy, Gannett, Stephens), as they move to destroy daily competition and impose regional monopoly in the Bay Area, cannot do so in the dark of night with sealed records that set a terrible precedent for the free press, the First Amendment, and open government.”
And so the two big papers, the San Francisco Chronicle and the San Jose Mercury News, gave us two more wimpy little stories buried deep in their business section. Those who are attentive readers of the Bruce blog would know how to find them. For example, the Chronicle put its wimpy little story in the Daily Digest column just above the fold on page two of the business section under the rousing head, “Media groups want documents unsealed.”
Its last paragraph is classic monopolyese: “(Judge) Illston issued a preliminary injunction Wednesday barring MediaNews and Hearst Corp. from collaborating until at least April 30, when Reilly’s case is expected to go to trial. (B3: Is this premature collaboration? Is it like premature ejaculation?) Attorneys for MediaNews and Hearst have argued that no collaboration plan is in the works but that should one emerge in the future, it would not be illegal.” Repeating for emphasis: “Attorneys for MediaNews and Hearst have argued that no collaboration plan is in the works but that should one emerge in the future, it would not be illegal.”
Marvelous. Simply marvelous. That is Hearst boilerplate corporate policy and it is a classic of self-immolation. Compare it with AP’s version: “On Tuesday, Illston barred Bay Area newspapers owned by MediaNews and Hearst from consolidating some of their business operations until the lawsuit is resolved. When she issued a temporary restraining order against the alliance in November, 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 some of their business operations.” Alioto got this scarlet letter in discovery and used it in his brief to show that Hearst was in effect lying in court about its documents of collaboration. The judge quoted from this critical letter, but it is still under seal and so are other key documents that would likely show the Hearst/Singleton plans for regional monopoly. Significantly, the AP story ran in the Seattle Post-Intelligencer, a Hearst paper.
Meanwhile, on the other end of the bay, the Mercury News
was doing its own wimpy little story in the “Business Digest” in its business section, a two paragraph story with the rousing head “Plaintiffs seek records in antitrust media case.” The story was not even a Merc story, it was pinched without attribution from the AP story (another wave of the future). From now on, I shall refer to these stories as WLSBs.
Over in the near East Bay, Josh Richman did a much better story that appeared in both the Oakland Tribune and the Contra Costa Times (a one reporter-covers-it-all concept that is another wave of the future.) Richman got some good quotes, including a notable one from Joseph Alioto, Reilly’s attorney.
“‘Oh, good, it’s about time,'” Alioto said of the lawsuit filing, adding that it was crucial for all details of an antitrust case. ‘It’s the archetypal example of hypocrisy when major newspapers take the right of the people to know applies to everyone except themselves.'”(Note the copy editing issues, another wave of the future with the staff cutbacks).
Significantly, none of the Hearst/Singleton reporters could get a single Hearst nor Singleton executive to comment on the lawsuit in their own papers. The ducking was delicious. Richman wrote: “Alan Marx, MediaNews’ attorney, declined comment. A Hearst spokesman could not be reached.” The Merc/AP reported: “Hearst officials were reviewing the motion and could not comment Thursday, said spokesman Paul Luthringer. Representatives at MediaNews did not immediately respond to a request for comment.” In short, the nation’s biggest chains are seeking to impose an ever more conservative news, editorial and endorsement line on one of the most liberal and civilized areas of the world, just as they ought to be raising holy hell about Bush, the Patriot Act, and the unending war in Iraq. And they are stonewalling like hell, in federal court and in their own papers, to keep secret the documents of collaboration.
And so there you have it: the state of daily journalism in the Bay Area, Friday, Dec. 22, 2007. There is much more to come. Follow our stories and editorials in the Guardian, on our website, and in the Bruce blog. Things of great moment are in the making.
P.S. Repeating: where the hell are the antitrust attorneys in the U.S. Justice Department? And where the hell is outgoing Attorney General Bill Lockyer and incoming Attorney General Jerry Brown? B3
By Bruce B. Brugmann
And so there it was, buried today in the business pages of the Chronicle/Hearst, the Contra Costa Times/Singleton, and the San Jose Mercury News/Singleton, the latest major development in one of the great buried stories of our time in the local daily press.
Editor and Publisher, the trade magazine for newspapers, got this major story right: Its online head read, “S.F. Judge Blocks Hearst/MediaNews Collaboration,” and its strong lead made the key point: “In a victory for a local businessman seeking to overturn a complex San Francisco Bay Area newspaper deal between Hearst Corp. and MediaNews Group Inc., a federal judge Tuesday issued a preliminary injunction blocking the chains from collaborating on joint distribution or advertising sales of their papers.”
This was an important ruling in the Clint Reilly/Joe Alioto antitrust case, which stands as the only real impediment to the Hearst/Singleton deal that would destroy daily competition and impose regional monopoly in the Bay Area.
(See Guardian stories and previous blogs.)
But the ruling and the coverage by burial by the Hearst/Singleton press illustrates a major problem with the case: the publishers, who are normally hollering about the government suppression of documents and government manipulation of the news, this time got the documents sealed and so only their side of the story is getting out. Hearst/Singleton got a stringent protective order that gives them essentially unreviewable discretion to control the documents in the case. (Alioto presumably agreed to the order to get an early trial date).
Here’s how this works: Hearst/Singleton designate any document they are producing in discovery as “secret.”Alioto cannot contest that under the order, nor is there any dispute mechanism by which he can challenge it. If Alioto wants the document, he has to accept it under the protective order. Then, if he wants to file it with the court, he has to do so under seal. And, under the protective order, the judge has no discretion and must appeal the seal order. Alioto’s brief is also sealed, if it references the sealed document. This was the case with the critical April 26, 2006 letter from Hearst to Singleton that outlined an agreement to explore joint national and internet adversiting sales as well as joint distribution.
The judge has referenced and quoted the letter and stated in her preliminary injunction order that the letter “is in the form of a potentially binding agremeent” and indicates the two companies have “expressed the desire, if not the intent,” to collaborate in the Bay Area. Yet the letter is under seal, as is another letter the judge has quoted and a whole batch of obviously explosive discovery documents which Alioto got under discovery.
The letter is a publisher document and is not under seal and they can talk about it if they want to. After all, if they want to disclose their own secrets, it is up to them. Thus: the publishers have crafted a protective order that gives them control of the documents, gives the court no power to control its own filings, and no way for anyone to challenge any secret designations. The effect is that the Riley/Alioto filings are secret, the publishers filings are public, the public gets only one side of the story. And then the Hearst/Singleton papers put its side out in wimpy little stories buried in their business sections with wimpy little heads. (Example: today’s Chronicle head, “Hearst-MediaNews ruling extended.” Now there’s a rouser.) And there is no explanation of how the publishers rigged the protective order to promote their side of the story and muzzle Alioto.
All of this amounts to a terrible precedent for Hearst and Singleton and their chain allies (McClatchy, Gannett, Stephens) to be setting in federal court against the free press, the First Amendment, and open government.
Repeating: Thank the Lord for Reilly and Alioto. And where the hell are the federal antitrust attorneys (they are still mucking about, pledging folks to secrecy and then asking softball questions)? And where the hell are outgoing Attorney General Bill Lockyer (who seems cowed by the case and is busy chasing those dread pre-texters in the Hewlett-Packard board room)? And where the hell is incoming Attorney General Jerry Brown (who has announced he is going to continue to live in Oakland under the heavy thumb of Singleton’s Oakland Tribune and his galaxy of East Bay papers, without making a peep to date)? B3
P.S. l: I am not blaming the reporters nor their editors for their patriotic Hearst First and Singleton First coverage. They have the unenviable assignment of covering the monopoly moves of their publishers in New York and Denver that are aimed at savaging their own papers and their own staffs and their own communities. It is not, let us stipulate, a fun job. I hope they are keeping detailed diaries. B3
The lawsuit that seeks to stop the monopolization of daily newspapers in the Bay Area isn’t just a business dispute. Real estate investor Clint Reilly argues that he would be personally harmed by the deal (which gives him standing to sue), but in reality, this is about the future of mainstream news media in one of the nation’s largest and most politically active markets. If the Hearst Corp. and Dean Singleton’s MediaNews Group have their way, it’s entirely possible one corporate entity could effectively control every single significant daily paper in San Francisco, southern Marin, the East Bay, the South Bay, and the Peninsula. And since TV and radio news stations tend to take their cues from the daily papers, that means one corporate entity would decide, to a great extent, what sort of local news will be available to several million people.
It’s more than a legal issue. It’s a major public policy issue — and that’s why the papers shouldn’t be allowed to fight this out in secret.
On Dec. 21 the Guardian and Media Alliance, a nonprofit media activism organization, filed a motion in federal court seeking to intervene in the Reilly lawsuit and asking Judge Susan Illston to unseal the key records in the case. Our point: this is a huge national story, and the public interest in knowing what the biggest and most powerful newspaper chains in the country are planning for the Bay Area is clear and overwhelming.
But the way the big chains have set things up, there’s no way for the public to find out much of anything — except what Hearst and MediaNews want us to know. Under the terms of a court order the chains wrote and got approved, anything — evidence, briefs, depositions, even legal motions — the newspaper barons want to mark secret is automatically sealed. Of course, the newspaper lawyers can decide to publicize anything they want to put out to bolster their side of the story. In other words, the newspapers — which, after all, are accused of trying to violate antitrust laws and create a media monopoly in the region — have complete control of what information does and doesn’t come out of the trial. That’s exactly how they want it — and exactly how things will go if they get away with their merger plans.
It’s hard to fight the big chains. Almost every experienced media lawyer in town works for or has partners who work for one of the chains, so they all have conflicts of interest. The news media organizations, like the California Newspaper Publishers Association, the California First Amendment Coalition, and the Society of Professional Journalists, all have board members who work for the chains.
And of course, the big newspapers themselves, which love to fight to unseal court records in other cases (like billionaire Ron Burkle’s divorce case), are all either involved or have allies who are involved, so they won’t touch the case.
So it’s fallen to the Guardian, an independent paper, and Media Alliance, an independent activist group, to work with the First Amendment Project, an independent public interest law firm, to promote the public interest in unsealing the records.
We know there’s a lot of information that ought to be out in the light of day. Already, one document discussed in open court shows that Hearst, which owns the Chronicle, has discussed ad sales, printing, and distribution deals with Singleton’s group — which is supposedly a competitor. What else do these companies have planned for the Bay Area? Will Hearst and Singleton wind up in some sort of joint operating agreement? Is this the end of daily newspaper competition? Will one billionaire publisher be able to put a conservative spin on all editorial coverage in the region? The public has a right to know.
Court documents are presumed public, and the newspaper chains have shown no reason why anything other than a few narrowly defined records should be kept secret. Judge Illston should revoke the secrecy order and open up the key documents in the Reilly case.
PS Where is the federal Justice Department? Where is outgoing state attorney general Bill Lockyer or incoming AG Jerry Brown? We haven’t heard a word from any of the public officials who ought to be intervening in this case. At the very least, they should support our efforts to open the records.
PPS: If Hearst and the big chains get away with sealing these documents, it will set a terrible precedent for future cases in which business interests want to keep secret information that ought to be in the public domain. How can any of these big media companies ever go into court in the future (as they have done in the past) to push for unsealing court record when they have gone to such lengths to seal their own records?
PPPS To see our legal brief, press release, and links to media coverage, go to www.sfbg.com.
By Bruce B. Brugmann
Eureka! As you will remember from my earlier blogs, I coined the term Eurekaism to replace the old term Afghanistanism for the bad habit of many daily papers, notably the Hearst and Singleton chains, for reporting on stories in Eureka instead of reporting on the big local scandal or embarrassing story in their own communities. (Hearst did a rollicking Sunday story awhile back on the competition way way up in Eureka between a Singleton daily and a locally owned daily.)
Tomorrow (Wednesday) at ll a.m., in the courtroom of Federal Judge Susan Ilston, there will be a major story that will once again raise the issue of Eurekaism: the major antitrust case of Reilly vs. Hearst and the request for a temporary restraining order sought by Clint Reilly and his attorney Joe Alioto to halt the accelerating moves by Hearst and Singleton to destroy daily competition and impose regional monopoly in the Bay Area.
Illston earlier tossed Reilly’s request for a temporary restraining order against the Hearst/Singleton transaction, but she did state in her last order that she would “seriously consider” forcing Sington to gve up some assets if the court finds the company’s transactions to be anti-competitive.
Meanwhile, on other fronts, the Guardian has learned that the U.S. Justice Department has interviewed a wide variety of local people, including former Chronicle executives and local antitrust attorneys and professors, to further its investigation into the Hearst/Singleton part of the deal (See previous Guardian stories and Bruce blogs). “It seems to be a very vigorous and aggressive investigation,” one interviewee told the Guardian.
The unanswered questions: Where is the current Attorney General Bill Lockyer and the incoming
Attorney General Jerry Brown (nowhere, it seems)? Will Hearst and Singleton papers provide the coverage that a major regional story of this magnitude deserves: an advance in tomorrow’s papers and then followed with a thorough story on the outcome of the hearing and the impacts of the moves to regional monopoly? Will they continue to try to black out the story keeping the court documents under seal? Or will there be more Eurekaism? Stay tuned, B3
By Tim Redmond
The evening started out as a resounding victory for the national Democrats, a train wreck for California Democrats, and a defining night for San Francisco progressives. But the state results are getting a little tigher, and it now appears that Arnold Schwarzenegger’s huge victory won’t drag down every Democrat running for statewide office. John Garamandi may survive to be lieutenant governor (keeping far-right loon Tom McClintock out of that office). Jerry Brown will be the next attorney general, and Bill Lockyer the next treasurer.
And Prop. 90 seems to be sinking.
So all in all, a good night — except for Mayor Gavin Newsom, who must be sitting around wondering why none of the voters seem to want to do what he tells them to.
The near-certain defeat of Rob Black in District Six is a huge deal: It’s proof that a storng progressive with grassroots support and troops on the ground can beat back even a massive political assault by some of the most sophisticated and well-funded forces in the city. It’s also going to mena a few tough years for Newsom, the Golden Gate Restaurant Association, SFSOS, Don Fisher and the rest of the anti-Daly gang: Daly has proven himself an effective politician, and he has never particularly liked it when jerks like these guys try to mess with him.
One of the more interesting aspects of this election was the money that Michela Alioto-Pier spent on ads for a race in which she had no real opposition — big, pricey, video ads on sfgate, for example. What’s that about? Well, part of what it’s about is that Mark Leno is in his last term in the state Assembly, and that seat will open up in two years, which means that in the spring of 2008, a Democratic primary contest will determine the next Assembly member from the east side of San Francisco. Tom Ammiano has already announced his candidacy. Bevan Dufty has loudly proclaimed that he won’t run. Is Alioto-Pier looking at that race?
If so, she’d probably have the support of the mayor — but from the looks of things tonight, that isn’t going to help much.
In fact, from the looks of things, Newsom needs to back away from the SFSOS types and try to make peace with the progressives if he wants to accomplish anything as mayor.
By Bruce B. Brugmann
Let me cite yet another example of the dangers of the Hearst/Singleton move to destroy daily competition and impose regional monopoly in the Bay Area.
As attentive Bruce blog readers know, I always turn to the second page of the Chroncie/Hearst business section called “Daily Digest” to pick up the news that Hearst is censoring. Yesterday, I spotted yet another nugget
that demonstrated how Hearst was censoring a major scandal story involving its own subsidiary in San Bruno and McKesson Corp., one of the nation’s largest drug wholesalers.
The story looked harmless enough, a six paragraph Associated Press story headlined “McKesson soars above expectations,” with a lead that said that the company’s “quarterly profit climbed 37 per cent to soar past analyst expectations, prompting the nation’s largest prescription-drug distributor to brighten its financial outlook.” Another five paragraphs provided the details of this seemingly rosy McKesson story.
So, knowing there was much more to this story and getting my blogging genes at the ready, I checked the online version of the story. Imagine my surprise when I found that the guts of the Chronicle story had been cut out of the paper and the juicy stuff was tucked away in the online version. A full seven paragraphs had been chopped from the print version of a l6 paragraph story by Michael Liedtke from the San Francisco AP bureau.
Let me quote the key chopped out paragraphs to make my point: “McKesson released its results and bullish outlook after the stock market closed Tuesday. The company’s shares fell 60 cents to finish at $50.09 on the New York Stock Exchange. After an early rebound in after-hours trading, the shares shed 5 cents.
“The downturn extended a recent slump triggered nearly four weeks ago by news of a tentative legal settlement that could depress prescription drug prices. (b3: a dreadful thing.)
“The settlement covers a class-action complaint alleging that drug price publisher First DataBank Inc. (B3: a Hearst subsidiary in San Bruno) had conspired with McKesson between 2002 and 2005 to boost the wholesale cost of most prescription medicines by 5 per cent. (B3: a tidy newsworthy sum).
“Although McKesson has denied any wrongdoing and isn’t joining the settlement, investors are worried the agreement will force the company to lower its prices (b3: another dreadful thing). Consumer advocates have estimated the settlement will save health insurance plans about $4 billion (b3: a nice newsworthy figure). The settlement still needs approval by a Massachusets federal court, something unlikely to happen before April…”
Note my previous blogs to get the scope of the Hearst shenanigans at work here. AP doesn’t put Hearst into the story where it belongs and doesn’t even identify FirstDateBank as a local subsidiary owned by Hearst, the biggest daily in Northern California and a big bankroller and participant in the Singleton move to monopolize the Bay Area. Hearst doesn’t properly edit the AP story and put Hearst high up where it belongs. And Hearst actually cut the print version of the story and put the guts of it up online at SF Gate so it will be hard to spot. And of course Hearst never ran the original story of the scandal (reported first in a lead story in the Oct. 6 Wall Street Journal, with versions by the AP, the Guardian, and even the Hearst-owned Houston Chronicle, see my previous blogs.)
The hinge point: Hearst went to these embarrassing lengths to censor a major scandal story involving Hearst, and three local companies, to protect its corporate interests and refuses to explain this professionally glaring omission in the stories, or to its readers. It also refuses to answer my questions directed to Hearst corporate in New York City via Hearst San Francisco and publisher Frank Vega, Executive Editor Phil Bronstein, Managing Editor Robert Rosenthal, and Business Editor Ken Howe. And the “competitive” Singleton papers haven’t done the story either to my knowledge and won’t explain why.
Impertinent Questions: If Hearst and Singleton won’t compete on a major scandal story like this, where will they compete and when do they start? How can they censor and cover up a major story like this in the midst of investigations by Justice and the AG?
This sorry episode illustrates a key issue for the current Justice and AG investigations into whether the Hearst/Singleton deal violates U.S.and state antitrust laws. It also illustrates a key issue for the highly important Clint Reilly/Joe Alioto antitrust suit seeking to blast apart the Hearst/Singleton financial relationship. I refer again to Brugmann’s Law: Where there is no economic competition, there is no news and editorial competition. So the thrust of any real antitrust investigation ought to be to stop monopoly moves like this and insure real newspaper and media competition.
We hear that Justice is at least doing lots of interviewing. God knows what Lockyer and his antitrust crew are doing as he heads into the sunset to be state treasurer. His probable successor, Oakland Mayor Jerry Brown, operating under the thumb of the Oakland Tribune/Singleton, has refused to comment or answer questions as to whether he will continue Lockyer’s purported investigation. Reilly and Alioto are hard into discovery, working with the media documents they obtained from Justice and the AG as a result of their suit. The documents were filed by the principals in the original merger (McClatchy, Hearst, Singleton, Gannett, Stephens) to get preliminary Justice and AG approval. They are certain to be illuminating. Impertinent Question: Why is it that, once again, Relly and Alioto must do the heavy lifting in a private suit because Justice and the AG have so far knuckled under to the chains and refused to do their job.
Repeating the Impertinent Questions to Hearst and Singleton editors and publishers: Why haven’t you done this major scandal story? When will you do it? If you won’t do the stories, please explain. Until then, let’s have no more macho talk about competition between Hearst and Singleton papers. B3
P.S. Let me quote the third paragraph from the WSJ to dramatize the heft of this story: “A 2002 email by a manager of (McKesson) describes how pharmacies would be able to more than doiuble their profit for dispensing the cholestrol drug Lipitor and adds, ‘that is awesome.'” The article quoted an economist hired by the plaintiffs who estimated that savings in 2007 alone at $4 billion. There is much, much more. The Hearst and Singleton papers would cover this national scandal in a flash if it involved any other big company in their territory. Hopefully.
A tough pill to swallow by G.W. Schulz
McKesson’s fiscal 2Q profit rises 37 percent to top analyst views by MICHAEL LIEDTKE, AP Business Writer
Followups on Hearst: No word back from the Chronicle on my questions on why they are blacking out the big local story involving three big local players (Hearst, McKesson Corporation, and First DataBank). Let me give you the lead front headline on the Oct. 6 Wall Street Journal story to make the point about what a big big story they are stonewalling on:
“How Quiet Moves by a Publisher Sway Billions in Drug Spending, Lawsuit Forces Hearst Unit To Lower Prices on List Widely Used as Benchmark, A ‘Survey’ of One Company”
Anybody out there annoyed at the ever escalating price of prescription drugs? That is the point. Below are my questions emailed Thursday to the campaign headquarters of Oakland Mayor Jerry Brown, who is the candidate most likely to be the next attorney general (no word back at blogtime).
Fair warning: next week I will start asking similar impertinent questions to the Oakland Tribune, Contra Costa Times, San Jose Mercury News, San Mateo Times, and other Media News Group/Dean Singleton papers that claim, along with Hearst, that they are really aggressively competing away out there even though they have formed what amounts to a regional news monopoply. Have they done the story and if not, when will they? And will they pursue the story as real competitive newspapers once did and as they ought to do again if they want to retain credility and financial viability? Repeating: Where are Justice and Atty. Gen. Bill Lockyer and their antitrust departments.
Take note, Clint Reilly and Joe Alioto, a key part of your antitrust case is being made right here and now. B3
Dear Jerry Brown,
I am requesting some information and answers to questions from you, as a candidate for attorney general, for stories we are doing at the Bay Guardian and for my Bruce blog at sfbg.com.
The Wall Street Journal on Oct. 6, and the Bay Guardian in its current edition, have done stories on a major settlement in which a Hearst subsidiary (First Data Bank in San Bruno) has ” agreed to stop publishing its list of wholesale medicine prices, which numerous critics have blamed for driving up drug costs,” as an AP story in the Houston Chronicle/Hearst puts it. (See story on the link below). Would you as attorney general investigate this issue and determine if it would save health plans $4 billion and if there should be any further action in this case?
Hearst and Singleton interests have, as charged in the Clint Reilly/Joe Alioto antitrust suit, effectively destroyed newspaper competition in the Bay Area and imposed regional monopoly. Would you continue the Lockyer investigation into this case? And/or would you join the suit as a co-plaintiff or an amicus? Thanks very much.
Sincerely, Bruce B. Brugmann (B3)
Whenever a big media conglomerate like Hearst tries to cover up its corporate transgressions, the questions start flying like machine gun bullets. These are a few of mine following up my previous blog on the Guardian’s G. W. Schulz story:
Questions to Hearst Corporate (via Hearst/Chronicle editor Phil Bronstein and Business Editor Ken Howe):
Your sister paper, the Houston Chronicle/Hearst, ran a story on Oct. 6 by Theresa Agovino, an Associated Press business writer, with a New York dateline. This story was headlined “Lawsuit May Save Health Plans $4 billion” and the lead read: “A publisher of prescription drug prices has agreed to eventually stop publishing its controversial list of wholesale medicine prices, which numerous critics have blamed for driving p drug costs, as part of a settlement that alleged it had conspired to increase markups.”
Second paragraph: “The plaintiffs said the settlement, which was filed in U.S. District Court in Massachusetts late Thursday and still needs a judge’s approval, will save health plans $4 billion.” Impertinent questions: why didn’t your local Chronicle/Hearst run the story or do its own since it involved three local companies (Hearst, the Hearst-owned subsidiary in San Bruno, and McKesson Corp., the big drug wholesaler)? Did you order the blackout of the story or was this decided at the Chronicle? When will you do the story? If not, why not?
Questions to Singleton corporate and Singleton papers (who claim to be competitive with Hearst): will you do the story and its ramifications on prescription costs? If not, why not?
Questions to Atty. Gen. Bill Lockyer and rough and tumble antitrust crew: The Hearst/Singleton blackout on this story suggests that the Clint Reilly/Joe Alioto suit has a major point: that the financial deal between Hearst and Singleton papers will destroy daily competition and impose regional monopoly. Will you have any comment or take any action on your investigation of the deal before you leave office?
Questions to Atty. Gen. heir apparent Jerry Brown: Are you familiar with the Wall Street Journal/AP/Guardian stories on the Hearst prescription pricing scam? Will you as attorney general do your own investigation? Regarding the Hearst/Singleton media merger deal, will you as attorney general continue the investigation that Lockyer has started? Will you consider joining or appearing as an amicus in the upcoming Reilly/Alioto antitrust trial aimed at stopping the Hearst/Singleton monopoly move?
Impertinent Journalism l0l question to AP and the Houston Chronicle: AP, which prides itself on getting the lead and the story upfront, put the lead involving a major client in the last line of its story. The line read: “First DataBank is a unit of Hearst Corp.” Why didn’t it say in the lead or upfront in this 20 paragraph story that this was a Hearst owned subsidiary that was being charged in a billion dollar prescription price gouging scheme? Why didn’t the Chronicle edit the story and put Hearst in the lead where it belonged?
Stay tuned. If there is anything the media and its investigators hate to do, it is to answer questions about their own transgressions and cover-ups? B3
EDITORIAL It’s hard to take the California Courts of Appeal decision on same-sex marriage seriously. It reads like some sort of joke, the product of a bad old mind-set that this country put behind it almost 40 years ago when the US Supreme Court struck down bans on interracial marriage. It’s worse though: the court, by a 2–1 decision, seems to imply that gay and lesbian people don’t have the same fundamental legal rights as everyone else, that discrimination against them doesn’t need to be viewed with strict legal scrutiny.
Hiding behind the absurd notion that the court would be usurping the role of the legislature by finding that it’s unconstitutional to outlaw same-sex marriage, Justices William R. McGuiness and Joanne C. Parrilli overturned a landmark ruling by San Francisco Superior Court Judge Richard Kramer and set the stage for what has to be a full debate before the state Supreme Court.
On many, many levels, this is the defining civil rights issue of our era — and the state’s highest court must agree to take the case and overturn this embarrassingly misguided decision.
The court goes out of its way to try to sound sympathetic to gay and lesbian couples, acknowledging in its ruling that social standards are changing and that “gay and lesbian couples can — and do — form committed, lasting relationships that compare favorably with any traditional marriage.” But the two judges in the majority argue that the state legislature hasn’t legalized same-sex marriage, so there’s nothing the courts can do.
That, of course, is nonsense and flies in the face of centuries of American legal jurisprudence (and most recently, of the well-reasoned decision by Judge Kramer). The Virginia legislature had explicitly refused to legalize marriage between people of different races when the Loving case came before the US Supreme Court in 1967; the court ruled, quite properly, that the so-called antimiscegenation laws by their very nature deprived people of a fundamental constitutional right. The right to an abortion was never established by Congress; the Supreme Court ruled in 1973 that the constitutional right to privacy protected the right of a woman to terminate her pregnancy. The list goes on and on: when courts find that state and federal legislators have acted in a way that undermines basic legal rights, they often wind up enshrining in law rules that were never put to a majority vote.
Besides, let’s remember: the state legislature did take up this issue and passed a bill — which the governor vetoed, saying he was leaving the issue to the courts.
Justice J. Anthony Kline, the lone dissenting voice, put it very nicely: “To say that the inalienable right to marry the person of one’s choice is not a fundamental constitutional right, and may therefore be restricted by the state without a showing of compelling need, is a terrible backward step…. Ignoring the qualities attached to marriage by the Supreme Court, and defining it instead by who it excludes, demeans the institution of marriage and diminishes the humanity of the gay men and lesbians who wish to marry a loved one of their choice.”
San Francisco City Attorney Dennis Herrera will, of course, appeal this decision to the state Supreme Court, where everyone has assumed it was heading anyway. But there’s a danger here: the high court could duck the entire issue, more or less, by simply declining to hear the case and letting the appeals court decision stand. That would be a tragedy. Everyone involved on all sides agrees that this is a huge issue, both legally and politically, and two appellate judges on a sharply divided three-judge panel simply can’t be allowed to hold the last word.
We urge the Supreme Court to take the case. So should every Democratic (and decent-minded Republican) politician running for office this fall, starting with Jerry Brown, the leading candidate for attorney general.
The ultimate outcome of the debate over same-sex marriage isn’t in doubt. A few years from now — 5, 10, 15, 20 — the bigots will have lost their hold on politics and same-sex marriage will be as widely accepted as interracial marriage is today. California can either be a national leader in this progressive cause — or suffer the shame and embarrassment of being a state where the highest court enshrined unconscionable and indefensible discrimination into its constitution. SFBG
The appeals court decision and Justice Kline’s dissent can be viewed at www.courtinfo.ca.gov/opinions/documents/A110449.DOC.
What a splendid Best of Party last night at Club Six down in the inner Mission in San Francisco. Almost all of this year’s Best of winners were there, more than 300 of them, to pick up their Best of certificate, and to pose in a group photo that will stand as one of the year’s most eclectic gatherings in San Francisco and certainly the Best San Francisco photograph of 2006. (We will publish the photo in next week’s Guardian).
There was Fire Chief Joanne Hayes-White, Kathi Kamen Goldmark and Sam Barry from the Rock Bottom Remainders, Chris Middlestadt of the Fruit Guys, the best beer-soaked bingo brigade, local heroes Tony Kelly of thick Description Theater, Barry Hermanson and the Greenaction Gang of closing-down-the-Hunters-Point-power-plant fame, (Marie Harrison and Bradley Angel), the best drag queen who plays the accordion, Breda Courtney of the Best Bloomin’ Thespians, Robin and Joe Talmadge and Cinder Ernst from World Gym, the Primitive Screwheads (best goofy gore), Press Secretary Peter Ragone and other reps from the mayor’s office (yes, Mayor Gavin Newsom did win an award, the best mayor we love to hate), best neighborhood newspaper publisher (Ruth Passen of the Potrero View), and scores more of the city’s best and brightest and most diverse.
The Keeping it Real with Will and Willie gang were there from the Quake (Comedian Will Durst, Ex-Mayor Willie Brown, producer Paul Wells) to accept their award as the “Best Herb Caen column on the radio.”
They exemplified the spirit of Caen by being “visible” at the party (a key Caen quality in his man about town role at the old Chronicle) and by talking genially to everyone who came in range in the massed crowd, including some who have tilted politically with Willie through the years. Caen had to do that, whether he liked it or not, because he was a target and a celebrity wherever he went. One key difference is that Will and Willie, out on the town regularly, can comment and do their reviews the next morning. Caen’s nocturnal adventures were always in his column a day later in the morning Chronicle. Caen also had l,000 word columns. Will and Willie have three hours every week day morning, from 7 to l0 a.m. in prime time, and can handle lots of live interviews in the studio or on the phone. Most important, Caen could only hint at his political proclivities, but Will and Willie announce they are Democrats and go after Bush and the war and local sacred cows with great glee.
This morning, Will and Willie led off their show on 960 the Quake with a report on the event, which they obviously enjoyed. My journalistic point: There will most likely never be another Herb Caen in San Francisco, or probably on any other daily paper, because he was a creature of another era, the hell-for-leather competitive newspaper wars in San Francisco, which were some of the most colorful in the country. Once the old Hearst Examiner and the old Chronicle formed a JOA in l965, they had no more real use for Caen but the Chronicle kept him on because of his ability and reputation. The Chronicle family owners were always nervous and often agitated about Caen and his enormous influence but they really couldn’t do much about him. Now, with the new Hearst Chronicle as the dominant daily here, with the coming of Singletonland in the Bay Area, no publisher has any use for a powerful independent talent such as Caen, particularly a strong union voice. Al’as.
The Caen formula lives
Will and Willie demonstrated the point again in this morning’s show with a snapshot of Caen’s San Francisco with a nostalgic interview of Mort Sahl, who Caen helped make a celebrated fixture at Enrique Banducci’s Hungry I. They were making the most of the fact that Sahl was reemerging in San Francisco and opening tonight at the Empire Plush Room (Willie said he would in the front row). And Sahl responded with some good political jokes: The Democrats are proving they can defeat Democats, he said of the Lieberman race. But can they defeat Republicans? Jerry Brown is putting Oakland “up for adoption.” On the Mel Gibson incident, Sahl said there was talk in Hollywood that he would now be boycotted. But Sahl quoted Jack Warner of Warner Brothers about an earlier star: “He’ll never work in this town again– until we need him.” And Sahl mused at one point, “Just how many wars are we fighting today.”
Sahl also had some news. Banducci was alive and well in Hayward, sharp as ever. Sahl lived in San Francisco and Sausalito for many years and is now living in LA and working regularly. The I in Hungri I stood for Intellectual. ON and on, making the point on the show that Sahl is back. Hurray!
Back on the monopoly journalism front
Just in: story from the Mercury News by Pete Carey with the arresting head: “Area’s new media king is having fun, industry leader started with one small paper at age 20.”
He quoted Singleton as telling a meeting of the American Society of Newspaper Editors in Seattle in April, on a podium he shared with McClatchy’s Gary Pruitt,
“We do a lot of things because they’re fun.” Impertinent questions: who else is having fun as Singletonland comes to town? Is there no way that any of the reporters covering Singleton on any of his papers can utter a discouraging or realistic word about his form of discount journalism, or find someone who can do? (Carey, incidentally, a veteran reporter, has done the best job of covering the sale of Knight-Ridder and subsequent developments).
The newspaper unions have been quiet and have not even commented on what happened to their offer to buy the Merc and the other McClatchy castoffs. And the few statements they have issued took the line of the Hearst unions in San Francisco in dealing with its monopolizing issues: lay low and wait till negotiations on the next contract (when, from my point of view, it may be too late.) The Merc employees are working without union contracts. The crunch will come when Singleton starts “consolidating” and making the deep cuts in production and newsrooms and quality that he must do, sooner or later, probably sooner, with his mountains of debt, his unmanageable forest of papers and presses, and his “lean Dean” cost-cutting modus operandi. Stay tuned. B3
EDITORIAL The federal judge who allowed the largest media merger in Northern California history to go forward unimpeded did what far too many judges do in cases like this: she ruled narrowly on the tightest definition of the law and missed the overall point entirely. Judge Susan Illston rejected a bid by San Francisco real estate investor Clint Reilly to block Denver billionaire Dean Singleton’s effort to buy virtually every daily newspaper in the Bay Area and set up an unprecedented media monopoly. Reilly had sought an injunction against the deal, arguing that once it’s approved there will be no way to halt the obvious damage. Illston noted that Reilly had raised “serious questions” and agreed that there’s “a need to examine the proposed sale to ensure that no long-term harm will come to Bay Area residents.” But she insisted in a 16-page opinion that the deal posed no “pressing and imminent danger.” Wait: no imminent danger? One person could soon control every single significant news media outlet in the entire Bay Area save for the Hearst-owned San Francisco Chronicle — which also has a financial partnership with Singleton. What does Illston expect? That a year or two down the road, when residents of the region find themselves without any credible local newspapers and advertisers find nothing but high monopoly rates, someone can reexamine this and find that it was a bad idea? That’s silly. The time to put the deal on hold and address Illston’s “serious questions” is now, before it’s too late. Nobody will be able to unscramble this egg. But Illston didn’t get that at all. Instead, she ruled that the real threat of great harm was to the defendants — the billionaire publisher and his business associates. Actually, they face no risk of harm at all — except for the threat to their ability to make obscene profits by gutting newsrooms, combining operations, and tearing the heart out of Bay Area journalism. This is how Singleton, known (for good reason) as “Lean Dean,” operates. He likes what he calls “clusters” of papers — groups of newspapers in adjoining geographic areas. He centralizes as many functions as possible, reduces staff to the minimum necessary, then sits back and watches the cash roll in. In the Bay Area, that will probably mean that the big, expensive newsrooms of papers like the San Jose Mercury News and the Contra Costa Times will be pared down, perhaps merged into a single operating center. The various papers will share stories, so there won’t be much difference (or competition) between them. Old-fashioned concepts like investigative and enterprise reporting, which require time and resources, will disappear. None of this requires a law degree and a judicial robe to comprehend. It’s been happening all over the country; Singleton’s record is clear. Of course, it didn’t help that Reilly was all alone on this, a single local businessperson trying to block a massive media merger that the state and federal governments are apparently ready to approve with only cursory examination. The outcome might have been very different if Attorney General Bill Lockyer had appeared before Illston representing the state of California. But Lockyer is sitting on his hands — and the US Justice Department just announced that it won’t pursue the matter and is going to allow the merger to proceed (see www.sfbg.com). This doesn’t have to be the end of the case, by any means. Reilly can and should go forward with his suit as aggressively as possible. And Lockyer, who is running for state controller, and Jerry Brown, who is running for attorney general, need to stop ducking this issue and take a firm stand against the merger. SFBG PS All of the papers involved in the merger covered the ruling, but none of them quoted outside experts critical of Illston’s decision or critical of the merger itself. Bruce B. Brugmann, Guardian editor and publisher, posted some key questions for the publishers on his Bruce Blog at www.sfbg.com; here are some of them: Why, if Hearst and the publisher participants feel they can’t cover themselves, don’t they get quotes from journalism or law professors at nearby UC Berkeley, Cal State Hayward, Stanford, San Jose State, SF State, USF? Why don’t they check with other independent experts such as Ben Bagdikian of The Media Monopoly fame, who is living in Berkeley? Why don’t they quote union representatives at the Chronicle and Merc? Why don’t they quote the congressional delegation that called on the Department of Justice and the attorney general to carefully scrutinize the sale? Why don’t they call on Sup. Ross Mirkarimi, who introduced a local resolution opposing the sale, or any of the other supervisors who approved it unanimously? Why is it left to the handful of remaining independent voices to raise these critical questions? PPS Now that the investigation is closed, we’ve asked the Justice Department to release its full investigative file. We hope all the local daily publishers, who love to talk about open government, will support our request. Read the Alioto Legal Documents: Complaint.pdf Gannett-Stephens_Opp_to_ TRO.pdf Hearst_Opp_to_TRO.pdf McClatchy_opp_to_TRO.pdf MediaNews-Calif_Newspaper_Partnership_Opp_to_TRO.pdf Memo-Supp_of_Mtn_for_TRO.pdf Order_denying_TRO.pdf Plaintiff’s_Reply_to_Mtn_for_TRO.pdf
