By: Lucia Moses
Ruling saves daily from swamping
With a court ruling apparently keeping the Honolulu Star-Bulletin safe from shutdown for another year, lawyers watching the case predict that the city’s two publishers will drop their plans to close the paper.
The ruling’s impact on another pending matter involving San Francisco’s joint operating agreement (JOA) is unclear.
A three-judge panel of the 9th U.S. Circuit Court of Appeals Nov. 15 upheld a U.S. District Court’s preliminary injunction preventing the shutdown. Gannett Co. Inc., which produces the morning Honolulu Advertiser and controls its JOA with the Star-Bulletin, agreed in September to pay Liberty Newspapers, the Star-Bulletin’s owner, 26.5 million dollars to close the smaller afternoon paper. That would have left the Advertiser the market’s only daily.
The Honolulu case is believed to be the first time a court has intervened to stop a JOA from dissolving. There are some who say the case has less to do with legal arguments and more to do with an active newspaper union, a big out-of-town corporation the public loves to hate, pro-job sentiment, and political leaders eager to score with voters.
The 9th Circuit Court ruling paves the way for a Sept. 19, 2000, trial to decide if the planned shutdown violates antitrust law, as Hawaii’s attorney general alleges. Some observers say Gannett won’t want to open its financial records to public scrutiny, which a trial would force it to do.
The Gannett-Liberty deal reportedly expires Dec. 23, although the parties could resurrect it later and modify it.
“I would not be surprised if they avoid a trial, and the easiest way would be to drop the termination agreement” and let the Star-Bulletin continue publishing, said Stephen Barnett, a law professor at the University of California at Berkeley and JOA expert.
Alternatively, Gannett might ask the court to seal the record, said Henry Walker, a Nashville, Tenn., lawyer who frequently criticizes Gannett in a column in Inreview, a Nashville alternative.
“My guess is, Gannett will never allow the attorney general to uncover all those internal Gannett business plans,” Walker said. He believes the Honolulu case will pave the way for a challenge to the 1998 closing of the Nashville Banner, which entailed a 65-million dollar payment from Gannett. Gannett publishes The Tennessean, the surviving partner in the Nashville JOA.
Publicly, Gannett isn’t backing down. It asked for a review of the 9th Circuit Court decision by a full panel of judges. Legal observers, however, said a full-panel court rarely reviews a panel’s decision unless the issue is of national importance.
The state of Hawaii calls the termination plan a buyout designed to eliminate competition. The papers’ owners say the 117-year-old Star-Bulletin is a drain on the JOA and that they have a First Amendment right to stop publishing it.
Beyond Hawaii, the 9th Circuit Court decision gives an emotional lift to those who want to preserve the San Francisco Chronicle, but observers say that might be all it does.
The U.S. Justice Department is investigating the proposed sale of the Chronicle to the Hearst Corp., parent of the San Francisco Examiner, its JOA partner.
The ruling’s impact on San Francisco is clouded, in part because the judges limited their review to whether the lower court abused its discretion and didn’t explain their decision. Also, the San Francisco case has a key difference: as part of a complex chess game, the Examiner is being offered for sale, but without the JOA protections that would make it viable. Liberty, though, didn’t try to sell the Star-Bulletin before deciding to close it.
“It does make clear that the Justice Department doesn’t have to fold its tent and go home,” Barnett said. The ruling’s impact on San Francisco, he said, depends on how the Justice Department views it and the sincerity of the effort to sell the Examiner.
The Justice Department filed a brief supporting the Honolulu injunction, while several major U.S. newspaper companies urged the court to let the deal pass, citing the potential impact on JOAs elsewhere.
“Publishers at other JOAs will think twice about closing their JOAs” as a result of the Nov. 15 ruling, Barnett said.
At the least, the Advertiser will have to further put on hold its expansion plans. The paper had planned to beef up its news hole, hire some 25 Star-Bulletin staffers, and expand its use of color. Mike Fisch, president and publisher of The Honolulu Advertiser and president of the Hawaii Newspaper Agency, said, “We’ll have to reconsider everything.”
In sum, Fisch said, “I think anybody who had a choice would rather have more rather than less. Whether it’s viable or practical is another issue.”
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