Judge Won’t Dismiss Antitrust Suit Against Charleston, W.Va., JOA

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By: E&P Staff

Lawyers for the U.S. Justice Department and Charleston, W.Va.’s jointly produced dailies return to court July 3 to discuss the next steps in the government’s antitrust lawsuit against the papers.

Federal Judge John T. Copenhaver Jr. kept the antitrust action alive by denying a motion to dismiss the case from The Charleston Gazette and Charleston Daily Mail.

In the unusual lawsuit, the antitrust division alleges that the Gazette, which bought the Daily Mail in 2004, is or was illegally working to weaken the evening paper with an ultimate aim of shutting it down as a “failing company.”

The two papers had been in one of the nation’s oldest joint operating agreements (JOA), and from 1958 to 2004 shared profits and costs equally. As part of the sale of the Daily Mail and its owner MediaNews Group Inc.’s share of the JOA, MediaNews is paid a management fee to run the editorial operations of the paper.

By their very nature, newspapers in a JOA — which need federal approval — do not compete for advertising or circulation dollars. But the lawsuit contends that the alleged intentional weakening of the Daily Mail violates antitrust law and “lessen(s) competition.’

The newspaper lawyers contend the JOA was behaving like any other, with the only competition existing in the newsrooms, which are not subjected to antitrust laws.

Judge Copenhaver declined to dismiss the lawsuit, ruling that significant factual questions about “reportorial competition” remain unanswered and that keeping the case going is the only way to answer them.

“Whether the issue is deferred pending development of the factual record, it is of some significance whether ‘the true product — news and editorials’ remains under the dailies’ separate control, a matter that is presently the subject of vigorous debate,” Copenhaver wrote, according to an account of the case in The State Journal by Beth Gorczyca Ryan. “In this connection, the continued viability of reportorial competition is worthy of further scrutiny with the benefit of a developed evidentiary record.”

Among the actions the Justice Department alleges violates antitrust law is reducing the number of reporters and editors through attrition.

In a statement, Elizabeth E. Chilton, president of the Daily Gazette Co., said, “We appreciate the careful consideration Judge Copenhaver gave to these important and difficult issues. The Daily Gazette Co. expects to prevail based on the factual record the judge said should be developed prior to a final decision.”

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