By: Jennifer Saba
The group of 50 auto dealers that sued Newsday of Melville, N.Y., has learned that they can no longer advertise with the paper. A letter issued by Newsday Executive Vice President and General Manager John McKeon to one of the dealers said that because of the litigation filed, “Newsday will no longer accept advertising from your organization effective Friday, July 30.”
As a collective, the dealers spend roughly $25 million a year on advertising in the paper, according to Leonard A. Bellavia, an attorney representing the plaintiffs. He said that all of his plaintiffs received the same letter.
“To intimidate the parties they already admitted they ripped off is going to expose them to greater damage when this case goes to trial,” Bellavia said.
Last week a consortia of mostly smaller and family-owned dealerships in Long Island, N.Y., filed a case in the U.S. District Court in the Eastern District of New York claiming that the paper charged unfair rates.
McKeon released a statement saying, “After the filing of the lawsuit on July 21 by certain auto dealership advertisers, Newsday was advised by its attorneys that it would put us at further risk of liability to continue to accept advertising from these litigants. We regret the necessity of this action, as many of our auto dealership advertisers have been long-time, loyal customers of this newspaper.”
Bellavia said that he started investigating the alleged discriminatory practices about 10 months ago when auto dealers complained they were being charged higher rates than others. “Some [dealers] were paying $1,500 where others were paying $15,000 for the same day and same space,” Bellavia alleges.
It is not uncommon for newspapers to charge different rates based on volume and frequency. Bellavia says this situation is different because Newsday is the only paper in town.
Before Bellavia filed the suit, he says that he was contacted by Newsday to try and negotiate a deal. According to McKeon’s letter, Newsday President and COO Tim Knight and other Newsday executives met with Bellavia on July 6. “After hearing the concerns of automotive dealers directly, we pledged to work on solutions and respond in a reasonable amount of time,” the letter said.
Bellavia confirmed, “At the meeting it was agreed that Newsday would come up with a settlement proposal and meet in three weeks.”
Bellavia claims that Newsday backed out saying they couldn’t commit to a time period. “[The negotiations] were abruptly stopped by them, not us,” Bellavia said, adding that he contacted a Newsday attorney warning that he was going to file suit. Sources close to Newsday deny they tabled any discussions.
This is not the first time the paper has had to stop doing business with advertisers under these circumstances. In the lawsuit filed by four advertisers in February, one of the plaintiffs, East Coast Realtors, had to drop out because they still needed to advertise in Newsday.