San Jose Guild Calls Emergency Meeting Over MediaNews Deal

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By: Jennifer Saba

While Wednesday’s announcement that MediaNews Group plans to snap up four Knight Ridder papers puts to rest several months of uncertainty, Newspaper Guild leaders are calling the convoluted deal “bad news for newspaper workers, readers, advertisers, and for our communities.”

San Jose Newspaper Guild Executive Officer Luther Jackson called an emergency meeting scheduled at 6 p.m. local time tonight for San Jose members to “review the implications” of the pending transaction. A meeting for Monterey members will be announced separately.

The guild wants to address many issues, including media concentration, but is also charging that Yucaipa Co. — the private equity firm that placed a bid on all 12 orphan Knight Ridder papers on behalf of the guild — did not get a fair shake in negotiations with McClatchy over the California papers.

The guild has “serious” concerns about whether Yucaipa received enough time for the due diligence process.

“This raises questions about the fairness and transparency of the sale process, about whether that process satisfies McClatchy’s fiduciary obligations to shareholders, and about the commitment to seek a buyer that will represent the journalistic excellence of all 12 papers,” said Jackson in a statement.

If the MediaNews’ deal goes through for three California papers — the San Jose Mercury News, the Contra Costa Times, and The Monterey County Herald — the private Denver-based chain will control 43 daily and weekly papers in the Bay Area with a total circulation of 814,000. By comparison, the San Francisco Chronicle (owned by Hearst) has a daily circulation of 400,906. Additionally, MediaNews will acquire the St. Paul Pioneer Press in Minnesota.

Linda Foley, president of the Newspaper Guild, said in a statement released this afternoon: “The apparent complexity of the proposed MediaNews/Hearst purchase of three Northern California newspapers shouldn’t obscure a simple fact: the newspaper industry is dominated by a small circle of ownership groups. Yesterday’s news drew that circle even smaller.

“Arguments about advancing digital media into traditional newspaper markets, while relevant, do not constitute an excuse, particularly in northern California, for permitting a single company to serve as the gatekeeper of public opinion for millions of readers.”

In a statement, the guild’s leadership said it’s considering a “range of options including outreach to governmental agencies responsible for regulating corporate ownership and governance issues as well as unspecified collective actions.”

According to the guild, California Attorney General Bill Lockyer has announced it will look into the transaction to ensure it doesn’t violate any antitrust laws. In addition, the national guild is calling on the U.S. Department of Justice to look into the transaction.

On Wednesday, the union filed a petition with the Justice Department charging that MediaNews has secretly become the sole owner of two daily papers in York, Pa.

The President of the Newspaper Guild’s Knight Ridder Council Henry Holcomb said in a statement that while the deal might work out to serve the communities, “It is troubling that business enterprises that have a financial interest in limiting competition are working with self-imposed secrecy to craft a complex deal that appears to be designed to evade official scrutiny.”

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