Would Joint Action on Online Pricing Violate Antitrust Laws?

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By: Mark Fitzgerald and Jennifer Saba

The under-the-radar meeting hosted by the Newspaper Association of America (NAA) Thursday brought together top newspaper executives to discuss various issues, including the much-debated topic of charging for online content.

Participants aren’t commenting specifically on their discussions, but the summit raises the question: Can newspapers collectively decide to put content behind a pay wall? And if they did, would that violate antitrust laws?

Aside from the historical precedence of the industry’s past attempts at togetherness — such as the failed New Century Network or the inability to standardize ad formats and billing — it would be miracle indeed if newspapers decided to simultaneously erect pay walls.

John Sturm, the NAA’s CEO, told E&P today that at no point was price discussed during the gathering that included McClatchy chief Gary Pruitt, Dallas Morning News Publisher Jim Moroney, Lee Enterprises’ Mary Junck and E.W. Scripps Mark Contreras. ?Everybody in the room is an adult,” Sturm said. “Price was never discussed and there was no reason to discuss price — it?s always a local decision.?

Sturm noted that William Baer, a partner at the Washington D.C. law firm Arnold & Porter and a former bureau director for the Federal Trade Commission, was on hand during the meeting.

While Sturm wouldn?t comment on the details of the meeting, he said that two subgroups were formed to look further into intellectual property matters and classified solutions. He stressed the meeting was just an exchange of ideas.

Northwestern law professor Fred McChesney said it’s not impossible for newspapers to collectively charge for online content. McChesney, who specializes in antitrust matters, noted that the courts have upheld similar arrangements in the past, citing the 1979 Supreme Court decision involving the music license company Broadcast Music Inc. (BMI) and the Columbia Broadcasting System (CBS).

In that case, he explained, BMI represented all the owners of music and sold packages to radio stations and other broadcasters. The individual owners of the music agreed to a pay structure; BMI turned around and sold blanket licenses for a single price. CBS, however, accused BMI of price fixing.

The high court decided that the BMI arrangement was allowable in that specific case because it was extremely costly for individual owners of the rights to negotiate individually with each station.

The court agreed it was a form of price fixing, but the alternative was so expensive for individuals it would never get done — and in fact it would encourage people to steal the rights.

Regardless, any move made by newspaper companies collectively would invite the scrutiny of antitrust enforcers — but the “devil is in the details,” McChesney added.

The government might also be inclined to consider the health of the industry when making any decisions regarding a collective action by newspapers.

“Generally, newspapers are in trouble,” McChesney said. “It could well be that without this arrangement, newspapers are going to go out of business. That could be a point in their favor.”

A spokespeson said the U.S. Justice Department Antitrust Division had no comment on Thursday’s meeting.

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