Down, DirtyDesert Dispute p.14

By: M.L. STEIN

RELATIONS BETWEEN mainstream and alternative newspapers never have been really cordial, but in Phoenix, they've gotten downright nasty.
Phoenix New Times is suing Phoenix Newspapers Inc. (PNI), charging that a story on New Times in PNI's Arizona Republic was based largely on a stolen, confidential financial report that was issued to only four top New Times executives. The alternative wants the report returned.
"I have no quarrel with the story," New Times chairman and CEO James A. Larkin said in an interview. "That's what newspapers do. It's the document that we want back. It contains detailed proprietary financial information. I don't care who stole it or how they got it. It's our property."
In an Aug. 9 letter to Phoenix Newspapers publisher and CEO John F. Oppedahl, Larkin said he had been informed by Republic reporter Bill Muller that the report had been stolen from New Times. Larkin demanded the report's return.
The next day, Oppedahl refused.
"I do not know how the report got out of your senior management's control, but no one employed by or associated with Phoenix Newspapers 'stole' the report or collaborated with anyone to have it taken," Oppedahl said.
"If the four financial reports your letter mentions are so filled with trade secrets and proprietary information," he added, "it appears your security is either very lax or nonexistent."
Larkin termed Oppedahl's reply "smart-assed."
Based on the documents, Muller's profile of New Times Inc. and its quickly expanding empire of free alternative papers is actually a kind of success story. The expos? ? beginning on Page 1 Aug. 11 and filling a full page and a quarter of another inside ? details how a small weekly with roots in the era of Vietnam War protest has grown to become a seven-paper chain with a combined circulation of more than 700,000 and $35 million in annual revenues.
Last week, in its latest venture, New Times consolidated two papers it bought in Los Angeles ? LA View and the Reader ? into a new weekly called L.A. New Times.
The story noted, however, that although the
company's revenues are climbing, "its debts are
significant, according to a confidential 1995
financial report obtained by the Republic." New Times papers in San Francisco and Houston were losing money, the article said. In San Francisco's bustling alternative market, New Times competes with the San Francisco Bay Guardian and others.
Still, Muller wrote, New Times increased revenues by 20%, while tripling pretax profit to $3 million, all from 1994 to 1995.
According to the Republic, the 150-page report lists New Times' monthly financial activities in six markets, as well as executive salaries and other financial information from the closely held company. Larkin and New Times editor and co-owner Michael Lacey each make about $300,000 a year in salary and bonuses, Muller reported.
The New Times suit in Phoenix Superior Court charges "misappropriation of trade secrets, conversion and unfair competition." The complaint, which describes New Times as a competitor of PNI's Republic and Phoenix Gazette, alleges that the purloined report contains a "substantial number of commercially valuable trade secrets," including figures and descriptions about pricing, profits, costs, advertising sales, circulation, customer relations, product assessments and personnel performance.
All this, the suit states, was kept in "strictest confidence and secrecy." It accuses Phoenix Newspapers of misappropriating trade secrets in Muller's Aug. 12 story, thereby causing the company "irreparable harm" by giving Phoenix Newspapers an "unfair competitive advantage." The complaint further charges that PNI turned over the report to its consultant, Robert E. Kehoe.
In his letter to Larkin, Oppedahl said his papers do not regard New Times as "direct or any competitor in the Phoenix market."
The suit seeks an injunction for the return of the documents, including all copies and extracts, plus unspecified general and punitive damages for lost profits, loss of goodwill and other injuries, plus costs.
Oppedahl was on vacation and unavailable for comment. But Republic and Gazette managing editor Pam Johnson labeled the suit "without merit."
"We got this report through standard reporting procedures," she said.
"We have no knowledge that it was obtained by underhanded means. We pursued a source, he talked to us and gave us the papers." Johnson denied the report had been given to Kehoe.
Underlying the court action is a long-running editorial guerilla war New Times has waged against Phoenix Newspapers. The weekly has particularly criticized the dailies' coverage of Arizona Gov. Fife Symington, who in June was indicted on 23 counts of fraud, lying under oath and attempted extortion. The dailies are alleged to have muted their reporting on Symington because of his cozy relationship with former PNI executives.
In 1980, PNI mounted a $10 million libel suit against New Times for a story alleging that PNI had bugged phones of union activists. The suit was dropped two years later.
At this year's Arizona Press Club awards, one winner, New Times reporter John Dougherty, blasted the Republic and Gazette for "lazy" journalism.
Muller's story said New Times staffers "yelled and cursed" at other journalists in the room for not joining in a standing ovation for Dougherty.
The awards dinner also produced a minor flap over a first-place picture submitted by New Times photographer Timothy Archibald. Contest officials later discovered the photo involved "sandwiching" of negatives ? or using multiple exposures ? to create a photo of a lightning storm.
PNI photographers were said to have complained about the award, but Rick Wylie, Mesa Tribune photo and graphics editor and co-chairman of the contest, said the press club board agreed that the rules on photo entries did not expressly forbid "photo illustrations," and that the requirements should be rewritten to be more specific. Archibald, who also was named "Photographer of the Year," was allowed to keep his awards.
In an intereview, Phoenix New Times editor
John Mecklin defended Archibald as a "very decent person ? absolutely straight as any journalist
I've worked with in my 15-year career. To make him seem otherwise, would be an absolute crime."
Archibald said he "carefully" read the press club rules before entering the contest and found nothing to bar his submission.