Guild President Lunzer: Non-Sale of 'Star-Bulletin' a 'Highly Questionable' Deal

By: E&P Staff In a scathing commentary on the impending sale of the Honolulu Advertiser to the competing and soon-to-be folded Honolulu Star-Bulletin Newspaper Guild President Bernie Lunzer writes that "this whole deal went down in a highly questionable manner that hints of collusion."

The U.S. Justice Department made an "unfortunate decision" not to block the sale of the market-leading Advertiser, owned by Gannett Co. to David Black's Hawaiian publishing company that also owns the big MidWeek shopper distributed throughout Oahu. MidWeek, not the weakened Star-Bulletin, is the principal newspaper advertising competitor to the Advertiser, Lunzer notes.

"The irony in my doing this, of course, is that David Black is in a position to monopolize Honolulu print media because of the Newspaper Guild, which helped block the last attempt to extinguish one of the city's two dailies, in 1999," Lunzer wrote.

Guild officials tried to get the Antitrust Division to look at the "anti-competitive implications" of joining the only daily with a powerful weekly.

MidWeek was not included in the sale of the Star-Bulletin, and neither were the commercial presses that print the weekly and daily. That left a "stripped-down failing daily" with minimal value. Lunzer writes that even then Justice would not intervene to help one bidder, 'saying his offer was under the 'liquidation value' that it had allowed Black to determine."

"Adding insult to injury, this whole deal went down in a highly questionable manner that hints of collusion," Lunzer writes. "Representatives from Gannett, owner of the Advertiser, and Black had met in secret with key state leaders and the Department of Justice well before the 'sale' was made public. At those meetings, it was agreed that an expedited sales process of seven weeks would suffice, with Justice officials rationalizing that a longer sales period might result in employees fleeing. As a result, there was not enough time for prospective buyers to perform due diligence and nothing that could be termed a meaningful sales opportunity."

Justice Department rationales for the speedy sales process -- including the argument that employees might leave their newspaper jobs if the sales process took too long -- made little sense, Lunzer argues.

Antitrust authorities, Lunzer writes, seem to have decided that consolidation of media is the only answer to the industry's ills.

"They're wrong, and the implications of their position are tragic," he writes. "This is not only a very sad message for advertisers, readers and workers on a beautiful island far from Washington-it is a doubly sad message for the rest of the country when it comes from an Administration that has publicly promised much more robust antitrust enforcement than its predecessor."