Legal Brouhaha With An All-Star Cast p. 9

By: Mark Fitzgerald

Sale of 13,000-circulation Northwest Arkansas Times
sparks lawsuit and federal antitrust intervention sp.

WHEN THOMSON NEWSPAPER Corp. announced in January that it planned to sell 25 small dailies that no longer fit into its strategic plan, few in the industry would have guessed that the lone Arkansas paper among them would stir up such a controversy.
But the sale of the 12,792-circulation Northwest Arkansas Times has spawned a legal brouhaha with an all-star cast.
On one side is the storied Stephens family, the wealthy and influential Arkansas banking clan, which is the new owner of the Times through its control of Nat L.C. and Donrey Media Group. This side is represented by another Arkansas institution that has become famous since the ascendancy of Bill Clinton: the Rose law firm of Little Rock.
On the other side is Community Publishers, which is controlled by James C. Walton ? heir to the most famous business to come out of Arkansas: Wal-Mart Stores Inc.
Community owns the 8,000-circulation Daily Record in Bentonville.
Walton was aided in his quest by Walter E. Hussman, one of the very few family owners of a newspaper who forced the giant Gannett Co. chain to cry uncle. In the ferocious Little Rock newspaper war of the late 1980s, Hussman's Arkansas Democrat not only survived the onslaught of Gannett's Arkansas Gazette? but prevailed. Gannett ultimately sold its paper to Hussman, who merged it with his own.
But the sale of the Northwest Arkansas Gazette did not bring out just Arkansas heavyweights. On March 28, the U.S. Justice Department's antitrust division brought suit against Donrey Media Group and NAT L.C., alleging the sale violates antitrust law.
In filing the action, the Justice Department followed a similar suit filed in late February by Community Publishers. Also joining the Community Publishers suit is a real estate agency that contends it and other newspaper advertisers would be hurt by the sale of the Times to Donrey Media Group.
Both lawsuits, which were consolidated March 29 by U.S. District Court Judge Franklin Waters in Little Rock, contend that selling the Times, which is based in Fayetteville, to the Stephens family interests will create a newspaper monopoly in the Ozarks.
Through Donrey, the Stephens family already owns the Morning News of Northwest Arkansas, a 32,600-circulation paper that is based in Springdale.
"Unless this transaction is blocked, the vigorous competition that has existed between these two newspapers for readers and advertisers will be substantially reduced or eliminated," Anne K. Bingham, the Justice Department's antitrust division head, said in a prepared statement.
An attorney for Community Publishers, Phillip F. Anderson of Williams & Anderson, said the Justice Department's decision to get involved demonstrates that Community was correct in challenging the sale. Donrey and NAT L.C. have portrayed Community's legal challenge as an attempt to overturn a sale the company lost fair and square.
"This is not a case of a spurned suitor just filing a lawsuit," Community's Anderson said. "It is a case of competiton being seriously damaged by an acquisition that is prohibited by antitrust law."
If the sale goes through, Anderson added, it will destroy newspaper competition in the Ozarks.
"The Stephens interests [will have] acquired a total of 84% of the market ? and our client is a dead duck," he said.