SPECIAL REPORT: Testimony at Ridder Trial, Part I -- How Publishers Share Information

By: Jennifer Saba E&P has obtained a full transcript from the trial iin a lawsuit brought by Northwest Publications LLC, which runs the St. Paul Pioneer Press, against The Star Tribune Co., held in late June, and will begin publishing excerpts starting today.

The lawsuit was sparked when Pioneer Press Publisher Par Ridder signed on to become the publisher of the Star Tribune in March of this year. The Pioneer Press contends, among other things, that Ridder violated a non-compete agreement and stole Pioneer Press financial information and disclosed it to some executives at the Star Tribune.

The trial took place over a three-day period starting June 25 in a Ramsey County district courthouse in St. Paul. Judge David C. Higgs said he will announce his decision at the end of the summer. Meanwhile, Ridder continues to serve as publisher of the Star Tribune.

Among those who testified and others who gave video depositions at the hearing: Par Ridder, his father Tony Ridder, MediaNews Group chief William Dean Singleton, McClatchy CEO Gary Pruitt, analyst John Morton.

Some of the many interesting things to come out of the trial are the inner workings of the newspaper industry. In this exchange, taken directly from transcripts, Ridder is testifying about how newspaper publishers share financial information in order to benchmark their progress.

In the testimony excerpted below, Daniel Kolb, an attorney with Davis Polk & Wardwell one of the firms representing the Star Tribune, is asking the questions (indicated by a "Q"). An "A" indicates Ridder's answers.

Q And, now, is benchmarking common or uncommon in the newspaper industry?

A It's common in the newspaper industry.

Q And what happens? How does the benchmarking go?

A Well, for instance, the Minneapolis Star Tribune is part of something called the Large Metro Ad Directors Group. We share every month our ad revenue numbers with the top 25 newspapers, and a report is generated every month. It's sent back to each newspaper, and we're able to compare our ad revenue declines or increases and the current environment's declines with the other top 25 newspapers.

When I was at the Pioneer Press, we were a part -- the Pioneer Press was a part of something called the Midwest Ad Directors Group. Same process, Pioneer Press would turn in its ad revenue numbers and, then, a report would be sent back, and it would have newspapers about the size of St. Paul. So Kansas City was on there, Little Rock was on there, there actually was a large one, Phoenix was on there which is also part of the larger metro. But it was a way for us to -- a fairly rapid clip benchmarker on performance after a few weeks after the months closed.

Q What's the point of it? What's the purpose?

A Just would identify if there's an issue. If you're not growing ad revenue and everybody else is growing ad revenue than you, you know, you might have an issue.

Q Meaning what of an issue?

A That you're not executing as well in the ad department
or whatever the category is in the benchmark.

Q And there was testimony this morning by Mr. Morton --you saw him. I think he mentioned there was sharing of information among publishers. He was clear it wasn't all information.

A Yes.

Q Is the sharing from time to time --

A Is there.

Q -- among publishers?

A Yes.

Q And one of the purposes is for benchmarking?

A Yes.

Q And can you just tell the court what you know generally about sharing. And this would be kind of one-on-one sharing?

A Sure. So when I came to the Star Tribune -- the -- Fort Worth, Star-Telegram is a McClatchy newspaper and I have a relationship with the publisher there -- and I would compare a lot of my numbers with his numbers to better understand how we benchmark in some different categories.

Q Okay. Now, there was also reference in a couple of people's testimony, as we refer to it otherwise in the case, to the fact that you did at one point show Avista and the operating committee some information with respect to costs?

A Yes.

Q And it was -- do you remember what those costs were?

A Yes. It was the percentage increase or decrease in labor expense by four or five departments.

Q Okay. And one place this shows up, just for orientation purposes, I believe, is Exhibit 1495. Do you have that, Mr. Ridder?

A Yes.

Q This is a letter to Chris and OhSang at Avista --

A Yes.

Q -- or a memo. And this is one of two places this shows up, right?

A Yes.

Q And is used at the Star Tribune.

MR. KOLB: Your Honor, I'll wait for you.

THE COURT: It's all right. Continue.


Q Okay. Now, sir, in the fourth paragraph here, just so the court can remember what we're talking about, is that the reference to the labor line?

A Yes.

Q 2006, '05, '04?

A Yes.

Q And what's the purpose for the comparison? And you don't have to get into the personnel part of this, but, just what's the point?

A The point is I had some concern about cost control at the Star Tribune.

Q And you were comparing it to the Pioneer Press?

A Yes.

Q And what were you trying do? What were you trying to induce here?

A That -- that -- that the Star Tribune needed to do a much better job at cost control.

Q So the Pioneer Press was cutting their costs better than the Star Tribune --

A Yes.

Q -- is that the idea? Star Tribune should do better --

A Yes.


The second part of the testimony can be found here.


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