Antitrust

Plan #54 to Save the Newspapers: Let the Justice Department Run Them

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In Charleston, West Virginia, the Daily Mail and Gazette are on the verge of restructuring their joint operating agreement, not because the papers' publishers decided that this would be a good decision but because the Department of Justice is ordering them to do so. Skip Oliva reports:

The DOJ's proposed order expressly states the newspapers "shall enter into, and abide by the terms of, the Amended and Restated" joint operating agreement. The new agreement cannot be modified or terminated without the DOJ's written permission.

The DOJ order further states that, "The publication of the Charleston Daily Mail as a Daily Newspaper shall not be terminated unless it is a Failing Firm and the United States has given prior written approval." Even if the paper fails, the DOJ order also dictates how the Mail's assets must be disposed.

Finally, the DOJ order mandates a 50% discount for new subscriptions to the Daily Mail and prohibits the Gazette from matching any such discount.

So let's recap: The United States Government has forced two "independent" newspapers to sign a contract governing their business and editorial operations, prohibits one newspaper from ceasing to publish daily, and fixes subscription prices for both newspapers. All to protect "competition."

The background here is that the Gazette and Mail changed the terms of their agreement in 2004. The Justice Department then concluded that the owners aimed to let the weaker paper die. The regulators made their case, in part, by identifying editorial defects at the Mail, making this, in the words of the Newspaper Association of America, the first "antitrust suit based on [the government's] opinion of the adequacy of a newspaper's editorial content." Almost three years of litigation ensued. As Oliva notes, the push here "is coming from DOJ bureaucrats, not the political leadership; this case started in the Bush administration, and there's been no significant policy change under the current regime."

Elsewhere in Reason: Matt Welch argues that joint operating agreements have been bad for the press.

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  1. Tanning businesses criticize proposed ‘tan tax’
    A 10 percent indoor tanning tax is proposed as part of the U.S. Senate’s health care reform bill.

    http://www.mndaily.com/2010/01…..-proposed-‘tan-tax’

    1. Reminds me of the breat implant tax proposed in California a few years ago.

      1. They actually had a cosmetic surgery tax in the Senate bill, but replaced it with the tanning tax. You see, the right sort of people are more likely to get cosmetic surgery, but only the wrong sort of people use tanning beds.

  2. 1. I need a bailout loan.

    2. Buy some Congressmen and force people to read my stuff.

    3. Profit!*

    *Eliminates the question step.

    1. Ooo – I like this. Do you need a partner? Bagman? Hanger on?

      1. Of course! It’s the Chicago way.

  3. I mentioned this in a previous thread, but the FTC chairman has ideas about government subsidizing the poor, poor newspapers. You can read the whole NY Time blog posting, which deals also with his idea that we should go to an opt-in regime for consumer privacy, but here’s the part with his relevant comments:

    The officials also briefly touched on the future for newspapers, which was the subject of a hearing last month. (Here’s a live blog of that event.)

    “There are some areas where you clearly see positive creative destruction,” Mr. Leibowitz said, giving the example of travel agents who were replaced by Orbitz and other online-booking systems. The news, he said, was not one of those.

    “When you’re dealing with something as critical as news is to a democracy, you need to ensure, certainly, that it’s independent, but also that it’s vibrant going forward,” he said. Areas like investigative reporting, foreign and domestic bureaus, and statehouse reporting, he said, would likely falter under blog operations because of “economies of scale.”

    He said he wasn’t sure what the solution was, but threw out a few ideas discussed at the conference: maybe special tax treatment for newspapers, a Corporation for Public Broadcasting-like fund, or for the newspaper industry to charge fees for the re-use of its content, similar to the model used by the American Society of Composers, Authors and Publishers.

    Remember, this is the chairman of the FTC saying these things. Anything–anything–that makes the press yet more beholden to the government is a potential danger to the entire idea of a free and independent press.

    1. “…would likely falter under blog operations because of ‘economies of scale'”.

      So let me get this straight – Newspapers are being bailed out because they’re too big to fail, yet blogs get nothing because they’re too small to succeed?

      1. It’s the tragedy of the dumbass phenomenon. Well known in economics.

  4. Maybe the DOJ has that wall poster of the Bill of Rights, with the big red stamp: “Void Where Prohibited by Law.”

  5. “But what’re we gonna do here at the Daily Planet?”

    “Don’t worry, Lois. We’ll ask Superman Al Gore ManBearPig Eric Holder what to do.”

    Unbelievable. Wait – totally believable.

  6. Unfortunately, this doesn’t surprise me; “failing businesses must not be allowed to vanish so competitors can fill the vacuum they leave behind” seems to be the new American status quo.

    1. But what of propeller turners? What of them?

    2. But that vacume could be filled by the wrong media. We can’t have that. Limbaugh is already poisoning 20 million minda a day.

  7. My plan for saving the newspapers – print them on toilet paper for convenient reading on the crapper. Think of it as a value-add.

    1. Yeah, I don’t think I want newspaper ink on my ass all the time.

  8. The problem with newspapers is that they don’t realize their principal value is the newsprint they’re printed on. Useful for cleaning glass, wrapping fish, etc. Rebrand papers for that purpose, with the content simply being a nice add-on.

    1. Cleaning glass? Does that actually work?

      Also, america doesn’t have enough chip shops for the fishwrapper branding to generate enough business.

  9. WTFO?

    “When asked, the President assured this reporter, ‘I have no interest in being involved in the day-to-day operations of these newspapers.'”

    1. He replaced car makers with newspapers in his stock phrasing? He really does recycle.

    2. Just weekly oversight–he swears!

    3. Brings a whole new meaning to the term Editor-in-Chief.

      1. Ooh, can I be Grammar Czar? First thing I’ll do is ban the non-use of serial commas.

        1. Oh, Pro-L, you’re singing my song. [bats eyes]

          1. Only with the serial comma can America cement its preeminence in the world.

            By the way, for your militia name, I suggested the Unredeaned.

  10. finally, some gubment streamlining! just cut out the middleman.

  11. Read the first paragraph of the brief. It says both newspapers and the US government have consented to the final judgement without trial or adjudication of issue of fact or law.

  12. Obama’s busy penning cover stories for Newsweak, so it’s not like he has time to run two papers in West Virginia. Good call on letting Eric Holder do it for him. I applaud his delegation skills.

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