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.