Lower Your Newspaper Advertising Prices, Pay a $21 Million Fine


It may seem hard to believe in the era of Craigslist that a newspaper (in the Bay Area, no less!) can be found guilty of "predatory pricing" for lowering its ad prices, but not only has that happened in the U.S. and A., it:

A) happened in March 2008, when a San Francisco jury awarded damages from the Village Voice Media-owned SF Weekly to the hoary old San Francisco Bay Guardian to the tune of $6 million; then
B) saw that amount tripled by a Superior Court judge in 2008 to $16 million + $5 million in interest, and then
C) had that $21 million verdict upheld [PDF] this Wednesday in the First District Court of Appeal in San Francisco.

Over at the formerly True/Slant website now known as Forbes Blogs, William P. Barrett highlights this supposedly damning bit from the court's unanimous opinion (to help you sort through the title confusion here, the New Times chain was a longtime competitior to the Village Voice chain, and bought the SF Weekly in the mid-'90s, then eventually bought the Village Voice chain itself a few years back):

[S]oon after the acquisition [of the SF Weekly] the executive editor of the New Times, Mike Lacey, disparaged the content of both the SF Weekly and the Guardian at a staff meeting, and announced that he wanted "the SF Weekly to be the only game in town." The Guardian was considered the primary competitor of the SF Weekly. Lacey stressed that the New Times had "deep pockets," with the financial resources to "compete very aggressively" with the Guardian and use "guerilla tactics" in rate battles. Lacey also emphasized that he was interested in improving the editorial quality of the SF Weekly. To increase circulation, additional salaried journalists were hired to bring higher quality "long form journalism" to the paper. The essence of Lacey's message was that he wanted "to put the Bay Guardian out of business."

Good heavenly Moses biscuit sauce, a journalism competitor wanted to compete aggressively enough to win–partly by improving editorial quality and hiring journalists!–so we better drag him to court and slap him with an eight-figure fine? In the town that Hearst built? For really?

I don't know what's more nauseating here–an evidently robust state law making it unlawful "to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition"; the application of it in such a way that's clearly intended (much more than Mike Lacey's chest beating) to drive a newspaper out of business (consider that the penalty is most likely several multiples of the SF Weekly's annual revenue, let alone profit)…or that the journalistic thumbsucker community outside of the Bay Area has been almost completely silent about this potentially momentous precedent. (In part, this is because the media establishment has long resented Lacey and his minions for their allegedly right wing/libertarian/"neo-con" hippie-baiting pugilism.)

Why shouldn't the San Francisco Chronicle now use the same law (and courts) to go after Craigslist for its "predatory pricing" of classified ads? Why shouldn't every weaker link in a two-newspaper California town accuse the deeper-pocketed winner of "injuring competitors" through lower prices?

Though the VVM folks have previously been apocalyptic about the consequences of losing, and the SFBG graybeards are busy gloating, the court decision referenced a settlement being either completed or on the verge. While I kind of hope so (being friendly to Mike Lacey and Co.), part of me wishes there was some process by which California could legally strike down the tougher-than-federal-law predatory pricing/"injuring competitors" provision, especially as regards the media business. And the consumer in me just hopes that neither side ever takes down bitchy content like this.