Saturday, June 07, 2003

Antitrust News: Raining on Seattle's Newspapers

The Seattle Post-Intelligencer reports on, er, the Seattle Post-Intelligencer:
The U.S. Justice Department has entered the fray between Seattle's two daily newspapers, acknowledging yesterday that it is investigating whether the unwinding of their joint operating agreement would violate antitrust laws.

The federal agency, which approved the original agreement between The Seattle Times and the Seattle Post-Intelligencer more than 20 years ago, will "look at all relevant evidence," said a Justice Department spokeswoman, Christine Jacobs.

The Justice Department has already started gathering information about the situation. Rowland Thompson, executive director of Allied Daily Newspapers of Washington, a trade group whose members include both Seattle papers, said Justice Department attorney Maurice Stucke contacted him Thursday. Stucke and another federal attorney, Carol Bell, are leading the investigation, a Justice Department staff member in Washington, D.C., said.

"He's doing a full community background check, as far as I can tell, about what public sentiment is and how people view the two papers, and if there are community groups that have a position on it," Thompson said.

Under the joint operating agreement, or JOA, The Times handles printing, advertising, production and circulation for the P-I, in exchange for a larger percentage of the papers' joint profits. The JOA, originally intended to keep the P-I from failing, began in 1983 and was revised in 1999.

The Seattle Times Co. moved in late April to end the JOA after what it said were three years of financial losses at The Times.

The P-I, owned by The Hearst Corp., had filed suit the day before, claiming that The Times has no right to end the agreement because its losses were the result of extraordinary circumstances and didn't demonstrate that the JOA is untenable. An end to the agreement could lead to the P-I's closure. A hearing is set for July 18.
One of the more disturbing trends in federal antitrust regulation is the government's efforts to interfere with private disputes that can easily be managed through the civil courts. We've already seen this with Rambus, a corporation that was hauled before the FTC after a federal appellate court cleared the technology company in its private dispute with industry competitors. Like the Rambus case, there is no benefit to federal antitrust intervention in this dispute between the Seattle newspapers. Indeed, it will simply increase the costs of all parties involved, meaning taxpayers will see their money squandered, while the two newspapers are forced to deplete their financial resources accommodating nosy Antitrust Division attorneys.

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