Making good on its pre-auction warning, the Justice Department today filed a civil antitrust lawsuit in Los Angeles seeking to block the acquisition by Tribune Publishing Company of Freedom Communications Inc. Freedom is the now-bankrupt publisher of Southern California paper the Register in Orange County and the Press-Enterprise in Riverside County. Chicago-based Tribune, which owns and publishes the Los Angeles Times, offered a winning bid Wednesday of $56 million to acquire Freedom’s assets. The Justice Department had indicated this week that if Tribune prevailed at the auction as expected, it would intercede to prevent what it called a monopoly of the market for both advertisers and readers.
“If the acquisition is not enjoined, Tribune would monopolize the market and control the only two local daily newspapers with meaningful circulation in Orange County,” according to the DOJ complaint (read it here). “Tribune, after the acquisition of Freedom, would also own four of the top five daily newspapers with highest circulation in Riverside County and monopolize newspapers in that county as well. Tribune’s dominant position in both Orange County and Riverside County would allow it to, among other harmful effects, increase subscription prices and advertising rates to businesses targeting readers in those areas. Overall, Tribune would own the four local daily newspapers with the highest circulation in Southern California.”
Tribune will seek bankruptcy court approval of its acquisition on March 21. According to the department’s complaint, filed in federal district court, the Times and the Register together account for 98 percent of newspaper sales in Orange County, and the Los Angeles Times and Freedom’s newspapers together account for 81 percent of English-language newspaper sales in Riverside County. Tribune’s acquisition of its most significant competitor would give it a monopoly over newspaper sales in each county and allow it to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers.
The DOJ action may be like trying to shut the barn door after the horses have run off. Cities that once supported two or more daily newspapers often have only one today, as consolidation, mergers, shrinking subscriber lists and Internet-crazed advertisers have seen the disappearance of one city paper after the next. The L.A. Times once owned the Dallas Times-Herald, for example. But when the Los Angeles mothership lost a similar suit against the competing Belo-owned Dallas Morning News, its fate was sealed. After a series of ownership changes at the Times-Herald, the Morning News bought the competitor in 1991 and promptly shut it down. Similar scenarios have played out all over the country.
“If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange and Riverside Counties will suffer,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Newspapers continue to play an important role in the dissemination of news and information to readers and remain an important vehicle for advertisers. The Antitrust Division is committed to ensuring that competition in this important industry is protected.”
Tribune Publishing Company is a Delaware corporation headquartered in Chicago. It publishes 11 major daily newspapers across California, Illinois, Florida, Maryland, Connecticut, Virginia and Pennsylvania.