Judge denies AG’s attempt to keep Citizen publishingby Mark B. Evans on May. 19, 2009, under Local, Special
U.S. District Judge Raner Collins Tuesday denied Arizona Attorney General Terry Goddard’s request for a temporary restraining order against Gannett Co. Inc. to force the company to resume printing the Tucson Citizen.
Gannett announced Friday that it would no longer publish a print version of the Tucson Citizen but would continue a modified Web site of daily commentary and opinion with a weekly insert of editorial content appearing in the Arizona Daily Star.
Goddard filed the suit late Friday, claiming Gannett, publisher of the Tucson Citizen, and Lee Enterprises, publisher of the Arizona Daily Star, were attempting to silence a news voice in a community in violation of the Newspaper Preservation Act.
In order to convince the judge to grant the restraining order, the state had to show that there would be irreparable harm caused by the continued cessation of the printed Citizen and that the state had a reasonable chance of succeeding on the merits of its case – that Gannett and Lee were acting in an anticompetitive way.
Collins said in his ruling:
“The Court finds at this point the plaintiff has failed to show the likelihood of success at trial that the defendant committed an antitrust violation that caused irreparable harm by closing the Tucson Citizen. While regrettable that the Citizen’s illustrious legacy must come to end, it can not be said at this time, the decision to close the Citizen involves an anti-trust violation. The Court can not say at this point in time that there is a violation of the Newspaper Preservation Act. While, it is true the closing of the Citizen is an irreparable harm, the plaintiff has failed to show the balance of hardships weighs in their favor.
“Evidence at this time does not show a ready and willing buyer to pay the fair and reasonable liquidation value of the Tucson Citizen assets.
“If the Court were to apply the failing company test, the Citizen would qualify.”
Federal case law allows a paper operating with antitrust exemption to shut down if its parent company can demonstrate that it is losing money and no one wanted to buy it.
In court Monday, Nancy M. Bonnell, antitrust unit chief for the Attorney General’s Office, argued that there was a buyer for the Citizen, a Santa Monica, Calif., based newspaper company, that had offered as much as $400,000 paid out over time for the Citizen but the offer was rejected.
Gordon Lang, attorney for Gannett, said the offer was far to low and cited an appraisal of the paper done while the U.S. Department of Justice was investigating Gannett’s and Lee’s efforts to stop publishing a printed Citizen. The appraisal said the assets of the paper, absent the interest in the JOA, were worth about $760,000.
The Justice Department signed off on the Citizen’s publication cessation Thursday and closed its investigation, a DOJ spokeswoman said Friday.
The Newspaper Preservation Act, passed in 1970, provides an exemption to antitrust laws for newspapers operating jointly in the hopes of increasing editorial diversity in cities and towns. The Star and the Citizen have had a joint operating agreement since 1940. That agreement was terminated Saturday, although the two companies will continue as business partners in Tucson Newspapers, a subsidiary that handles all noneditorial operations for both papers.
Lee and Gannett will continue to share equally in the operating costs and profits of Tucson Newspapers, also known as TNI Partners, just as they did with the JOA, CEO Mike Jameson said Friday. TNI, though, will no longer receive the limited antitrust immunity offered JOAs under the Newspaper Preservation Act.
Bonnell said Gannett and Lee have benefited from the antitrust exemption but now the “two competitors have come to an anticompetitive agreement.”
She argued that by closing the Citizen, the profits of the two companies would increase after having been freed from the operating costs of the Citizen. She said that would in essence be the same as Lee paying Gannett not to publish, something a federal court said was anitcompetitive in a similar case in Hawaii in 2000.
Attorneys for Lee and Gannett, however, argued that the Citizen was a failing paper, losing as much as $10,000 a day and was drag on the partnership.
They also argued that while Gannett has ceased a print publication, its web site remains and is being converted to a portal for community debate and commentary, even noting to the judge that Citizen staffers were in the courtroom covering the hearing.
On the Web
Read Judge Collins’ ruling: