Sunday, April 8, 2007

Judge 'inclined' to let Reilly sue chains

U.S. District Judge Susan Illston (right) said Friday (April 6) that she is "inclined" to rule that San Francisco businessman Clint Reilly (left) has standing to challenge MediaNews Group's $736.8 million purchase of the Contra Costa Times and San Jose Mercury News. Such a ruling would clear the way for an April 30 trial over Reilly's allegations that MediaNews and Hearst Corp. are conspiring to create a Bay Area newspaper monopoly that would result in massive layoffs and higher ad rates.

Bloomberg quoted Joe Allito, Reilly's attorney, as telling the judge that MediaNews is "firing reporters left and right, and they're shutting down plants." The companies have acknowledged in court filings that, "when we don't have to compete anymore we can stabilize circulation and raise prices," Allito said.

According to the Chronicle account of the hearing, Illston said the question of whether Reilly has standing is difficult to determine. The newspapers have argued that Reilly won't personally be injured by the consolidation, and thus doesn't have a right to sue. "Mr. Reilly's injury here is pure speculation," said MediaNews attorney Gary Halling.

Illston pointed out that another judge allowed Reilly to sue in 2000 to challenge Hearst's $660 million purchase of the Chronicle. Although Reilly was unable to block the deal, Hearst failed to have the suit dismissed for lack of standing, and was required to subsidize the new owner of its former newspaper, the Examiner, before gaining federal approval to buy the Chronicle.

• Press Club, March 19: Chains tell readers to butt out of dispute

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