Tuesday, August 26, 2008

Singleton sues rival for selling below cost ads

Dean Singleton, the Bay Area's biggest publisher of daily newspapers, is suing a competitor in Humboldt County for supposedly selling below cost advertising, a violation of California law.

Typically in such cases, a small independent paper sues its chain-owned competitor for doing such things. An example is the Bay Guardian's successful lawsuit against the Village Voice Media chain, which a jury found was selling below cost ads in the SF Weekly to run the Guardian out of business. The Guardian was awarded $15.9 million, which is now on appeal.

In the Humboldt County case, the David and Goliath roles are reversed. Singleton's MediaNews Group owns Eureka's Times-Standard, a paid-circulation daily, and the Tri-City Weekly, a shopper. A local banker, Rob Arkley, started a free daily, the Eureka Reporter, in 2004 because he felt the Singleton-owned paper wasn't providing enough local news.

The civil suit seeks a jury trial and the recovery of $3 million in lost advertising revenue and $40 million in economic damages from depressed value to the Times-Standard and Tri-City Weekly, as well as a court order to prohibit its competitor from engaging in any alleged unlawful, unfair and deceptive business practices, according to the Eureka Reporter's story about the lawsuit.

According to the Times-Standard's story, the complaint claims The Eureka Reporter undercuts ad costs, “with the intent to eliminate the Times-Standard and Tri-City Weekly as competitors and destroy competition.” It further alleges that The Eureka Reporter's financiers “are willing to subsidize the (company's) losses ... in an effort to economically cripple The Times-Standard and the Tri-City Weekly.”

The two newspapers have been embroiled in a separate lawsuit over legal notices, with the Times-Standard arguing that the Reporter doesn't fit the state's criteria to print them. An appeals court agreed with the Singleton paper and the Eureka Reporter has been forced to stop printing the notices.

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