Judge halts Hearst, MediaNews joint efforts

U.S. District Judge Susan Illston yesterday extended an order she issued Nov. 28 that bars the Chroncle's owner and the owner of the San Jose Mercury News and other Bay Area papers from jointly selling national or Internet ads, or consolidating their distribution departments. The order was requested by Joe Alioto, the attorney for San Francisco businessman Clint Reilly (pictured), who is suing the newspaper companies, claiming they are violating antitrust laws by fixing advertising prices and consolidating distribution departments. Illston extended the ban until April 30 when Reilly's lawsuit against Hearst and MediaNews Group goes to trial in San Francisco.

Illston was surprised at an earlier hearing when Alioto produced a April 26 letter signed by Hearst and MediaNews executives that showed the two companies planned to collaborate on selling national advertising, Internet ads and distribution. The judge had claimed previously they had no intention of pursuing a joint venture. The judge indicated she had been misled.

"The April 26 letter is in the form of a potentially binding agreement, and defendants have expressed the desire, if not the intent, to pursue cooperative agreements discussed in the letter," Illston wrote in yesterday's order. "The Court therefore wants to leave no confusion as to its expectation that defendants will comply with their stated intent not to pursue any of the agreements at issue; the only way to do so definitively is to issue the preliminary injunction."

Alioto yesterday ridiculed the companies' assertions that they were not planning to collaborate. "You'd have to believe in the tooth fairy before you could believe in that,'' he said.

Illston has made it clear previously that she has the authority to un-do MediaNews' purchase of the Mercury News and Contra Costa Times if she finds that those newspapers were purchased with the intent to violate antitrust laws.

The order only applies to the two companies Bay Area activities and doesn't stop Hearst from buying the 68,000-circulation Torrence Daily Breeze in suburban L.A. and giving the paper to MediaNews to operate. That $25 million deal closed on Friday. Bloomberg: Hearst, MediaNews plan to jointly sell ads is haltedBay City News: Federal judge freezes MediaNews/Chronicle tiesChronicle: Hearst-MediaNews ruling extended Sacramento Business Journal: Judge blocks Bay Area newspaper agreement Mercury News: Papers must delay joint effort; ads, circulation hinge on April antittrust trial