McGuire on Media

Tucson Citizen case should stop here

The judge in the Tucson Citizen case did exactly what I think he had to do when he rejected Arizona Attorney General Terry Goddard’s request for a restraining order. AP Reporter Art Rotstein wrote: “Collins’ ruling denied the state a temporary restraining order, but the state is entitled to continue with its lawsuit alleging antitrust violations. The attorney general’s office hasn’t decided whether to file an appeal.” According to my friend and colleague, Steve Elliott, the judge basically said, “go away.” Steve’s blog will lead you to all the documents in the case. They make great reading.

I hope Goddard drops the case now. It is a non-starter in today’s multi-media world. I have been saying for months that the elements for anti-trust no longer exist in the newspaper business, and I still think I am correct.  I realize that last month the Obama Administration rejected this contention with this language: “Newspapers, however rare and financially weak, can adapt and ultimately conquer the threat posed by the Internet,” the Justice Department’s Carl Shapiro told a House panel.  I think the Department of Justice was wrong. Any adaptation will merely allow newspapers to survive, it will not not allow them to “conquer the threat.”

Phil Meyer in his book The Vanishing Newspaper wrote about newspapers controlling the “advertising tollgate.” In 1995 Meyer wrote this in American Journalism Review : “U.S. newspaper publishers are like the Savoy family because a monopoly paper is a tollgate through which information passes between the local retailers and their customers. For most of this century that bottleneck has been virtually absolute. Owning the newspaper was like having the power to levy a sales tax. ”

That’s why there were times in my career when certain rate categories at my newspaper went up at double digit rates. That’s why one newspaper publisher in my memory threatened the customers of an upstart shopper that if they didn’t stop advertising in that shopper they wouldn’t be allowed to advertise in his newspaper.  Now that was anti-trust behavior, and that publisher got hammered by the courts for his efforts. That could not happen in most newspaper markets today because advertisers, brimming with options, would laugh at such threats.  The local newspaper simply does not control the tollgate anymore.  Witness the Amish Furniture ads and the full-page ads for coin dealers. That immediately tells you all you need to know about eroding rates.

A friend of mine this morning was trying to play devil’s advocate on the part of the Citizen and Goddard.  He said “let’s imagine there are two coffee shops in town and you and I own them. I come to you and offer to buy you out and give you 50 percent of the future profits (that is allegedly similar to the Lee Newspaper/ Gannett deal in Tucson.) Are you trying to tell me,” my friend asked, ” that isn’t anti-trust behavior.”

I said, “it certainly is not anti-trust behavior if there are 50 other shops in town who are selling a magical new beverage that is more refreshing, and far tastier than coffee—a beverage that makes our coffee look like mud. In that case the new beverage shop owners and customers could care less about what we do with our silly, antiquated coffee business.” And that is exactly the situation newspapers are in right now.

There are simply too many alternatives for advertisers and information consumers for newspaper actions in the marketplace to matter much. When every newspaper action affected the commercial marketplace regulation was important and necessary. Until and unless newspaper reinvention can put newspapers back in some position similar to the troll commanding the tollgate, anti trust for newspapers should be considered dead. I am not holding my breath that newspapers will ever again play the role of a tollgate troll.

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