The chief executive of MediaNews Group, corporate parent of the Times-Standard, is a Texas-born, Denver-based media legend by the name of Dean Singleton. Singleton is a fearsome figure in the business, a man who leaves a trail of corpses in his wake wherever he wanders. He doesn't customarily do things by half, unless that thing is operating one of his hundreds of shoddy and starved newspapers.
So it wasn't at all surprising that he finally did the expected thing and filed a massive, $120 million slap-down lawsuit against the Eureka Reporter, the four-year-old crosstown rival founded by local financial magnate Rob Arkley. The lawsuit charges that Arkley -- named in the initial charges as a "John Doe" -- has set out to destroy the Times-Standard, subsidizing its operations at a loss and selling advertising below cost with the express purpose of wiping the competition off the map. The suit follows the path blazed by the San Francisco Bay Guardian, which won a similarly worded case against its rival, the SF Weekly, earlier this year.
People involved in the industry locally have been waiting for MediaNews to file this lawsuit for a long while. It is said that Singleton takes unusual interest in goings-on involving his Humboldt County properties. Legend would have it that he reads the Times-Standard every day, one of the very few of his papers so blessed. We are one of the very last places in the country to host an old-fashioned newspaper war, and it is to be expected that a latter-day press baron of Singleton's mold would be drawn into it. So what if the stakes are low? This is the only table still open for business.
We spectators are lucky, in that the upcoming bout -- which will stretch on for years and years -- is just about evenly matched. Arkley is a man of identical temperament and comparable resources. He will not willingly back down. If anything, he can be expected to throw just about everything he can back at the Coloradan. Expect countersuits. Expect punches below the belt. Expect attorneys of an exceedingly rare vintage. Expect them to shovel mountains of dirt into the case file.
Here in the preliminary phases, the case is simple to describe. Singleton's attorneys -- a firm out of La Jolla with a specialty in media law -- charges five counts against the Reporter and its owners, all of which more or less boil down to one thing: unfair and illegal business practices. Essentially it charges that the Reporter is not and will never be a legitimate business; its utility, to its owner, is that of a weapon against MediaNews and its Eureka-based affiliates, the T-S and the Tri-City Weekly, to which Arkley allegedly bears some animus unnamed in the initial suit.
"The actions of the Eureka Reporter in selling display and classified advertising below its cost of doing business," the suit claims, "were intended to economically injure the Times-Standard and the Tri-City Weeklyof their advertising customers." The Reporter, the suit alleges, targeted Times-Standard and Tri-Citycustomers, offering them rates at a price that did not even recoup the Reporter's internal costs. In total, the suit claims, these actions have cost the T-Saround $3 million in revenue and depressed the values of MediaNews' local properties by a total of $40 million. In accordance with state law, MediaNews asks for three times this amount -- $120 million -- in damages.
It's not enough to simply sell ads below cost -- it has to be done with the intent to injure, and with no intention of ever turning a profit. Why would Arkley throw millions of dollars away on the Reporter simply as a way of damaging the Times-Standard? The case is mum on the subject; its current documentation is skeletal, and will be added in the coming months. What is well known is that Arkley is a man of fierce passions, and at times in the past has been given to venting those passions over e-mail. Several Times-Standard staffers have been on the receiving end of those e-mails, over the years. The Reporter was born shortly after the Times-Standard endorsed Arkley's wife's rival in her race for mayor of Eureka. Look for MediaNews to present some of these e-mails in the case file; if Arkley turns out to have made specific threats against the Times-Standard -- to "destroy" it, say -- MediaNews' case is thus strengthened.
The Reporter has signed up San Francisco attorney Ralph Alldredge to handle its case. This is significant because Alldredge was the lead attorney for the San Francisco Bay Guardianin its pioneering suit against the SF Weekly and its parent, Village Voice Media, which resulted in a $15 million award for the Bay Guardian. The Bay Guardian had charged that the Village Voice chain (then called New Times, Inc.) subsidized the operation of the Weekly in order to put the Guardian out of business, at which point it would have the only alternative weekly in town. Alldredge and his co-counsel convinced the jury that it was so. Now he's ready to argue the other side in what would seem to be a very similar case.
But are they so similar? Not at all, says Bruce Brugmann, owner and publisher of the Bay Guardian. Brugmann said that he wasn't completely familiar with the particulars of the case up here, though he had heard tell of it. And from what he had heard, it seemed that the cases were completely distinct.
"The whole idea of the act -- the unfair practices act -- was to help protect a small newspaper against the big chain," he said last week. "That's why the Guardian prevailed here, because we were protecting ourselves against the big chain out in Phoenix.
"Up there, Singleton is the big chain, right? And the Reporter is the locally owned paper, right? So what Singleton is doing is trying a jujitsu move here, so the big national chain is trying to use the act to knock out a locally-owned, independent and competitive paper.
"It's a totally different case. It's a totally different situation than the Guardian."
The Brugmann analysis may not take into consideration the fact that the Reporter, in fact, has had access to resources similar to those that Singleton has had. But many local business owners will be happy to stand up and testify on grounds similar to those Brugmann has offered. Before the Reporter, Times-Standard ad rates were obscenely high, and the excess money was shipped back to MediaNews HQ. In fact -- and though the Times-Standardis now beyond a doubt the superior paper, editorially -- there's no reason to doubt that Singleton continues to take cream off the top. Those $3 million in losses are hislosses, not the Times-Standard's.
Coincidentally, former T-S staff writer Kimberly Wear, a smart and hard-working young journalist, was just named managing editor of that paper. Both papers are now helmed by capable young women. It's hard to say whether this pissing match between their zillionaire Republican patrons ends up spoiling their tenure or making it. The latter is to be devoutly wished for, and is probably more likely. This is going to be an enlightening lawsuit, and a beautiful thing to witness.