Judge halts sale of Register, Press-Enterprise to Tribune Publishing – LA Daily News
A federal judge late Friday halted the sale of the Orange County Register and the Riverside Press-Enterprise to Tribune Publishing owner of the Los Angeles Times.
Judge Andre Birotte approved a Department of Justice request for a temporary restraining order on the acquisition, finding that antitrust concerns raised by the government are valid.
â€œTribuneâ€™s acquisition of the Register will increase its control of local daily newspaper circulation from 41 percent to 98 percent in Orange County, and Tribuneâ€™s acquisition of the Press-Enterprise and Register would increase its share of local daily newspapers from 12 percent to over 81 percent in Riverside County,â€ Birotte said in his opinion. â€œSuch a concentration clearly constitutes a threat to competition and would likely have adverse effects on consumers in the market as whole.â€
Tribune on Wednesday won an auction for the Register, Press-Enterprise and other assets of bankrupt Freedom Communications with a bid of $56 million. Digital First Media, which owns nine daily newspapers in Southern California, including this one, also bid on the assets. A third group made up of private investors and led by current Freedom CEO Rich Mirman walked out of the auction after a contentious day in which the bidding had been repeatedly delayed.
The Department of Justice filed a lawsuit and sought a restraining order on Thursday.
â€œWithout such an order, Tribune will take control of The Register and Press-Enterprise newspapers, immediately harming consumers through this lost competition,â€ the departmentâ€™s motion continues. â€œTribune could also begin to integrate its newly acquired assets into those of the Los Angeles Times and take actions at odds with preserving a competitive marketplace, including accessing Freedomâ€™s confidential competitive information, firing employees, and shuttering operations.â€
On Friday, Tribune refuted federal antitrust concerns in its own legal filing, arguing that newspaper monopolies are outdated.
â€œIn this day and age, newspapers cannot be reasonably considered to be their own relevant product market, notwithstanding the cases from the 1950s and 1960s cited by the government,â€ Tribuneâ€™s lawyers wrote.
Tribune argued that the advent of the internet and social media made it possible for the public to get news and information from a variety of sources other than local newspapers.
In other words, Tribuneâ€™s brief reads in part, â€œtechnology has fundamentally altered the place of newspapers in American society.â€
â€œThe Internet has exploded with new news and information sites. If readers want news on any particular topic, they can look to Google News, Apple News, numerous search engines, or various media. For local news in Orange County, they can turn to numerous on-line local sources,â€ the brief reads in part. â€œFor leading national or international news, they can easily look to a world of sources, from the New York Times to CNNâ€™s web site to the Financial Times or BBC in London to sites in most every major city. For business news, they can easily click on the Wall Street Journal or MarketWatch or CNBC or Forbes or Yahoo Business. For classifieds they can look to Craigslist. For better or worse, the court and the government need only look at the phone in their pocket to understand that the trend toward digital content is accelerating.â€
â€œTo the Courtâ€™s knowledge neither Google News, Apple News, nor â€˜search enginesâ€™ themselves generate local content,â€ the judge wrote. â€œRather, news aggregator sites primarily post links to stories on the websites of other content generators â€“ including local newspapers like the Register or the Press-Enterprise. That other websites post links to local sites only demonstrates that local newspapers continue to serve a unique function in the marketplace: they are the creators of local content.â€
In their brief, Tribune attorneys also argued that a delay in the sale would force Tribune out and result in Freedomâ€™s assets going to the next-in-line bidder, Digital First Media, as Freedomâ€™s funding runs out at the end of March.
A hearing is scheduled in Santa Ana on Monday to approve the sale of Freedomâ€™s assets. That hearing is still expected to take place, though its outcome is uncertain.
â€œIf Tribune cannot close by March 31 â€“ the date on which Freedom has told the bankruptcy court it must close the sale or risk liquidation â€“ then Freedom must revert to the next bidderâ€™s back-up bid, which affords between $3 million and $13 million less value to Freedomâ€™s bankruptcy estate,â€ Tribune attorneys wrote in their brief.
Birotte recognized that a delay might cause harm to Tribune but agreed with federal prosecutors that Tribune knew antitrust issues would arise and should have contacted government authorities earlier.
â€œTribune could have avoided the risk of harm altogether by vetting the acquisition with the government ahead of time,â€ he wrote.
â€œIt may be that Tribune will lose the opportunity to acquire the Register and Press-Enterprise in favor of the second place bidder,â€ he wrote. â€œHowever, this private harm does not outweigh the public interest in the preservation of competition, especially given the governmentâ€™s likelihood of success on the merits.â€
Birotte set a hearing for March 28 at which attorneys for the government are expected to argue in for an injunction to prohibit the sale.
â€œThe public interest and the balance of hardships inquiries are interrelated and both weigh in favor of an injunction,â€ Birotte wrote. â€œThe Court finds this especially applicable here where the consumer access to local news is at stake. Newspapers â€“ indeed, local ones â€“ are important to a healthy democracy.â€
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