Antitrust Concerns Could Slow Media News’ Bid for L.A. Times

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William Dean Singleton’s Media-News Group owns eight newspapers that ring downtown Los Angeles, and with reports of the company talking to Tribune Co. owner of the Los Angeles Times about purchasing assets, the group could buy the center of the doughnut, too.


But the buyout could run afoul of anti-trust regulators, according to Ted Bolema, a former attorney with the Justice Department’s Antitrust Division and now a professor at Central Michigan University. “I would expect that this transaction is likely to attract a challenge from my former agency,” he said.


According to Bolema, the Justice Department looks at two aspects of a newspaper deal: the geographic overlap between the merging papers’ markets, and the availability of alternatives. They consider the market for both newspaper subscribers and advertisers.


Earlier this year, Justice looked at the potentially monopolistic effects of MediaNews’ purchase of two Northern California papers, the San Jose Mercury News and Contra Costa Times. Media News already owned the Tribune and Alameda Times Star in Oakland, leaving the Hearst Corp.’s San Francisco Chronicle the only significant competition.


Nonetheless, the Justice Department approved the deal, noting “MediaNews will continue to face competition for the sale of newspapers and newspaper advertising in the East Bay.”


But the Los Angeles situation is different because two MediaNews properties, the Daily News in Woodland Hills and Press-Telegram in Long Beach, have significant circulations. “This one raises different issues because Singleton is a more direct competitor to the Times,” Bolema said.


The decision would become more even more complex if Media News were to purchase the South Bay Daily Breeze, which Copley Press Inc. is selling and Singleton is known to covet.


If regulators find too much overlap and too little alternatives for consumers or advertisers, they could nix the deal or, more likely, require the divestiture of one of more newspapers. That solution worked earlier this year in the Minneapolis market when the McClatchy and Knight-Ridder merger would have nearly eliminated local competition.


As for the argument that the Internet and electronic media negate the effects of a print monopoly, the Justice Department doesn’t buy it. “I think they’re sticking with the definition that newspapers are a distinct market and the Internet is not a good enough substitute at least not yet,” Bolema said.



Telemundo Files Complaint

Telemundo, the Spanish-language TV network owned by NBC Universal, has filed an informal complaint against renewal for the broadcast license of rival KAZA-TV (Channel 54) in Avalon. KAZA is the flagship station of Azteca America, a Mexico City-based network that competes against Telemundo and Los Angeles-based Univision Communications.


The complaint alleges that Azteca effectively owns 51 percent and controls KAZA. Non-U.S. companies are forbidden from owning U.S. broadcast stations under federal law.


The actual owner of KAZA is Pappas Telecasting in Visalia. Three years ago, Azteca loaned Pappas $129 million to buy stations in Houston, San Francisco and Los Angeles. Later, Pappas rented the stations to Azteca. Currently Azteca both runs the stations and supplies their programming.


The deal also included an option by Azteca to buy KAZA for $250 million. The $129 million loan matched against the total value for KAZA yields the claim of 51 percent effective ownership.


Azteca responds that such operating agreements are common and standard in the TV industry. “There is no legal merit to these complaints and that this is merely a PR ploy to damage the image of TV Azteca and its subsidiaries due to the strong operations and growth we are experiencing in the U.S. Hispanic market,” the company said in an e-mail.


A second section of the complaint alleges that Azteca lacks the “character qualifications” to own a U.S. broadcast station due to investment fraud and “strong-arm tactics” designed to exclude Telemundo from competing in Mexico. As a result, an Azteca-controlled station is “inconsistent with the public interest,” the complaint states.



News & Notes

In the slanguage employed by Hollywood trade paper Daily Variety, studio and network executives are never fired, they “ankle.” The term refers to the part of the body you see when someone walks away and is ambiguous by design. The Hollywood Reporter’s Vice President of Content Matthew King exited his post at the end of November and Editorial Director Howard Burns left last week. Burns dispensed with any ambiguity when he addressed his staff a final time. “If I told you this was voluntary, I’d be lying,” he said. Both men reported to new Publisher John Kilcullen, who replaced Tony Uphoff on Oct. 10. Roher Public Relations in Woodland Hills has won four new accounts. Roher will handle marketing for All Media Guide, a provider of content management technology for recorded entertainment. LifebankUSA, a division of Celgene Corp., put Roher in charge of launching PlacentaCord, the world’s first private bank of placenta-derived stem cells. Also, Roher will handle strategic planning for real estate firm Rosenberg & Estis and electronics manufacturer SiRAS. M & C; Saatchi LA has moved into new offices 2032 Broadway in Santa Monica. At an open house in its Culver City offices, ad agency WongDoody briefed clients on its business innovation practice and the opportunities they see in the decline of traditional TV.



Staff reporter Joel Russell can be reached at

[email protected]

, or at (323) 549-5225, ext. 237.

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