Real Estate Investor Sues to Block Sale of Papers

Posted 16 July 2006 @ 11:21 pm EET     Print     Reprint     E-Mail     Comments

SAN FRANCISCO (AP) - A millionaire real estate investor filed an antitrust lawsuit Friday in federal court to block McClatchy Co.'s plan to sell three Bay Area newspapers to MediaNews Group Inc.

Click to Enlarge A sign in front of the San Jose Mercury News newspaper office, owned by ...

Clinton Reilly claimed the $737 million deal to cast off the San Jose Mercury News, Contra Costa Times and Monterey Herald as part of the acquisition of Knight Ridder Inc. would eliminate newspaper competition in the San Francisco Bay area, attorney Joseph A. Alioto said.

"The hope is to convince these very powerful people and influential people that competition is much better than monopoly," Alioto said.

The lawsuit names as defendants MediaNews Group, publisher of The Oakland Tribune and other newspapers; the Hearst Corp., which publishes the Chronicle; Gannett Corp. and Stephens Media Group, a privately held a company.

Sacramento, Calif.-based McClatchy reached an agreement in April to sell the three San Francisco Bay area papers to MediaNews with backing from Hearst and the other publishers.

Reilly's challenge comes six years after he turned the sale of the San Francisco Chronicle into a legal marathon. He tried to block Hearst from acquiring the San Francisco Chronicle in 2000, but a judge rejected his claims that the sale created a monopoly for Hearst, which already owned the rival San Francisco Examiner. The litigation delayed and complicated the deal.

The McClatchy deal, which is under review by the U.S. Justice Department and California's attorney general, would create a monopoly that would drive up newspaper prices, harm the quality of news coverage and reduce jobs in the industry, Alioto said.

MediaNews owns 22 newspapers in Northern California, including the Tribune, the Marin Independent Journal and The Vacaville Reporter.

Reilly plans to seek an injunction against the completion of the sale if the Justice Department approves the deal and is willing to take the case to trial, Alioto said.

Lawyers and spokespeople for MediaNews and Hearst did not return calls for comment Friday. A spokeswoman for Gannett did not immediately return an after-hours call, and an after-hours call to Stephens Media president Sherman Frederick went unanswered.

MediaNews President Jody Lodovic has said sale would create "virtually no overlap" in terms of circulation with the papers the company already owns.