Andy Van De Voorde 
Member since Mar 3, 2010


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Re: “The Next Newspaper Death

I thought this blog string was long over.

But now comes Tim Redmond, late to the party.

It is high comedy indeed to hear Redmond claim that the Bay Guardian didn't really want to sue New Times, and also that its true wish is for San Francisco to have "two competing alternative newspapers."

That has never been the Guardian's wish.

Who said so?

Tim Redmond said so.

Allow me to quote from a 1997 Guardian memo, co-authored by Mr. Redmond himself, and introduced into evidence as part of his own lawsuit.

In a discussion of long-term, big-picture goals for the paper, here's what he wrote:

"Send the guys from Phoenix packing: This is everyone's favorite five-year goal. Force the New Times to admit they can't make it in San Francisco. Make them shut the SF Weekly down and make room for something new."

So there you have it: "Make them shut the SF Weekly down."

That was the goal.

Could it have been stated any more plainly?

And you know what? Fine. Let them try and drive us out of business if that is their intent.

Yet during the trial, a parade of Guardian witnesses raised their hands, took the oath, and then angrily swore that the Weekly was out to get them. We were obsessed with the Guardian, they lamented. New Times was bound and determined to drive them into the sea.

What flaming hypocrisy.

Getting back to that memo, just why did Redmond feel so strongly about destroying the Weekly (beyond the anti-chain "bias" he openly admitted to under oath during the trial)?

A clue is provided when Redmond makes the startling (for him) admission that the SF Weekly was turning out to be a pretty damn good newspaper.

"We're also facing immense competitive challenges," he wrote. "For all our dismissals of the SF Weekly as an out-of-town chain and a cookie-cutter operation, in editorial terms, the SF Weekly is probably the most serious direct competitor we've ever had. The New Times Corp. has more money and more desire to dominate this market than anyone we've ever faced. And unlike many previous competitors, the SF Weekly under New Times has a strong, talented staff and has produced some very good journalism. New Times is in it for the long haul, and it would be foolish for us not to take the competitive threat seriously. Among other things, the SF Weekly is going directly after our core audience and challenging us on our strengths, running major investigative stories and doing regular City Hall coverage, as well as sophisticated arts criticism and well-written lifestyle features."

Note that there's nary a word about advertising pricing or costs. Nothing whatever about below-cost pricing. Instead, when Redmond discusses New Times' supposed "desire to dominate the market," it's squarely in an editorial context. Redmond suggests, quite accurately, that New Times is spending a lot of money in an attempt to produce an editorially superior product. And that worries him.

Gosh. That's exactly what New Times argued at trial. But when our witnesses said it, it was met with eye-rolling and derisive snorts from the gaggle of Guardian employees who often huddled together at the back of the courtroom to view the proceedings. Their behavior often reminded me of that exhibited by police officers who arrive in court and make a loud show of force to support comrades accused of brutality or other misconduct.

Keep in mind that, at the time Redmond praised New Times and the Weekly for their devotion to high-quality investigative and arts coverage, New Times had been in San Francisco for fully two years.

At trial, the Guardian argued that we implemented an aggressive, scorched-earth, below-cost pricing conspiracy from the day we arrived. We were loaded for bear, they said. Yet there's no mention of such a scheme in the memo. And not only that, but Redmond veritably crows about how well the Guardian is doing, and dreams out loud about opening up bureaus across the Bay and even across the country.

Do you mean to tell me that we had been dropping the weekly economic equivalent of hydrogen bombs on the Guardian for two years, and nobody over there so much as noticed?

At trial, if memory serves, the Guardian claimed that it "took a while" for New Times' dastardly plan to take effect. But isn't it remarkable that the Guardian didn't start "noticing" all of this alleged destruction until such things as the dot-com bust and 9/11 had also taken place--and newspapers everywhere were cratering as part of a general decline in print revenues?

How fantastically convenient.

So, you ask, why does this all matter now that a jury verdict has been returned?

For one thing, in my opinion, the jury got it wrong. (Perhaps they were impressed by Bruce Brugmann's humble testimony that Redmond probably was the very best newspaper editor in America, or Redmond's asinine observation that the SF Weekly "has no soul.")

But it's also important because it underscores precisely why not just the U.S. Supreme Court but the five other state appellate courts who've taken up the issue have ruled that "recoupment" is a fundamental element in below-cost pricing claims.

Barring such a requirement, as the courts have noted, it's impossible to tell pro-competitive conduct (low prices, aggressive sales practices, perhaps even internal emails in which people talk about "kicking the competition's ass") from true anti-competitive conduct, which in theory could look exactly the same.

(Why, some misguided soul might even take Redmond's 1997 memo and wrongly attempt to hold it up as evidence of malicious intent!)

It all boils down to this: Unless a company actually can achieve a monopoly--and thus raise its rates high enough to recoup its losses--courts should be extremely skeptical of below-cost pricing claims, for the simple reason that, barring a potential monopoly, low prices are GOOD.

The Guardian told the jury that our "ultimate prize" was precisely that: a monopoly. But it didn't want to actually have to prove it, which is why it argued--and continues to argue--so vigorously against the recoupment principle.

There was never any evidence at trial that the Weekly was driving the Guardian out of business. In fact, when both papers opened their books, it was proven that their revenues followed the same general trajectory: up, up, up during the boom 1990s, and down, down down during the disastrous Bush economy. If the Weekly was really stealing the Guardian's business, why weren't its revenues rising instead of falling?

I might also note that, if Redmond is going to seriously suggest that "consumer groups" are in support of the Guardian's efforts to destroy competition in the name of saving it, I would have to question whether those groups really care about consumers at all.

As Redmond himself openly admits, the Guardian believes it is "radical" to expect it to meet the same standards as businesspeople in the other 49 states, or, for that matter, anyone operating under the jurisdiction of the federal courts. Rather, Brugmann and Redmond prefer that their cozy California cocoon be preserved for their eternal benefit. This way, they are kept safe from well-heeled "outsiders" who dare to compete, while at the same time reserving the right to cloak themselves in politically correct progressive principles.

It is New Times' position that California does not stand alone--that, in fact, the UPA, by implication, requires recoupment. It is hardly extreme to suggest that anti-trust laws must inure to the benefit of consumers, not businesses, or to suggest that the rulings of the U.S. Supreme Court should provide the governing precedent when it comes to such laws in this country.

And as for Redmond's bank-robbery analogy, consider this: If, in his words, "a bank still got robbed" in this case, where did the money go? It certainly didn't go into our pockets; in fact, the Guardian took great delight at trial in pointing out how much money we lost in our efforts to succeed in the Bay Area.

No, in this case, the money went to local advertisers, who benefitted from more affordable prices during a very difficult economic cycle.

That's where the money went.

Those are the people whom the Guardian views as having benefitted at its expense.

And that's what the Guardian finds so infuriating, and why it makes the Orwellian argument that when we benefitted consumers we actually sought to screw them.

Think about that tortured logic the next time you are tempted to buy into the Guardian's self-serving victimology.

Finally, I wasn't being "glib" when I accused the Guardian of trying to stick its hands in my pocket. Redmond can pontificate all he wants about how hard the Guardian works. But it's never worked as hard at anything as it's working to destroy the SF Weekly.

Andy Van De Voorde



Posted by Andy Van De Voorde on 03/12/2010 at 2:08 PM

Re: “The Next Newspaper Death

Bob

We appear to have arrived at a rhetorical impasse, and, if so, that's
fine.

What's not fine is leaving your readers with the impression that we
are playing a "shell game."

So, let me repeat: Neither Village Voice Media Holdings nor Village
Voice Media are defendants in this lawsuit. That is not an opinion or
spin. It's not disingenuous. It is a fact. If VVMH and VVM were defendants,
the Guardian would not have gone to court (a full two years after the trial, I
might add, and after it had every opportunity to sue whomever it
wanted) in a thus-far unsuccessful attempt to have them added to the
judgment.

In fact, last Tuesday, the trial judge vacated all the dates on
the Guardian's Motion to Amend the Judgment, in part because of her
observation that there are serious jurisdictional questions at stake,
especially now that the case has been fully briefed at the appeal level.

If you choose to view this highly complex lawsuit through the prism
of your own "layman's perspective," you are welcome to do so. But you
do your readers a disservice when that "perspective" conflicts with
the relevant facts.

You are right about one thing: We do pride ourselves on producing
investigative journalism that ferrets out the truth. As I have
explained in my previous posts, SF Weekly's willingness to spend
money doing just that was used against it at trial by the
journalistic porch-sitters at the Bay Guardian, who would rather
stick their hands in somebody else's pocket than work for a living.

The only thing the Weekly or New Times Media were guilty of in San
Francisco was competing. We believe that, ultimately, the courts will
agree with us on that point.

One last thing on the question of corporate structure, Bob: Perhaps
your readers may find it interesting that your present publisher at
the Express, Jody Colley, is a former Bay Guardian employee who
testified against the Weekly and New Times during the 2008 trial.

According to Ms. Colley's trial testimony, one of her jobs at the
Guardian was gathering account information that the paper could
use in its effort to get a large cash judgment from the SF Weekly.
She also testified that, having moved over to the Express, she
planned to wind down the Express's business relationship with
the Weekly and that she was open to "combo buys" with her old
friends at the Guardian, whom she liked and respected.

Further, it came out during testimony that Ms. Colley authored an
internal Guardian email in 2005 in which she shared with Guardian editor Tim
Redmond her observation that it was "always fun" to "make the SF
Weekly look bad."

When Weekly attorney Ivo Labar asked about this, she said it was a joke.

Labar then noted that, in the same email, she expressed her hope
that a letter she proposed to send to advertisers would make "the Bay
Guardian sound strong, not like a paper with a circulation decrease struggling
and suing to stay in business."

When the Weekly attorney asked her about this, she responded that
this, too, was a joke.

That prompted the following exchange:

Labar: "And did you joke a lot about the paper having a circulation
decrease and suing to stay in business?

Colley: "No, I did not joke a lot about that. It's not actually funny."

Everybody has a corporate structure, Bob. We've never made a secret of ours.

Andy Van De Voorde

Posted by Andy Van De Voorde on 03/07/2010 at 1:05 PM

Re: “The Next Newspaper Death

Bob

Thanks for calling me a smart guy. I think you're a smart guy, too. But facts are facts.

Village Voice Media was not and is not a defendant in this case, period. That is not a silly argument, it is an irrefutable truth. It is true that the Bay Guardian, as part of its ongoing efforts to get money before the Court of Appeal has had a chance to rule on the underlying merits of the case, has asked a judge to add VVM as a defendant. But the judge hasn't done it and the motion has yet to be briefed. I'm not sure why you would say we've "gotten nowhere in court" with this argument. We haven't even had a chance to make the argument.
Given that VVM is not a defendant, it certainly is rank speculation to start imagining scenarios where papers are sold off. This sort of talk is directly from the Guardian's playbook: part of a toxic public-relations effort to damage our company as much as possible before the higher court has ruled.
When you say "it's simple," you remind me of Guardian attorney Ralph Alldredge, who continually repeated that phrase during trial as he wooed a jury with emotional, anti-chain arguments.
But this isn't a "simple" case. It's a complex case, made so in part because of the Guardian's seemingly unending flurry of assorted legal tactics.
You accuse me of being ridiculous on this question of the Weekly "effectively admitting" it sold ads below-cost. It's true that the Weekly lost a lot of money competing in San Francisco. Based on that standard, I suppose you could make the argument that ALL the ads were below cost. Simple, right? But, in fact, as I mentioned before, every time the Guardian tried to actually tie its alleged damages to specific transactions, it failed.
The evidence also showed that the Weekly's prices went up, up and up after the paper was purchased by New Times, and that our salespeople made every effort to get as much money as they could for the ads. The only reason the question of "cost" became an issue was that New Times spent a lot more money on hiring journalists than the previous owners. And it continued to do so, even in a difficult economy, because of its belief in the importance of such work.
To have another newspaper company--and, yes the Bay Guardian is a company, too--then portray this spending on salaries and benefits as if it were part of some sort of anti-trust conspiracy was mind-boggling.
The Guardian's argument, boiled down to its essence, was that we should have avoided selling "below cost" by either firing journalists or engaging in price-fixing (at least twice during trial, Guardian attorneys openly suggested that the Weekly should have just raised its prices to the level of the Guardian's "and let the customer decide"). Either that, I suppose, or we had a duty to go out of business.
With regard to the appeal, I fail to see how I'm "trying to have it both ways." You don't get to just reargue the facts of the case in an appeal, you must present evidence of judicial error. The fact is that the U.S. Supreme Court and every other state appellate court that has addressed the issue has ruled that recoupment should be an essential element of these cases. It is patently absurd that the same case that would be thrown out on summary judgment in federal court can produce a $16 million judgment in a state court around the block.
Lastly, Bob, I make no apology for continuing to "contest the merits of the original trial." They damn well ought to be contested. I sat through that trial, and I watched a plaintiff walk into court with zero evidence and a bad attitude and walk out with a Sumo-sized judgment. If pointing that out while also noting the overarching legal defects in the Guardian's case somehow constitutes trying to have it both ways, consider me guilty.

Posted by Andy Van De Voorde on 03/04/2010 at 8:30 AM

Re: “The Next Newspaper Death

I spent the better part of an hour talking with Bob Gammon about the Bay Guardian's lawsuit against the SF Weekly. That's why I'm so disappointed that the resulting story betrays a fundamental misunderstanding of key elements in the case. For your readers' edification:

-- In his discussion of why the defendants in the case haven't posted an appeal bond, Gammons confuses the identity of those defendants. I told Bob that the defendants, SF Weekly and New Times Media, lack the financial resources to post an onerous $30 million bond. That much is true. His story, however, implies that I was talking about "my company," Village Voice Media when I made those remarks. In fact, VVM is not, and has never been, a defendant in this case. This error was compounded when the story went on to imply that VVM can't get a loan to post a bond because it lacks collateral. This is a fundamental inaccuracy, and it's also a moot point--again, because VVM is not a defendant in this litigation.

-- At least three times in the story, Bob engages in rank speculation as to whether VVM would "sell off" some of its other newspapers in order to satisfy the judgment. Putting aside that all of those newspapers are separately organized entities which had nothing to do with this San Francisco lawsuit, it's only upon the third reference that we see where this speculation is actually coming from: The Guardian's own attorney. Jay D. Adkisson can pontificate all he wants about VVM's hypothetical activities, but this particular scenario is ludicrous, and it's nonsensical to write, as Bob did, that this fantasy of Adkisson's is "a safe bet." It's not a safe bet at all. It's a sucker's bet.

-- Bob writes that SF Weekly "effectively admitted it sold ads at below cost" during the trial. Actually, what SF Weekly said was that it took as much as it could get for ads in a highly competitive market.

-- Bob writes that SF Weekly "lowered prices first" in its war with the Guardian. In fact, the Weekly raised its prices from the time it was purchased by New Times. It is also worth pointing out that the Weekly was the newer, smaller paper, and had a lower circulation. Wouldn't it naturally have had lower prices overall?

-- Bob refers to the Weekly engaging in "steep price cutting." What the evidence showed was that the Weekly was a price-TAKER--in other words, that it got as much as it could for its ads--again, in an extremely competitive market. Every time the Guardian tried to tie its alleged "losses" to actual customer transactions, its efforts blew up in its face, including Guardian comptroller Sandy Lange's infamous lament that the Guardian had lost the business of a customer who, it turned out, had died.

-- Bob chose to lead his story with the notion that the Weekly could be driven out of business by this lawsuit. As I told Bob repeatedly during our conversation, we fully expect to prevail on appeal, based on the strength of our legal arguments. We will appeal the case to the California Supreme Court if necessary. It is true that, if, after every legal avenue has been exhausted, and the Weekly is saddled with a $21 million judgment, that crushing burden would effectively destroy the paper. But such an outcome is highly unlikely.

-- Finally, I couldn't help noticing the comment from Guardian editor Tim Redmond that, should the Guardian lose on appeal, it would "struggle" on. I think a reasonable person could be forgiven for wondering whether, under such a scenario, the Guardian might face much less of a struggle had it not opted to spend millions of dollars prosecuting a groundless lawsuit.

I do appreciate Bob noting that the Guardian's venal and premature collection efforts are not nearly as important as the legal arguments that serve as the foundation of our appeal. Our argument--that anti-trust laws exist for the benefit of consumers, not for the benefit of entrenched businesses--is critical to our case, and I thank Bob for getting it right.

Andy Van De Voorde
Executive Associate Editor
Village Voice Media

Posted by Andy Van De Voorde on 03/03/2010 at 2:44 PM

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