Thursday, August 12, 2010

Appeals Court Upholds Ruling Against SF Weekly; Papers Apparently Settle Case

By Stephen Buel
Thu, Aug 12, 2010 at 10:33 AM

A state appeals court has unanimously upheld the San Francisco Bay Guardian's $21 million judgment against the SF Weekly, and the ruling indicates that the papers have settled the case, the San Francisco Chronicle reports. However, Bay Guardian editor and publisher Bruce Brugmann told the Chron that settlement negotiations are still ongoing.

The case concerned the Guardian's allegations that the Weekly intentionally sold advertising at well below its costs in an effort to drive its competitor from the market and allow it to claim a monopoly for itself. A final ruling in the case has long been expected to leave San Francisco with just one surviving alternative newsweekly. Testimony in the case made it clear that both are hemorraghing losses, and a spokesman for the Weekly's parent company told this newspaper in March that the Weekly would be closed if it lost the case.

The appeals court ruling also cleared the East Bay Express of any liability in the case. Between February 2001 and May 2007, the Express was owned by the company then known as New Times, the parent company of the SF Weekly. During this period, the Express occasionally sold advertising at below-cost rates in group ad buys with its sister newspaper. But the court ruled that the Express did not act as an agent of the Weekly and that the Weekly's predatory behavior began well before the Express was part of the New Times chain.

"The Express may have participated, through its affiliation with the New Times as its parent company, in transactions that offered below-cost rates for display advertising in conjunction with the SF Weekly," the court ruled. "However, nothing in the record indicates to us that the Express either held power to alter the legal relations between the principal and third parties, or that the SF Weekly as principal had the right to control the conduct of the Express with respect to matters related to the pricing scheme."

In 2007, the Express became independent once again when a group of journalists and investors, including this reporter, purchased the paper back from the company formerly known as New Times and now known as Village Voice Media.

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