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Friday, January 8, 2010

"The Guardian won't get a dime from the Seattle Weekly."

Posted by on Fri, Jan 8, 2010 at 11:56 AM

Andy Van De Voorde, the executive associate editor for Village Voice Media, responded this morning to my request for comment on the potential seizure of Seattle Weekly assets by the San Francisco Bay Guardian.

Van De Voorde calls Bay Guardian executive editor Tim Redmond "venal," suggests Redmond and "his cohorts" won't get anything but some old gym socks worn by Seattle Weekly managing editor Mike Seely, and offers a colorful take on the predatory pricing trial that led to all of this legal mayhem (crazy back story here).

Eli

As venal as Redmond and his cohorts at the Guardian are—I can practically hear them licking their chops in anticipation of all those juicy "assets" that were created by someone else's hard work—they will not be getting any Seattle Weekly property. If they really want a Washington State souvenir to go along with the other mementos of their baseless lawsuit, I think Seely may have some old gym socks he doesn't need anymore. Beyond that, Redmond's and [Bay Guardian editor and publisher Bruce R.] Brugmann's greed for cash, along with their lust for payback against a company that dared to compete against them in the marketplace, will just have to go unsated. This crowing about seizing assets is much ado about nothing.

I sat through every day of that trial. Not once did the Guardian provide a shred of actual evidence that SF Weekly or New Times did anything wrong. In fact, there was considerable evidence that it was the Guardian that was trying to put the SF Weekly out of business, not the other way around, and you didn't see us running to the courthouse, crying towel in hand.

Not a single advertiser testified on behalf of the Guardian, despite the fact that this was a lawsuit all about advertising. And every time the Guardian attempted to cite specific advertising transactions as evidence of predatory behavior—based on the notes of ITS OWN employees—those pathetic excuses for smoking guns were shredded on cross-examination. In one case, the Guardian listed as a customer "lost" to the low prices of the Weekly an advertiser who was DEAD.

The verdict also represents a complete misapplication of antitrust law, especially given that it stands in direct opposition to federal precedent, which says that, in order to prevail, predatory pricing plaintiffs must prove that a defendant had the ability to recoup their losses—i.e., that they actually had a chance in hell of getting their money back. This is just another way of saying that wild-eyed claims about predatory schemes must meet a common-sense standard, and if there is one thing sorely missing from the Guardian's arguments, it is simple logic.

Among the surreal claims made by the Guardian at trial were Brugmann's insistence that his paper's profitability wasn't hurt at all by the rise of the Internet (apparently, the Guardian existed in a special bubble that rendered it immune to the economic forces that affected every single other print newspaper in the U.S.) and Redmond's claim, under oath, that the SF Weekly "had no soul."

For these reasons and more, I am confident SFW and [New Times / Village Voice Media] will prevail upon appeal. And that the Guardian won't get a dime from the Seattle Weekly—much as Redmond and Brugmann may relish the idea of lining their own pockets by damaging the prospects of hard-working journalists under the guise of fighting for the little man.

Andy

UPDATE: Bay Guardian executive editor Tim Redmond responds to Van De Voorde's e-mail:

Lovely. You know, the last time I saw Andy, at an AAN conference, he told me he wanted to strangle me with my ponytail. Sweet guy.

Anyway, here's my comment:

Andy can call me anything he wants, and make all the claims he wants about the trial evidence, but the fact is that a San Francisco jury heard all of the VVM arguments, over a six-week trial, and rendered a unanimous verdict in our favor.

All we're trying to do here is enforce the law. The law says you can't use big chain profits to engage in predatory pricing and try to damage a smaller local competitor. A jury—again, having heard all the arguments Andy is making—found that SF Weekly and VVM did, indeed, engage in that conduct. A judge listened to all the arguments about the law and concluded that the Guardian's interpretation was correct.

Now VVM owes us the money—and if the VVM folks wanted to stop collection pending appeal, they could have posted an appeal bond, which would have guaranteed that they would have to pay if they lost. They didn't do that, so we have every right to collect the money.

And given that nearly every legal motion we've made toward collection has been successful, we're confident we'll be able to collect.

 

Comments (24) RSS

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1
Now, to somehow improve the quality of writing in their PUBLICATIONS to match the wit and passion of Andy's LETTER... Hmmm...
Posted by Punditwatch on January 8, 2010 at 12:08 PM
seandr 2
Anyone over there at The Stranger find it scary that such a flimsy lawsuit could result in a judgment that effectively destroys a newspaper?

Or are you just happy to see the courts take out your competition?

Posted by seandr on January 8, 2010 at 12:09 PM
josh 3
emphases yours or his?
Posted by josh http://www.sciencevsromance.net on January 8, 2010 at 12:25 PM
4
Of course, Village Voice Media is notorious for exactly the sort of predatory pricing alleged in this suit, which they lost. So there may be another side to the story. Not that the executive associate editor of the company that stands to lose millions would have any motive to slant his presentation of the facts or anything, because he is after all a journalist.
Posted by We Have Cleared Ourselves Of Any Allegations of Wrongdoing on January 8, 2010 at 12:27 PM
Fifty-Two-Eighty 5
Hmm. If they're so confident they'll prevail on appeal, why didn't they post the bond, then?
Posted by Fifty-Two-Eighty http://www.nra.org on January 8, 2010 at 12:35 PM
6
Uh...the Guardian has already seized the Weekly's delivery trucks and rental income here in SF and they are just getting started. I guess that is the equivalent of 'dirty socks' to someone who thinks that anti-trust laws only apply to other people.
Posted by Gary SF on January 8, 2010 at 12:47 PM
elenchos 7
Clearly Andy's guilty conscience has sent him into histrionics.

The idea that the New Times can KILL advertisers who won't come over to them, and then say they can't be mentioned in the lawsuit because they're DEAD... well, it's disturbing to say the least.
Posted by elenchos on January 8, 2010 at 12:50 PM
8
I like the part testifying under oath that a newspaper has no soul. How upsetting that perjury charges weren't brought, since clearly the SF Weekly has a soul. It is shriveled, blackened and oozing as all newspaper souls are, but a soul nonetheless.
Posted by dwight moody on January 8, 2010 at 12:59 PM
rob! 9
"Not a single advertiser testified on behalf of the Guardian" is red herring-ish. People who want to advertise in an alt weekly obviously have to go with cheaper sources, and have nothing to gain by testifying on behalf of the spurned provider. I don't see any point in advertisers testifying for either party except under subpoena and in regard to bald facts ("What rate were you quoted? What rate did you pay?" etc.). This is obviously a case for accountants to shine--showing expenses vs. income for each paper, and how infusions of cash from the corporate parent may have subsidized predatory pricing for ads either continually or in certain key instances or time periods.

Whatever the merits, the VVM exec comes off as a major asshole and won't be winning any hearts or minds in the S.F. market.
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on January 8, 2010 at 1:11 PM
Will in Seattle 10
They should call the Repo Men.

Jude Law could get it out of them.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on January 8, 2010 at 1:20 PM
rob! 11
I would expect the Stranger to be at least a little careful around this issue because the owners/investors might actually want to be bought out by something like VVM someday, which has a history of acquiring scrappy independents, cutting costs, gangplanking any "stars," and blandifying/homogenizing the editorial content.

Open question: have the principals of [Stranger publisher] Index Newspapers ever made a public statement of whatever guiding concepts they feel differentiate them from juggernauts like VVM, of their desire to remain independent, or any other "fightin' words"? If so, where, and if not, would they do so now?
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on January 8, 2010 at 1:26 PM
12
"Predatory pricing" should not be illegal. Of all the economically poorly jusified attempts to use the courts to stifle your competition using "anti-trust" law, it is among the worst justified. Anti-trust law is supposed to protect consumers from paying monopoly prices. But "predatory pricing" prohibitions essentially require competitors to collude by not undercutting each other.

That said, predatory pricing laws do exist. My comments are on the merits of the law, not the merits of this case.
Posted by David Wright on January 8, 2010 at 1:34 PM
treacle 13
@12 ?!?!? Predatory pricing is the weapon of monopolistic juggernauts. They are used to create or reinforce monopolies. Afterwhich, once the monopoly is obtained, prices get pegged to any ole level the monopoly thinks it can soak out of it's customers. How did that li'l dynamic escape you?

As to the original post:
"Venal"?
Van De Voorde is one to talk. He was the tip of the spear the reduced the Seattle Weekly from an actually interesting local paper to the bland-format shell that it is today.
Recall the across-the-board editorial resignations that came after short little 15 minute one-on-one conversations with VdV. An opinion writer sacked because he was "too opinionated". And Seely, placed in the news department months ahead of time, then conveniently moved into the Managing Editor's office when the "non-sackings" came, because they knew he'd be the perfect little obsequious tool.

VdV is as machiavellian as they come. Hot under the collar, and a rabid little attack dog, doing the bidding of his corporate masters.
Posted by treacle on January 8, 2010 at 2:49 PM
14
Treacle @ 13: That scenario only has even a chance of working if barriers to entry are very high. Otherwise, it plays out like this: company A looses a bundle executing its "predatory pricing" strategy against company B. Finally, company B is bankrupt and company A imposes monopoly prices. Company C notices a profitable oportunity and enters the market.

Barriers to entry are not high in the indie alt-weekly market.

In fact, most economists don't believe that predatory pricing strategies are likely to work even with barriers to entry. Wikipedia says "Economists claim that true predatory pricing is rare because it is an irrational practice and that laws designed to prevent it only inhibit competition."

I'm actually surprised to see any successful predatory pricing suits between U.S. companies. "Predatroy pricing" charges used to be just thinly veiled protectionism, used only against foreign competitors whoose costs a U.S. firm could not possibly match. I guess some lawers saw the oportunity to turn that political shennigan to their monetary advantage.
Posted by David Wright on January 8, 2010 at 3:05 PM
scary tyler moore 15
gawd, and i thought queens were bitchy...
Posted by scary tyler moore http://pushymcshove.blogspot.com/ on January 8, 2010 at 3:23 PM
stuckie 16
Tim definitely has a point. If VdV & VVM wanted to argue that the law is unjust or outdated, they could appeal on those grounds, but amount of explaining the reasons why they shouldn't have lost will change that fact, and past the vitrol, there doesn't seem to be much explanation of what would get in the way of the Guardian getting their settlement.
Posted by stuckie on January 8, 2010 at 3:23 PM
scary tyler moore 17
gawd, and i thought queens were bitchy...
Posted by scary tyler moore http://pushymcshove.blogspot.com/ on January 8, 2010 at 3:24 PM
rob! 18
@14, laws designed to prevent predatory pricing would only have the effect you describe (inhibiting competition), ironically enough, if there is a perceived risk of meaningful watchdog government intervention. As a civil remedy, it seems to me, there is a "nothing ventured, nothing gained" incentive to give it a whirl if you're a deep-pockets rapacious outfit like VVM going up against a smaller local company. The [reasonable] gamble would be that the small local would not have the financial or intestinal wherewithal to mount a legal action.

My perception is that predatory pricing prohibitions are a later, perhaps flawed attempt to address the fact that antitrust laws are rarely and ineffectively enforced. That failure is what gave us banks, insurance companies, automobile manufacturers, etc. that are "too big to fail." Much effort was put into breaking up the original AT&T into the 9 regional Baby Bells, only to see them gradually coalesce over the last few decades with few obstacles in their way. (Granted, their original monopolistic threat has been diminished very recently by (a) internet telephony delivered via cable TV, power lines, and satellites, and (b) removal of direct-connection prohibitions (remember acoustic couplers, the forerunners of modems?).

And I would dispute your assertion that "barriers to entry are not high in the indie alt-weekly market." That arena would not even be in the top ten I'd consider, were I blessed with $5-10 million burning a hole in my pocket.
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on January 8, 2010 at 3:40 PM
mackro 19
Does the Bay guardian want to be known as The Alt Weekly That Killed All The Other Alt Weeklies? Probably not.

Will VVM try to frame the Bay Guardian with that scapegoat title as a way to close papers that were likely going to shut down anyway for non-Bay-Guardian related reasons? You betcha.
Posted by mackro http://mackro.blogspot.com on January 8, 2010 at 7:30 PM
20
Rob @ 18: That a market has a high barrier to entry does not mean that, if you have a lot of money, entering that market wouldn't be a great choice. It means that, if you are resolved to enter that market, you need a great deal of money to do so.

You do not need a great deal of money to start an indie alt-weekly. I would bet that the Stranger was started with less than $100K. You need a couple writers and a sales guy. You outsource your printing, and you deliver the run in your own car.

Airplane manufacture is an example of an industry with a high barrier to entry.
Posted by David Wright on January 8, 2010 at 8:37 PM
21
Living in SF, I have no love lost for Bruce Brugmann or the Bay Guardian (I think they're kind of obnoxious douchebags with an obsession with PG&E)...but they won at trial.

The VVM/Weekly people are insane in not posting an appeal bond. What do they expect will happen upon not doing that? What I really want to know is what is their attorney smoking?
Posted by Mike Friedman on January 9, 2010 at 12:03 AM
22
Let me try to explain the case a bit more clearly based on my understanding of the facts. I am not involved with the case or the parties in any way.

Predatory pricing exists only when the party engaging in the pricing has a rational economic motive to do it, and that motive exists only when the party expects at a later date to be able to raise prices in order to recoup the losses suffered from the lower pricing. And that possibility of higher prices only exists if the predatory pricing results in the party acquiring a controlling market position, such as a monopoly. So predatory pricing laws are necessary in order to prevent the creation of monopolies. But at the same time they have a high burden of proof, because consumers benefit from price reductions, so if it were easy to show that a company was engaging in predatory pricing every time they lowered their prices, companies would be afraid to compete by lowering their prices, and consumers would pay higher prices as a result.

To prove that SFW (or VVM if you will) was engaging in predatory pricing, The Bay Gaurdian (TBG) would have had to prove that SFW would have been likely to recoup their losses through obtaining a monopoly and raising prices later. No such proof was ever offered, and no such possibility likely exists, simply because the Internet has decimated the print advertising world and driven down the sales and profits of all newspapers (just look at Craigslist and its effect on classified advertising). In fact at trial the sales, market share, and profits of both companies were shown to experiene the same decline during the time period in question, 2000 onwards, and to closely parallel the general industry trends. So there was no evidence of SFW benefiting from reduced ad pricing, and no evidence that TBG could have experienced increased revenues or profits over this time if the alleged predatory pricing had not occurred.

The judgment awarded by the court (even prior to punitive trebling of damages) was many times higher than the historical profits of TBG, meaning that the award was not in line with actual losses likely to have been sustained if the predatory pricing were in fact to have occurred. The jury's decision and the judgment amount, in my opinion, are a farce and are not supported by the facts. Due to what I perceive to be a complete disconnect between the facts of the case, the applicable law, and the jury's decision, I believe SFW will succeed in their appeal to have the judgment reversed.

People's like or dislike of a company or the business environment in which it operates are not a sound basis for a legal opinion. The fact that anyone likes or dislikes SFW, TBG, local independents vs. national chains, etc. is not material to the facts of the case. San Francisco is full of people who hate "the man" and want to see "the little guy" win whenever possible, even if there is no rational basis for their opinion. This attitude seems to be a primary motive in TBG's lawsuit against SFW, based on comments that came out at trial as well as . This attitude is self-defeating, since it is the possibility of growth and profit that entices people to enter into business in the first place and to work hard to make their businesses successful. if the motives of growth and profit are taken away, innovation and economic efficiency (price reductions) will be stifled, and quality of life will suffer as a result. The whole reason America has been so successful is precisely because of our superior economic environment. We all benefit from lower prices, and we all benefit from greater choice. An anti-big-company attitude is entirely counterproductive to the benefits that we all enjoy.
More...
Posted by BayAreaJonathan on January 9, 2010 at 10:15 AM
rob! 23
Thank you for making the effort to write this, @22. If I have time later, I'll try to make a few comments.
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on January 9, 2010 at 12:38 PM
24
So, can my local sub shop sue subway for the $5.99 footlong?
Posted by SF PTP on January 16, 2010 at 10:09 AM

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