Herald's antitrust case could turn on definition of market
The Boston Herald's effort to get the Justice Department to halt The
In addition, some legal specialists say, the Justice Department could look more closely at the potential impact on advertisers than on readership.
The Herald, in a letter to the Justice Department, described the market as comprising only the Times Co.'s Boston Globe, the Herald, and Metro, a narrow focus that would dramatically expand Times Co.'s market position. But legal specialists say the Justice Department could view the market as far broader, to include not only suburban dailies and various weekly newspapers, but also other media such as Internet sites, television, and radio.
"The first question is what is the proper market?" said Einer Elhauge, a Harvard Law School professor specializing in antitrust. "Then the question is why does it hurt the Herald? It's not clear how the Herald is harmed."
In an earlier statement, Globe publisher Richard Gilman argued the Boston area's media market is fiercely competitive, including many papers published by Herald Media Inc. Besides the Herald, Herald Media owns at least 4 dailies and 89 weeklies and 21 shoppers in Greater Boston.
In fact, while arguing to the Justice Department that the Herald is a small player, the media guide the parent company offers to advertisers combines the company's daily and weekly readership and says, "Herald Media provides advertisers with the greatest reach of any print medium in the Greater Boston area," a claim the Globe disputes. Papers estimate their readership, which is always larger than circulation, because more than one person often reads a copy.
The Globe has a daily paid circulation of 451,471, compared to the Herald's 240,759. The Metro distributes 180,000 free papers daily.
The Herald's letter of complaint to the Justice Department is not a legal action. It triggers no formal review or action by the Justice Department. The Herald could file an antitrust suit in court and seek an order to block the acquisition, but has not done that yet. "You exhaust all your administrative remedies before you go to court," said the Herald's lawyer, Daniel C. Gusenoff of Brown Rudnick Berlack Israels in Boston.
The Times Co. declined to comment on whether it plans to send its own letter to the Justice Department to rebut the Herald, nor would it comment on market definition or any other specifics of the Herald effort.
But in a statement, a Times spokeswoman, Catherine Mathis, said the Herald is "wrong on the law and wrong on the facts." She added, "The Times Co.'s investment would give advertisers more choices and readers more news. We believe the investment is pro-competitive and will raise the level of competition in the Greater Boston region."
Some legal specialists say the Justice Department is traditionally skeptical of antitrust complaints brought by competitors, while complaints by consumers, which in media cases might include advertisers, tend to have more weight.
"The goal of antitrust law is to protect the competitive process and competition, not particular competitors," said Stacey Dogan, a Northeastern University law professor.
Meanwhile, Patrick J. Purcell, publisher of the Herald, has sent a signed letter to some of the paper's advertisers urging them to "lend your voice to the fight" to kill the deal. Purcell provided a copy of the Herald's letter to the Justice Department and a "sample letter" of complaint the advertisers can use as a model to send out.
The package from Purcell goes as far as to include preprinted address labels for the state's congressional delegation and Justice Department officials.
Times Co. on Jan. 3 said it would buy a 49 percent stake in Metro Boston for $16.5 million, and the Herald hasn't been subtle in its coverage and campaign to undo the deal. It has splashed the story on the front page for several days running, including referring readers from the front page to an editorial this week that urges them to write letters of opposition to their legislators and the Justice Department.
Metro's total revenues are so small -- $10 million last year -- that the acquisition would have little impact on the relative positions of the Globe and the Herald, some legal specialists say.
Advertising revenues for Times Co.'s New England Media Group, which includes the Globe, its online affiliate Boston.com, and the Worcester Telegram & Gazette, were $464.5 million in 2003, the bulk of which were generated by the Globe.
"If you measure the market by advertising, then this acquisition would appear less significant, as opposed to measuring by readership," said Dogan, the Northeastern law professor.
This week, the Herald sent a letter to the Justice Department, charging the Metro deal would violate the federal Clayton Act. The act prohibits acquisitions that may "tend to create monopoly."
Using readership figures from a Metro marketing brochure, the Herald said the Metro acquisition would dramatically shift the competitive landscape, and give Times Co. a 72 percent share of readership, compared to just 28 percent for the Herald.
Gusenoff, the Herald's lawyer, said the Herald has defined the market as just the three papers, circulating in Boston and a close-in ring of suburbs, because that's how the Metro defined the market in its brochure.
The Metro acquisition would give Times Co. so much market power that it could corner advertising, harming the Herald and its readers, Gusenoff said in the letter.
"The question that lurks in the background," Gusenoff added, "is there a separate and independent interest that results from a loss of an editorial voice?"
Robert Gavin can be reached at rgavin@globe.com.
