Justice agency 'aware' of proposed Metro deal

Despite a published report that the US Justice Department had opened a "preliminary inquiry" into The New York Times Co.'s plan to buy a 49 percent stake in Metro Boston, a spokeswoman yesterday said only that the department is "aware" of the proposed deal.

In a story discussing regulators' concerns about newspaper consolidation, The Wall Street Journal reported yesterday that the Justice Department is probing the Metro deal and Gannett Co.'s proposed buyout of a Midwest newspaper operation.

Spokeswoman Gina Talamona told the Globe yesterday that the Justice Department is investigating the Gannett transaction, but she would not comment on whether the department is reviewing the Metro deal.

"We're aware of it," she said of the proposed purchase, and declined to comment further.

Times Co. spokeswoman Catherine Mathis said yesterday the company has not been contacted by the Justice Department. Boston attorney Daniel C. Gusenoff, who is representing the Boston Herald in its effort to block the Times Co. purchase, declined to comment. Through a spokesman, Herald publisher Patrick J. Purcell said he has "nothing else to add."

On Jan. 3, Times Co., which owns The Boston Globe, said it would pay $16.5 million for a 49 percent stake in Metro Boston, a free daily tabloid aimed at commuters and young readers. A day later, Purcell said he would contest the deal on the grounds that it was anticompetitive and "aimed directly at the Herald."

On Jan. 11, Gusenoff sent a letter asking the Justice Department to intervene, arguing that the deal would dramatically change the competitive balance in readership and advertising, and result in Times Co. domination.

At the same time, Purcell sent a letter to Herald advertisers, urging them to contact elected officials as well as Justice Department officials and ask them to stop the purchase. He vowed to "use all of our resources to fight this acquisition."

The Times Co. position, in a statement released Jan. 13, said: "The Boston Herald's letter to the Department of Justice claiming that the Times Co.'s proposed investment in Boston Metro violates the antitrust laws is wrong on the law and wrong on the facts."

The transaction, the statement said, would give "advertisers more options and readers more news."

Though it is unclear whether the Justice Department might review the proposed Metro purchase, Joel Grosberg, an antitrust lawyer in Washington, said the department has shown interest in recent years in looking into newspaper mergers.

Though the Metro deal would be a relatively small media merger, Grosberg said even modest transactions can attract scrutiny from regulators.

"What they typically would do in this case is assign a couple of attorneys and an economist," he said. "Typically, they would ask [the parties] not to close the deal before the investigation." If an investigation is launched, he said, "they start talking to other competitors in the market; they'll talk to retailers and advertisers about the deal. . . . This is an area that gets a lot of attention. It's an easy market to understand."

Mark Jurkowitz can be reached at jurkowitz@globe.com.