US eyes Times Co. deal with Metro

The US Justice Department said yesterday it is investigating The New York Times Co.'s plan to buy a 49 percent stake in the free commuter daily Metro Boston, a deal the Boston Herald has challenged as a threat to competition.

Contacted Monday by The Boston Globe, Justice Department spokeswoman Gina Talamona declined to comment on a published report that the agency was launching an investigation of the transaction. But yesterday she said: "We are investigating that matter now. We would look at the competitive effects of the transaction." She declined to comment any further on the nature or scope of the investigation.

Joel Grosberg, a former Federal Trade Commission attorney and an antitrust lawyer who is not involved in the Metro case, said a complaint, such as the one the Herald has lodged, is often sufficient to launch an investigation.

"It doesn't take much to open it up," he said. The Justice Department "will probably ask the companies to voluntarily provide information and come in and meet with them." Grosberg added that if that phase of the investigation revealed significant problems with the merger or was hampered by a lack of cooperation, the Justice Department could issue subpoenas as part of a more serious probe.

Times Co., which owns the Globe, released a statement yesterday that reiterated its earlier position. "We continue to believe that the Times Co.'s investment in Metro Boston would give advertisers more options and readers more news, and would raise the level of competition in the Greater Boston region," the statement said. "The Metro is a single free newspaper in the Boston media market, which has 18 paid daily newspapers, not to mention a considerable number of free weekly newspapers, including the many owned by Herald Media Co."

A spokesman for Herald publisher Patrick J. Purcell said he had no comment on news of the probe. A spokesman for the Metro also declined to comment.

Times Co. revealed its intention to buy a 49 percent stake in Metro for $16.5 million on Jan. 3, becoming the latest media company trying to either create or invest in free newspapers designed to attract younger readers and commuters. A day later, Purcell issued a statement saying, "This deal is aimed directly at the Herald. It is clearly anticompetitive and not in the best interest of the general public or advertisers."

On Jan 11, the Herald's attorney sent a letter asking the Justice Department for its "intervention," arguing the merger would dramatically alter the competitive balance in the local newspaper market. The same day, Purcell sent a letter to advertisers asking them to lobby federal officials to stop the purchase and stating his intention to "use all of our resources to fight this acquisition."

The proposed purchase has also been hampered by reports that Metro International officials made racially crude remarks and allegations the company has an insensitive and discriminatory corporate culture. That controversy has prompted Times Co. to conduct a review of the transaction that was originally slated to have closed by the end of this month. On Tuesday, Times Co. chief executive Janet Robinson said the review should be finished "in a very short period of time." When asked whether the federal probe could delay Times Co.'s timetable for the transaction, spokeswoman Catherine Mathis said, "We haven't received any communication from the Justice Department, so we don't believe there's any change in the timing."

Mark Jurkowitz can be reach at jurkowitz@globe.com