Taking a page out of the Bruce Brugmann playbook, the San Francisco Newspaper Company, which owns SF Weekly, the Examiner and the San Francisco Bay Guardian, has filed suit against against the San Francisco Chronicle, alleging the Hearst Corp.-owned paper of record is blocking out the Examiner's advertisers by offering dirt cheap rates to advertisers who agreed not to work with the free daily paper.
According to the Weekly's insider details (helpfully reprinted on the Examiner), the lawsuit alleges that the Chronicle began slashing ad prices around the time Vogt & Co. took over the Examiner in 2011. In exchange for the lower rates, advertisers had to refrain from working with the smaller operation:
"Hearst has demanded and obtained agreements from key advertising customers, which preclude those customers from purchasing any advertising space from the Examiner for a period of a year or more," the complaint said. "In many cases, these discounts were specifically conditioned on the advertiser agreeing to purchase advertising services exclusively from Hearst and requiring it to stop doing business with the Examiner."
The lawsuit alleges that, in one case, the Chronicle gave away $200,000 worth of ad space and offered secret rates to different buyers. Advertisers reportedly snitched to Examiner execs about the Chronicle's shady business practices late last year and an attorney for the SFNC says they have material evidence of the aggressive pricing schemes.
The SFNC also alleges Hearst has been using other money making properties to subsidize the discount ads on the Chronicle, claiming the Examiner doesn't have the same resources to do that. (Although that is getting harder to argue, with SFNC's growing empire.)
All of this is illegal under the California Unfair Practices Act, which observant readers will remember was the same law the Guardian used to successfully sue the Weekly's former owners for $21 million (although the final undisclosed settlement was reportedly lower) a few years back. At the time, that case captivated handwringing members of the dead tree media across California, which — according to the Examiner's legal team — makes this scheme especially nefarious.
It's been a rocky year or so in local media and it doesn't look like the power plays are quite over yet. Expect this all to end when we have one unified web portal for the SFWeeklyGateGuardianExaminer.com tucked safely behind a paywall.