News media consolidation continues to take a heavy toll in the Bay Area with the announcement that one San Francisco newspaper is suing another for allegedly using illegal predatory advertising rates to pummel the competition into oblivion.

The San Francisco Examiner alleged in court papers that the San Francisco Chronicle violated the California Unfair Practices Act by selling ads to customers at ridiculously low loss-leader rates, often in exchange for promises that they not do business with their cross-town rival.

The 150-year-old Examiner, once the flagship of newspaper magnate and erstwhile politician William Randolph Hearst, is now an independent, freely-distributed shadow of its former self. The Chronicle, once the independent home of columnist Herb Caen, is now owned by the Hearst Corporation and dominates the market. The two newspapers had a tortuous joint operating agreement from 1965 until 2000 until Hearst practically gave the Examiner to the Fang family with a multi-million-dollar subsidy and bought the Chronicle.

The Examiner did not fare well under the Fangs and was sold to Denver billionaire Philip Anschutz’s Clarity Media in 2004. The newspaper was purchased by the San Francisco Newspaper Company LLC in 2011, and that’s when the Chronicle ad campaign allegedly began.

Examiner lawyers have some experience with the legal arguments made in the lawsuit. They were successfully used by the San Francisco Bay Guardian in a lawsuit against the New York Times-owned SF Weekly that was concluded in 2011. Afterward, the parent company of the Examiner bought both newspapers. The Examiner’s legal team is led by Ralph Alldredge, the lawyer who represented the Guardian in its lawsuit.

One Examiner lawyer told the Bay Guardian that the Chronicle offered deals to sell advertising for $1,000 that it normally prices at between $59,000 and $92,000.

The bloodletting between the Examiner and the Chronicle comes amid a general collapse of print media regionally, as well as nationally. It comes on the heels of the demise of California Watch and The Bay Citizen, two respected investigative online news publications that were absorbed by their parent, the Center for Investigative Reporting (CIR), last month. 

–Ken Broder

To Learn More:

Suit between SF Dailies Claims Predatory Ad Rates (by Andrew Dalton, Associated Press)

SF Chronicle Accused of Predatory Ad Rates (by Dave Tartre, Courthouse News Service)

Examiner Sues Chronicle, Alleging Predatory Ad-Pricing Scheme (by Joe Eskenazi, San Francisco Bay Guardian)

San Francisco Bay Area News Sources Disappear in Merger (by Ken Broder, AllGov California)