Antitrust Law Daily Wrap Up, TOP STORY: U.S. moves to block LA Times publisher’s acquisition of local papers, (Mar 17, 2016)

By Jeffrey May, J.D.

The planned combination of newspaper publishers Tribune Publishing Company and Freedom Communications Inc. is being challenged by the Department of Justice Antitrust Division. The proposed acquisition would merge Freedom's Orange County Register and the Riverside Press-Enterprise into the same company with Tribune Publishing’s Los Angeles Times. Today, the Antitrust Division filed a complaint and a motion for a temporary restraining order (TRO) in the federal district court in Los Angeles to block the deal (U.S. v. Tribune Publishing Co., Case No. 2:16-cv-01822).

The Justice Department alleges that the proposed transaction would substantially lessen competition in the English-language local daily newspaper markets in California’s Orange and Riverside counties in violation of Sec. 7 of the Clayton Act. Tribune Publishing publishes 11 major daily newspapers across California, Illinois, Florida, Maryland, Connecticut, Virginia, and Pennsylvania. In southern California, its newspapers include the Los Angeles Times and the San Diego Union-Tribune, among others. California-based Freedom owns the Orange County Register and the Riverside Press-Enterprise.

According to the complaint, if Tribune were to acquire Freedom’s assets, it would control 98 percent of the sales of English-language local daily newspapers to readers in Orange County. In Riverside County, the Riverside Press-Enterprise, the Orange County Register, and the Los Angeles Times are the three leading English-language daily newspapers by circulation. If the acquisition were to proceed, Tribune—which also owns the San Diego Union-Tribune, the fifth largest English-language daily newspaper in Riverside County—would control four of the top five English-language newspapers by circulation in that county, with 81 percent of the English-language daily newspaper circulation, the government alleged. The Justice Department contends that the acquisition would harm both advertisers and readers.

TRO. The government is seeking a TRO to preserve the status quo. Despite Tribune Publishing's understanding that the proposed acquisition would raise antitrust concerns, the company chose not to approach the Justice Department concerning its plan to bid for Freedom’s assets, to share its views on the antitrust implications of the acquisition, or to allow the government to investigate the transaction ahead of time, according to the Justice Department. As a result, “[a]ny time pressures Tribune faces as a result of the United States’ intervention at this point are of its own making,” the government contends. The government is seeking appropriate discovery in order to prepare for a preliminary injunction hearing.

Bankruptcy proceedings. Tribune Publishing is awaiting approval of a U.S. bankruptcy court to acquire the Freedom assets. Last year, Freedom announced that it had filed a petition for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. A bankruptcy auction for Freedom’s assets was held on March 16. With a $56 million cash bid, Tribune beat out at least two other bidders, including a local investor group led by Freedom’s CEO, to become the winning bidder. A bankruptcy court hearing is set for March 21 to determine whether to grant approval of Tribune's takeover of the assets. According to the government, the alternative bids for the Freedom assets would not threaten competition.

Attorneys: William H. Jones II for U.S. Department of Justice. William Blumenthal (Sidley Austin LLP) for Tribune Publishing Co.

Companies: Tribune Publishing Co.; Freedom Communications, Inc.

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