Facts

Clinton Reilly, a resident of San Francisco, sued to enjoin a series of transactions involving MediaNews Group, Inc., The Hearst Corporation, SF Holding Corp. (formerly Stephens Group, Inc.), Gannett Co. Inc., and California Newspapers Partnership (CNP). CNP, a partnership of MediaNews, Gannett, and Stephens, owns newspapers throughout California, including several in the San Francisco Bay Area. Hearst owns the San Francisco Chronicle.

The challenged transactions included an agreement by MediaNews (and ultimately CNP) to buy two former Knight-Ridder newspapers, the Contra Costa Times and the San Jose Mercury News, from The McClatchy Company and an agreement between MediaNews and Hearst that they would attempt to negotiate the terms of an equity investment by Hearst in MediaNews' non-Bay Area assets.

Plaintiff sought a temporary restraining order to prevent MediaNews from buying the Times and the Mercury News. The court found the transaction created no imminent danger to plaintiff or the public and allowed it to proceed. MediaNews completed the acquisition after receiving antitrust clearance from the Department of Justice.

Plaintiff later renewed his motion for preliminary relief, focusing on an April 26, 2006 agreement between MediaNews and Hearst to negotiate in good faith over possible joint activities, to the extent lawful, in the Bay Area involving newspaper distribution, national advertising, and the internet. The court issued a TRO and a preliminary injunction requiring defendants to comply with their stated intent not to pursue such agreements during the pendency of the case.

PLAINTIFF'S CONTENTIONS:
The plaintiff contended that the transactions, taken together, would eliminate competition between defendants' Bay Area newspapers.

DEFENDANTS' CONTENTIONS:
Defendants contended that neither MediaNews' purchase of the former Knight-Ridder newspapers nor Hearst's proposed equity investment in MediaNews' non-Bay Area assets would result in any lessening of competition in Bay Area media markets.

Damages

The plaintiff sought to enjoin the agreement.

Result

The case was settled before trial. MediaNews and Hearst agreed to rescind the April 26, 2006 agreement and to make certain changes in the terms of Hearst's proposed equity investment in MediaNews' non-Bay Area assets. MediaNews and CNP also agreed to add a citizen member to the editorial boards of CNP's Bay Area daily newspapers and to provide Reilly with paid advertising space and information about the operations of those newspapers, including advance notice of any planned discussion of cooperative efforts with non-CNP Bay Area daily newspapers.