DOJ Challenges Charleston Newspaper Deal
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[##_1L|1302872190.jpg|width="150" height="128" alt=""|_##]Three years after the parent company of The Charleston Gazette purchased its capital city rival, the Charleston Daily Mail, the U.S. Department of Justice has stepped in, declaring the sale illegal. The Justice Department filed a lawsuit May 22 in U.S. District Court in Charleston, alleging the sale violates antitrust laws. It seeks an order requiring the Daily Gazette Co., which owns the Gazette, and Denver-based MediaNews Group Inc., which owned the Daily Mail, to undo the $55 million deal.
The 19-page complaint alleges the Daily Gazette Co. bought the Daily Mail in May 2004 intending to shut it down and create a newspaper monopoly in Kanawha County. The Justice Department said the Daily Gazette Co. suspended those actions in December 2004 but only after the company learned the federal agency had launched an investigation into the newspaper company's maneuvers.
The Justice Department's suit seeks to undo completely the 2004 sale and restore the Daily Mail to its previous competitiveness.
"When the Daily Gazette Co. acquired the Daily Mail with the aim of shutting it down, readers in the Charleston area and the advertisers who valued access to them, were denied the benefits of competition," Assistant Attorney General Thomas O. Barnett said in a news release. Barnett works in the Justice Department's Antitrust Division.
"The Department's investigation saved the Daily Mail from this unlawful termination, and this action seeks to remedy the competitive damage already done and to prohibit the parties from resuming an anticompetitive course in the future."
Trip Shumate, chief financial officer for Charleston Newspapers, which serves as the umbrella company handling the business side of the Gazette and Daily Mail, said the Daily Gazette will "vigorously defend" the Justice Department's lawsuit.
"We will win in court if it goes there," he said.
Messages left for Dean Singleton, MediaNews' vice chairman and CEO, and MediaNews President Joseph Lodovic IV were not returned.
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