Good Day, Sir 

Utah’s newspaper monopoly sparks an antitrust inquiry by refusing a “competitor’s” ad.

Exoro Group political consultant and sucker for all that’s news LaVarr Webb once believed the business he toiled in for 20 years was about disseminating information, not censoring it.



That was until a couple months ago, when Webb approached Newspaper Agency Corp. (NAC), the joint-advertising arm of The Salt Lake Tribune and Deseret Morning News, to see about running a 2-inch ad for his online political newsletter, Utah Policy Daily (utahpolicy.com). Webb, a former managing editor and current political columnist for the News, launched the clearinghouse of public policy information and insight more than a year ago, mostly as a hobby, but also to reach out to potential clients.



With a steadily growing unpaid subscriber base of around 5,000 politically minded eggheads (including this reporter), Webb felt the time was nigh to parlay his labor of love into a moneymaking machine. A recent Tribune write-up about the site boosted subscriptions by a couple hundred, and boosted Webb’s conviction that Utah’s largest dailies hold the key to reaching his target demographic.



An NAC ad rep initially quoted Webb a small-business promotional rate of about $6,500 for a yearlong daily run, and all was going “swimmingly,” he reported in a Utah Policy Daily rant titled, “NAC to UPD: Drop Dead.” But after he settled on an ad design, higher-ups decided Webb’s site was “political” in nature, and would be charged the going rate for candidates for public office, “an amazing $116,800 a year!” Webb wrote. He pressed for a better explanation and, after further consideration, NAC Vice President of Advertising Greig Smith killed the deal altogether.



“NAC does not randomly promote aggregators of content or advertising material,” Smith wrote Webb in an e-mail, apparently taking issue with the Website’s daily links to political stories in local and national newspapers. “In the case of your site we are not able to recommend an advertising package that will meet both of our needs.

Webb remains perplexed. His innocuous ad certainly wouldn’t offend readers’ fragile sensibilities. After all, the Trib promotes adult-oriented services, with such headlines as “Barely 18 & Very Hot,” and “Lunch Special $100 hr.

NAC President Harry Whipple refused to say why the agency rejected Webb’s ad, explaining, “Any publisher, including yours, has the right to accept or decline any advertising he or she chooses to.”



All Webb can surmise is that NAC views him as competition for its parent companies, MediaNews Group and Deseret Management Co., respective owners of the Trib and News. On the one hand, Webb links readers directly to both newspapers’ Websites, a good thing for them. But on the other, Webb said, “they might think if [I’m] aggregating all the political news, people aren’t going to buy the paper,” a potential threat to their bottom lines.



Either way, “it’s a little bit of a head-in-the-sand kind of a reaction, because [newsletters, blogs and news aggregators] are going to become more common, and the newspapers have to realize it and figure out a way to capitalize on it,” Webb said. Shortsightedness aside, he’s resigned to the fact that “the power of the press belongs to he who owns the press. And they’re a private business; they can choose who they do business with.

Unless, of course, that choice is based on an agreement between two competitors with monopoly power to thwart a third from entering the market. So says antitrust expert and University of Utah law professor John J. Flynn, a 30-year critic of the joint operating agreement that has bound the fortunes of Utah’s dominant dailies for more than five decades. The duo’s de facto joining in monopo-mony was solemnized by the Newspaper Preservation Act of 1970, which allows dueling papers in markets where one would have otherwise folded under the weight of competition to combine production, advertising and distribution functions in order to preserve distinct editorial voices.



Flynn maintains that such agreements compromise the free market'more than intended, that is. For even as the act was meant to preserve independent voices, in practice, it has acted to exclude others, he said. Take the recently launched “zoned editions” by the Trib and News, folksy neighborhood inserts or freebies, which “drive small local weeklies to the wall, because [the zoned editions] sop up local advertising revenue,” Flynn said.



And given that the Trib and News reach, by far, more consumer eyes than any medium in the core Salt Lake market area'about 60 percent of adults compared to 18 percent reached by its closest market competitor, KSTU Fox 13, according to a mid-2004 Media Audit survey'Flynn said NAC was free to raise advertising rates, as it has by about 20 percent since 2004, even as circulation declined.



“If there were a functioning market, you would expect to see them cutting prices to try to retain advertisers,” Flynn said.



Webb’s row with NAC could be another prime example.



Paraphrasing the Newspaper Preservation Act, “No joint operating arrangement or any party thereto shall be exempt from any antitrust law,” Flynn said, adding, “both federal and state antitrust laws prohibit competitors from agreeing with each other to boycott a competitor doing the same thing.



“I’m sure there are junkies that want to read [Webb’s] political stuff, but where do they go to find out about it?” Flynn posed, suggesting that NAC’s rebuff looks strikingly like a boycott. “That just sounds kind of phony to me that they have some policy against carrying ads for ‘aggregators,’” he said, especially when both papers run ads for Cars.com, an aggregated list of vehicles for sale at dealerships nationwide, which would seem to directly compete with the papers for automotive classifieds.



While Webb merely wants to point out NAC’s “arrogance,” at least one subscriber to his newsletter has taken an interest in the wrangle. Utah Attorney General Mark Shurtleff read about Webb’s troubles in the newsletter. Asked for comment, he declined, saying, “If there is a valid claim, rendering an opinion would be prejudging.” Even though Webb hasn’t registered an official complaint, Shurtleff said he’s going to “run it by my antitrust guys.

Asked by phone if a looming antitrust inquiry concerned him, NAC President Harry Whipple told City Weekly, “It’s good to have your call today, sir, good day.”

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Shane Johnson

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