Starbulletin.com


Wednesday, October 6, 1999



Star-Bulletin closing after 117 years

Citizens, state sue to save Star-Bulletin

A.G. files concurrently
to keep the Star-Bulletin
from closing

Bullet A.G. files concurrently to stop closing
Bullet Star-Bulletin vending boxes being removed
Bullet Closing to be topic on public TV

By Mary Adamski
Star-Bulletin

Tapa

The U.S. District Court in Honolulu was being asked today to rule that the plan to close the Honolulu Star-Bulletin is a violation of federal and state antitrust laws.

The newspaper's Florida-based owner should be enjoined from ceasing publication without first offering the assets for sale, under a complaint filed by seven Hawaii residents organized as Save Our Star-Bulletin.

Thomas P. Gill and Jean King, both former state lieutenant governors, are among the plaintiffs who also were to ask the court to block Gannett Co., owner of the Honolulu Advertiser, from interfering with the sale of its competitor.


By George F. Lee, Star-Bulletin
Norman Murakami prepares a Star-Bulletin street sales box
to be repainted and turned into an Advertiser box. Murakami
works for Sun Auto Body and Paint Shop in Kalihi which is
repainting about 100 boxes. Story below.



Michael J. Fisch, president and publisher of the Honolulu Advertiser, declined to comment since he said he hasn't seen the lawsuit.

The federal court complaint comes on the heels of an announcement by state Attorney General Earl Anzai that the state will challenge the closing. Gov. Ben Cayetano said yesterday that the state will seek an injunction in federal court.


What the plaintiffs are seeking

Star-Bulletin staff

Tapa

The lawsuit asks the court to:

Bullet Grant a preliminary injunction to allow the Star-Bulletin to continue publication and stop Gannett, the Advertiser and the Hawaii Newspaper Agency from making any payments, other than guaranteed payments to Liberty, without court approval.

Bullet Prohibit defendants from carrying out the closure agreement;

Bullet Permanently enjoin Liberty Newspapers and Phillips from stopping publication of the Star-Bulletin until the JOA expires, unless public notice is given offering all its assets up for sale to anyone except the defendants;

Bullet For five years, stop Gannett, the Advertiser and HNA from making any payment to Liberty or Phillips, except for guaranteed payments in the ordinary course of business;

Bullet Stop Phillips and Liberty from entering any agreement with any party to shut down Star-Bulletin in return for payment or other consideration;

Bullet Declare that the closure violates state and federal antitrust laws.


Star-Bulletin owner Liberty Newspapers Limited Partnership has operated since 1993 under a joint operating agreement with Gannett. Liberty's principal investor, Rupert Phillips, announced Sept. 16 that the afternoon paper will publish its final edition Oct. 30. He told employees that investors decided to end their 20-year agreement with Gannett after six years because the return on their investment was not satisfactory.

Critics have contended that the U.S. Justice Department in the past has required newspapers operating under a joint operating agreement to offer the less profitable paper for sale before closing it. The Star-Bulletin was not offered for sale.

The Save Our Star-Bulletin group asserts in its complaint that Liberty received an annual guaranteed payment and was scheduled to receive $1,910,000 in the year 2000.

Liberty will collect $30 million from Gannett under terms of the closure agreement, according to the suit.

"There is no legitimate justification for paying a competitor to shut down," the plaintiffs said.

The suit names Gannett Co., the Honolulu Advertiser, Hawaii Newspaper Agency, Liberty Newspapers and Rupert E. Phillips as defendants.

Phillips was unavailable for comment.

Conspiracy alleged

Besides Gill and King, the plaintiffs are former state Democratic Party Chairman Richard Port; former City Councilman Kekoa D. Kaapu; Ah Quon McElrath, former ILWU social worker and a member of the University of Hawaii Board of Regents; Honolulu Realtor Alice Clay; and Ah Jook Ku, administrative director of the Honolulu Community-Media Council and a former Star-Bulletin reporter.

The suit was filed by Honolulu attorney Randall Harakal and the Washington, D.C., law firm of Baker & Miller PLLC.

Through the agreement between Liberty and Gannett to shut down the 117-year-old Star-Bulletin, the parties have conspired to create a monopoly in violation of the Sherman Antitrust Act and the Hawaii Antitrust Act, the federal complaint claims.

The joint operating agreement between the two owners relied on antitrust immunity provided by the Newspaper Preservation Act, says the complaint. It asks the federal court to find that the closure agreement violates the intent of the Newspaper Preservation Act which was "to preserve the publication of newspapers" since it does preserve the publication of the Star-Bulletin.

"By entering into the Star-Bulletin closure agreement whereby defendant Liberty would be paid for its agreement to shut down the Star-Bulletin, the defendants have engaged in an agreement to eliminate all editorial and reportorial competition between themselves for editorial, news and other content."

'Uncontested monopoly'

The effect of the closure will be that the Honolulu Advertiser "will have an uncontested monopoly in the market for daily general circulation newspapers on the island of Oahu. Plaintiffs, like other subscribers and purchasers and other readers of the Advertiser and Star-Bulletin, will be deprived of competition in news and editorial coverage."

The plaintiffs are asking the court to stop Liberty and Phillips from entering any agreement with any party to shut down the Star-Bulletin in return for payment of money or other valuable consideration.

They are asking that the owners be enjoined from ceasing publication unless, 180 days prior to any proposed cessation of publication, they give public notice that all assets of the Star-Bulletin, the limited partnership interests in HNA, and the contractual rights under the JOA are for sale at public auction.

Also they ask that the defendants require that a purchaser agree to publish the Star-Bulletin for at least two years.

Gannett would be enjoined from making any payment to Phillips or Liberty except for the guaranteed annual payments, without court approval.

State also to act

Cayetano said yesterday Liberty Newspapers' plan to shut down the afternoon paper violates the spirit of the federal Newspaper Preservation Act, and may violate federal antitrust laws.

"The attorney general's analysis is this: While the agreement cannot stop a business from going out of business for financial reasons, the law does not permit one competitor to buy the other one out," Cayetano said. "We don't think the law permits that."

He said he and Anzai will discuss plans to file for a temporary restraining order against the closure after Anzai returns from Washington, D.C., on Monday. The attorney general attended the Rice vs. Cayetano appeal today before the U.S. Supreme Court.

Since the Star-Bulletin provides a guaranteed return for Liberty, Cayetano believes the joint operation should be continued until it expires, no matter who owns the newspaper.

"Being guaranteed an annuity and being guaranteed a return on investment, and facing no risk of loss, seems to me an argument can be made that he (Phillips) should be held to this contract for the remainder of the term," Cayetano said.

"Someone may come in and buy him out, but that someone should stand in the Star-Bulletin's place."

More than 90 Star-Bulletin employees and about 50 Hawaii Newspaper Agency workers will lose their jobs when the paper closes.



Star-Bulletin writers Gregg K. Kakesako
and Pat Omandam contributed to this report.


A.G. files concurrently
to stop closure

By Star-Bulletin staff

Tapa

Citing anti-trust violations, the state attorney general today also filed suit in U.S. District Court to put a stop to the closure of the Honolulu Star-Bulletin.

Named as defendants in the suit are Gannett Pacific Corp., Liberty Newspapers Limited Partnership, and the Hawaii Newspaper Agency.

Star-Bulletin owner Rupert Phillips on Sept. 16 announced that the paper will cease publication Oct. 30.

The attorney general's complaint says the closure would eliminate competition and allow Gannett to achieve a monopoly on English-language newspapers in Hawaii; deprive readers of an important source of democratic expression and controversy; and unreasonably restrict trade and commerce in the market for English-language newspapers on Oahu.

It alleges that Gannett and Liberty Newspapers intended to destroy competition between the Honolulu Advertiser and the Honolulu Star-Bulletin, and conspired to monopolize the market for English-language newspapers in violation of state law.

The suit asks the court to declare the paper's closure illegal and stop Gannett and Liberty Newspapers from implementing it.

It also asks the court to order Gannett not to make any payments to Liberty Newspapers in exchange for closing the paper, and to allow the Star-Bulletin to be put up for sale.




By Ken Sakamoto, Star-Bulletin
Doug Rapozo and Roland Tom load Star-Bulletin street sale
boxes onto a truck where they will be taken to a
shop and repainted.



Star-Bulletin vending
boxes already being
removed

Star-Bulletin staff

Tapa

The Honolulu Star-Bulletin will be published until Oct. 30, but about 100 of the street vending racks have already been removed around Oahu.

"The impact was expected to be pretty minimal," said Dennis Francis, general manager of the Hawaii Newspaper Agency, which handles distribution of both daily newspapers. The agency is owned by Gannett Co., operator of the Honolulu Advertiser.

Francis said the majority of the racks were taken out of commission because only three or less copies were sold daily from each.

About a third of the removals were from Waikiki where they are being replaced by concrete bunkers mandated by city ordinance to control a proliferation of vendors.

Another 40 Waikiki racks are slated for removal. The Star-Bulletin is being sold from the bunkers, he said.

Francis said the company expects the removal to affect less than 300 sales per day. "We certainly don't want to affect sales where racks may be selling 20 to 25 copies.

"There is no intent to jump the gun" on the end of publication, he said.

The racks will be repainted and reused for Honolulu Advertiser sales.


Closing to be topic on public TV

The impending close of the Honolulu Star-Bulletin and its effect on Hawaii will be explored tonight on Hawaii Public Television's "Newsmakers" program.

Former Mayor Frank Fasi, a critic of the 1962 joint operating agreement between the two Honolulu daily newspapers, and Phil Mayer, a 35-year veteran Star-Bulletin reporter, will join commentator Dan Boylan.

The KHET show will air at 7:30 p.m. and will be rebroadcast at 1:30 p.m. Saturday.




Star-Bulletin closing Oct. 30, 1999



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