seek $21 million
bond from state
to cover costs
A $10,000 bond postedBy Debra Barayuga
by the state is insufficient,
the owners say
The owners of Honolulu's two daily newspapers want the state to post a $21 million bond to cover potential losses due to the delay in the shutdown of the Honolulu Star-Bulletin.
The newspaper owners were to file a motion today in federal court seeking the bond while the case goes to trial.
A $10,000 bond posted by the state is insufficient to cover the costs and damages the newspaper owners will suffer as a result of the injunction granted by U.S. District Judge Alan C. Kay, say attorneys for Liberty Newspapers, owner of the Star-Bulletin, and Gannett Pacific Corp., owner of the Honolulu Advertiser.
The court's Oct. 13 order barred the newspapers from implementing a plan to terminate their joint operating agreement and close the Star-Bulletin on Oct. 30.
Kay also ordered the state to post a bond to cover the newspapers' losses should they later prevail in the case. Because of the state's financial condition, the court had required the state to post only a nominal bond, provided it agrees that the newspapers can seek recovery of more than that amount.
The state, when posting the bond on Oct. 19, noted that any recovery by the newspapers would be limited to the bond amount and that it would not compensate the newspapers for any additional costs and damages they incur if the state prevails in its lawsuit.
"In light of the state's position, the state's bond must be increased to an amount that will compensate the defendants for the losses they will suffer because of the wrongful injunction," the newspapers say.
The state's lawsuit is set for trial Sept. 19. The state claims that the agreement to close the Star-Bulletin for a $26.5 million payment to Liberty violates state and federal antitrust laws.
"If the injunction is eventually overturned, Liberty has no claim to the $26.5 million and no assurance the sum would again be available," the motion said.
Potential damage to Liberty, as of Oct. 30, 1999, would be $9.7 million, according to a declaration by Katherine Wiernicki of the Virginia accounting firm of Beers & Cutler PLLC. If the injunction continues until Sept. 30 and Liberty prevails, total potential damages to Liberty would increase to $10.2 million, Wiernicki said.
Gannett Pacific incurred "negative financial impact" of $10.67 million in 1998 -- the cost of publishing and distributing the Star-Bulletin, according to Lawrence P. Gasho, vice president of financial analysis for Gannett Co., parent company of Gannett Pacific.
The $10.67 million amount includes the Star-Bulletin's editorial and administrative expenses, fringe benefits and the guaranteed payment to Liberty as provided by the joint operating agreement.
The figures do not include revenues of the Star-Bulletin.
Paper's shutdown on hold