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S.F. paper boss
sued for alleged
subsidy misuse

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By Christine Hanley
Associated Press

SAN FRANCISCO -- Six weeks before he plans to launch the new San Francisco Examiner, publisher Ted Fang is being taken back to court over antitrust issues.

This time, longtime printing rival Fricke-Parks Press Inc., accuses Fang and his associates of misusing the $66 million subsidy approved as part of the Examiner sale to bolster his separate printing operation, Grant Printing.

More specifically, FPP claims that Grant, with the subsidy money in its coffers, has an unfair financial advantage over FPP and other competitors, driving them out of business by underbidding for printing contracts at prices even lower than the cost of raw materials.

The lawsuit, filed Tuesday in U.S. District Court in San Francisco, also accuses former FPP sales manager Gerard Diaz of stealing trade secrets, including proprietary client lists and pricing data, after Fang hired him away nearly a year ago.

"We want the Fang people to stop subsidizing their printing operation using the proceeds of the Examiner sale. We want the employee to stop using the information he stole," said FPP's attorney, Daniel C. Girard.

"FPP has been in business more than 25 years," he said yesterday, adding that the company can't compete against "people who are benefitting from a subsidy that was obtained through political influence."

"We think it's illegal to use a subsidy that's not available to the competition to undercut them and put them out of business," he said. "So our position is that any agreement that allows that result violates antitrust laws."

Political influence and antitrust violations were at the heart of a lawsuit filed by San Francisco real estate millionaire Clint Reilly seeking to stop Hearst Corp. from buying the San Francisco Chronicle and selling the Examiner. Reilly lost his fight after a colorful and complicated trial, when a judge ruled in July that the deal did not threaten newspaper competition.

Fang, publisher of Asian Week and the Independent newspaper, two local publications, came out as one of the victors in that case. Under the agreement, he bought the Examiner from Hearst for a dollar and was promised the $66 million subsidy over three years from Hearst.

Fang, who plans to publish the first edition Nov. 22, did not immediately return a phone call yesterday.

FPP, founded in 1972, is an independent printing company based in Union City, east of the San Francisco Bay. About 50 employees help print local publications that include the San Francisco Business Times, Bay Classified and the Daily Californian at the University of California, Berkeley.

Girard said FPP is seeking an injunction to stop Grant Printing from allegedly underpricing the competition and to stop Diaz from using inside information against the company. Girard said he has an idea of how much FPP has lost, but declined to discuss that.