Partial Merger of Detroit’s 2 Papers Blocked : Judge Grants Opponents Stay Until Sept. 17

A federal judge Wednesday temporarily blocked a partial merger of Detroit’s two newspapers, the Free Press and the News.

U.S. District Judge Joyce Hens Green issued an emergency order, effective until Sept. 17, that will prevent the joint operating agreement from taking effect. It was due to begin Thursday.

Former Atty. Gen. Edwin Meese III approved the deal before leaving office last week. Both newspapers sought the agreement under an antitrust exemption of the Newspaper Preservation Act.

“To borrow the phrase used by counsel for plaintiffs, it will be very difficult to reassemble this egg once it has been scrambled,” the judge said, hours after attorneys for advertisers and readers argued for the order.

She scheduled a further hearing for Sept. 8.

Reacting to the ruling, Detroit Free Press Publisher David Lawrence said: “I am very disappointed. It (the decision) seems to me to be so cruel to all the individuals involved.”

Came as Surprise

“The people of the Free Press have gone through 28 months of uncertainty and now they still don’t know what will happen to them and this newspaper,” he said.

Chip Weil, publisher of the Detroit News, said he was stunned by Green’s decision.

“Everything was ready to go,” Weil said. “But now, with the restraining order, we will go back to what we were doing before and that is putting out a fine newspaper.”

William Keating, chief executive officer of the Detroit Newspaper Agency that would oversee the joint operating agreement, was not immediately available for comment.

In her ruling, the judge said that if the agreement is immediately implemented, “immediate harm will ensue.”

“Hundreds of jobs are scheduled to be terminated; the cost of purchasing the newspapers, as well as placing advertisements in them, appear likely to rise, and only one newspaper, rather than two, will be available in Detroit on the weekends.

“Thus, consolidation of the Free Press and the News will harm their employees, their advertisers and their customers as well. . . . Besides being immediate, these injuries will also be irreparable,” the judge said.

William B. Schultz, an attorney representing a group of advertisers and readers, argued that Meese arbitrarily ignored an administrative law judge’s finding that neither daily qualified for the antitrust exemption as a “failing newspaper.”

Both in Top 10

“As the administrative law judge found, it is not a situation where one newspaper is dominant and the other is failing. It’s a situation where both are in a struggle, and it’s not clear who is going to win.”

Both papers rank among the nation’s 10 largest in terms of circulation but have each posted significant losses in recent years in a continuing battle to dominate Detroit’s newspaper market.

Philip A. Lacovara, representing the Free Press, called the partial merger “the only solution to a bad situation.”

“The Free Press cannot survive, cannot become profitable so long as it is in commercial competition with the News,” he told the judge.

Although the joint operating agreement will eliminate 500 jobs, its implementation would forestall the closing of the Free Press, which employs 1,500 people, Lacovara said.

Knight-Ridder had threatened to close the morning newspaper if Meese rejected the partial merger. Alvah Chapman, the publishing company’s chairman, has said the Free Press sustained $100 million in operating losses since 1979.

“The Free Press has no unilateral way out. The competitive situation is such that it can’t get in the black by unilaterally raising its prices,” Lacovara said, noting the newspaper’s daily newsstand price of 20 cents was already a nickel higher than what the News charges Detroit readers.

Under the deal, the daily newsstand price of the Free Press in the city will rise to 25 cents and the News will go from 15 cents to 20 cents.

Schultz argued that the executives of both newspapers met in 1980 and discussed “the importance of the Detroit Free Press to continue to show losses in order to make a case” for a joint operating agreement sometime in the future.

Justice Department attorney Thomas Millet defended Meese’s decision, saying the former attorney general correctly concluded that the Free Press’ losses were unlikely to be reversed.