San Diego There's been an intriguing bump along the road in David Copley's attempt to dismantle his late mother's newspaper empire to pay estate taxes: the sale of the Torrance Daily Breeze, expected to close on November 30, was abruptly put off. The next day, with the buyer still unidentified, the Daily Breeze told readers that the snag involved an "undisclosed technical issue" and added that the deal "could be completed by the end of next week." Then, last Wednesday, new information was revealed in an antitrust case filed in San Francisco federal court by wealthy political consultant Clint Reilly against the Hearst Corporation and the MediaNews Group.
According to a declaration filed with the court by MediaNews Group president Joseph J. Lodovic IV, Copley is set to sell the Daily Breeze to Hearst. Hearst will later transfer the paper to Denver-based MediaNews in a complicated arrangement that also includes the Monterey County Herald and the St. Paul (MN) Pioneer Press. Hearst will ultimately get a 30 percent interest in MediaNews. Reilly argues that MediaNews, which recently bought the San Jose Mercury News and the Contra Costa Times as part of the breakup of the Knight Ridder chain, and Hearst, which owns the San Francisco Chronicle, are working together to take over the Bay Area's newspaper advertising market, a charge denied by Lodovic.
"The Hearst equity investment in MediaNews, which is still pending, is carefully structured to exclude MediaNews' Bay Area properties," the declaration says. "The transaction documents deny Hearst any ownership interest in, influence over, or rights to non-public information with respect to MediaNews' Bay Area newspapers." But after disclosing the Daily Breeze purchase from Copley, Lodovic then reveals that the two firms aren't done dealing. "Hearst and MediaNews are contemplating another possible acquisition of a newspaper located in the Northeast. While the parties have not consummated this transaction, there is no circumstance in which it would involve Bay Area newspapers."
Though Copley has said it has no intention of unloading the Union-Tribune as part of the previously announced sell-off of its remaining seven papers in Illinois and Ohio, the fact that Hearst and MediaNews are collaborating on the Daily Breeze transaction has fueled speculation that the two newspaper giants may ultimately be eyeing Copley's San Diego flagship. Much other material in the Reilly case is under court seal, including a December 6 declaration by James M. Asher, Hearst senior vice president and chief legal and development officer in charge of acquisitions.