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In his letters to Hoisington and Kydd, Allegretti referred to a 2008 predatory-pricing court case, Bay Guardian Company vs. New Times Media, LLC. The Bay Guardian newspaper was awarded $21 million in damages after a jury found the Guardian’s rival alternative newspaper, the SF Weekly, guilty of underpricing ads with the intent to drive the Guardian out of business. In that case, the Guardian presented evidence that shortly after New Times Media acquired the SF Weekly, a corporate executive told Weekly staff that New Times “would make the Weekly ‘the only game in town’ by subsidizing aggressive advertising sales,” according to a November 24, 2010 article in the San Francisco Chronicle.

Allegretti warned Hoisington and Kydd that he has been in contact with the same legal team that represented the Guardian.

However, “It is only predatory pricing if the price reduction is implemented for the purpose of driving a competitor out of business,” says Richard Spirra, who practices media law in San Diego.

“There are legally permissible reasons for a newspaper, or any other business, to cut the price it charges customers to below the company’s cost of producing its product. For example, a company may offer a significant discount to new customers to generate new business.”

Predatory pricing cases are difficult to prove, says Spirra. “Under the applicable California law, if the defendant company’s owner or employees testify that the company had a valid reason for reducing its prices, the plaintiff must convince the jury that the company’s real reason for decreasing prices was to drive the plaintiff out of business. This is difficult because, in most cases, it is unlikely that an employee of the company will admit, or that there will be notes or memos that state, that the purpose of the price reduction was to drive a competitor out of business.”

Hoisington and Kydd say that the antitrust laws Allegretti cites are meant to protect small businesses like their own from large ones like MainStreet, not the other way around.

Jeffrey Shohet, who practices antitrust and complex business litigation in San Diego for DLA Piper, agrees.

“Predatory price litigation is typically a remedy for the smaller competitor to challenge the pricing practices of its more dominant rivals. Typically, the predatory ‘pricer’ is the larger company with resources to price below its cost and outlast its smaller rivals who cannot match such low prices for very long.”

Tracy Pendergast publishes the luxury real estate magazine San Diego Premier Properties and Lifestyles. In December 2009, MainStreet Communications acquired part of Premier. One year later, frustrated by Allegretti’s business tactics, Pendergast decided to buy Premier back. I called her office to ask about her experience with Allegretti.

“During our publisher meetings, he would make comments about sending letters to his competitors for selling ads below cost. He said that, technically, papers only needed to sell one page below cost to violate the law.”

Asked to comment, Allegretti stated by email, “This is a legal matter and I have no comment on pending legal matters.”

Steve Staloch, vice president of MainStreet, Joe Niehaus of Housatonic Partners, and Donald Hawks of Brookside Capital Partners Management also refused to comment.

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Comments

scf April 20, 2011 @ 3:12 p.m.

ah my god this guy alligretti is a serious moron..hes siting case law thats meant to protect the small guy! idiot!!...I think thats pathetic he feels its necessary to try and scare owners by saying they estimate 2 mil in legal fees?? get the f@^& outta here..what a thug...think hes gonna come in and shake people down..scare people? shit, he aint even from here...as the lady from sd said, we have raised families here, started businesses...he just moves into town and thinks hes gonna take over? like hes some gangster or something? please.. Hey Alligrody...heres a message for you...Dont hate the player, hate the game....if you must hate om something.. nice try though, your scare tactics almost worked..

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SurfPuppy619 April 26, 2011 @ 6:09 p.m.

Although Kydd and Hoisington consider Allegretti’s letters just another attempt to corner the community-newspaper market in San Diego County, both fear that he will stop at nothing to achieve his goal.

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We are the real local community newspapers. We’ve raised our children in the community, and we run our business here. But my concern is that they are a corporation with investors and money in the bank. I don’t have deep pockets to go through some lawsuit. I am concerned that I might have to play the legal game.”

Allegretti is an idiot if he thinks ANYONE is going to fall for his sham attempt at a shakedown.

And since he has a subscription to Lexis-Nexis he needs to look up California's Anti-SLAPP codes-CCP 425.16, because I have a strong feeling he may be violating it.

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Visduh April 20, 2011 @ 7:59 p.m.

This may be a reflection of how the newspaper industry has changed in the past 20-30 years. When I was peripherally involved with it, there were many such papers, and all seemed to be making a nice living or better. In the late 70's a number of the news chains started to go around the US buying up community papers as fast as they could, paying millions to the mom-and-pop owners of many of them. The mass merchandise retailers, notably Kmart, wanted a saturation delivery system to get their preprinted ads into every household, and were willing to pay for it.

The La Jolla Light was a class publication. It was bought as part of the Harte-Hanks attempt to unseat Copley, starting about 1972. That attempt failed. It has been through many changes of ownership since, that's for sure. The whole topic of this story smacks of bullying, and there's more of that out there than most of us could imagine. With major daily newspapers on the ropes, this group is really trying to swim against the current.

I've seen how bullying, the sort that had little or no legal basis, can get non-confrontational people to back down. The prospect of paying megabucks to some attorney to defend you can surely be discouraging. Many innocent folks just fold when so threatened. Let's hope these small fry fight back.

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SurfPuppy619 April 26, 2011 @ 6:31 p.m.

I've seen how bullying, the sort that had little or no legal basis, can get non-confrontational people to back down. The prospect of paying megabucks to some attorney to defend you can surely be discouraging.

If you're a business owner and someone is trying to stick their hand in your pocket you better learn to be confrontational or you will not be a business owner for very long.

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MiriamRaftery April 28, 2011 @ 12:39 a.m.

I'd counter sue this bully for harassment if I were those publishers. Hasn't he ever heard of the free market and competition?

After reading this, I will never read his publications or link to them, since I can't abide anyone who tries to intimidate the press. Apparently he doesn't believe the market will support his publications on their merit, so he stoops to harassing his competitors.

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