F. HEARST’S MONOPOLY PROBLEM

Hearst then faced the problem that it would own the only two daily newspapers in San Francisco and that it intended to close The Examiner, thereby achieving a monopoly in the relevant market. Accordingly, Hearst decided to offer The Examiner for sale, in order to secure Justice Department approval for its purchase of The Chronicle.

Initially, The Examiner assets offered by Hearst included nothing from the Agency, but only news and editorial assets. Any buyer of The Examiner would therefore have had to arrange separately for printing and distribution of the paper, and all other business functions. Hearst received no offer for this package. Instead, Hearst received widespread criticism for offering a mere shell. (PX 13, PX 15, PX 19.)

Hearst therefore changed the package of Examiner assets it was offering. On January 25, 2000, Hearst announced that it was offering The Examiner as a "turnkey" package, with production and distribution assets and a period of transitional assistance for any new owner. Hearst did not offer its interest in the JOA, however, including the right to receive half the Agency’s profits. This deterred most eligible buyers, such as Knight Ridder, which was interested in The Examiner only if the JOA interest were available. (PX 19, PX 53, PX 92, PX 21, PX 24.)

Hearst received only three offers for The Examiner: from a New York concern not in the newspaper business; from the Fangs; and from plaintiff. Each proposal required Hearst to pay a multimillion dollar, multiyear subsidy to the acquirer, in effect a negative purchase price. Hearst did not pursue negotiations with the New York concern, but focused instead on plaintiff and the Fangs.