3. The Examiner is Not a Failing Enterprise that Hearst Should be Allowed to Close

A readily apparent problem with Hearst’s third defense is that it contradicts the second. If the Fangs can make a go of The Examiner, then it cannot be a failing company. If it is a failing company, then the Fangs cannot make a go of it. Defendants ought to decide which position to take, instead of flip-flopping between the two, as they did in the hearings on March 30 (when they said the Fangs would succeed) and April 13 (when they said no one could succeed).

Although defendants’ experts incline to the latter view (failing company), under the JOA The Examiner is highly profitable, and will continue to be so through 2005. Given the pace of technology and the uncertainty of prognostication, no one can say that at the end of the JOA The Examiner will be doomed. With ownership of half the Agency’s assets and half its profits, The Examiner has easily covered its news and editorial costs up to now, and been left with a tidy profit. When one adds Hearst’s enthusiasm for the San Francisco market and its desire to remain in this market, one cannot find The Examiner to be a failing company.

A "failing company" defense under Clayton section 7 requires a showing that a business "is on the brink of collapse, its prospects for reorganization are dim or nonexistent, and no other noncompeting buyers are available." Committee for an Independent P-I v. Hearst Corp., 704 F.2d 467, 473-74 (9^th Cir. 1983). Hearst can establish none of these elements. The Examiner is not on the brink of collapse; its prospects and profits are assured through at least 2005, the term of the JOA. Its prospects for reorganization are not dim; supported by the assets and revenue of the Agency, Hearst could easily move The Examiner to the morning were CPC to consent. Moreover, because The Examiner is financially healthy, it has no need to reorganize. Finally, Hearst cannot show an absence of non-competing buyers, because Hearst has never offered The Examiner for sale with all its assets, including its one-half interest in JOA profits and Agency property. Under the law, The Examiner is not a failing company.