Hearst, MediaNews settle antitrust suit


SAN FRANCISCO -- Hearst Corp. and MediaNews Group Inc. have settled an antitrust lawsuit initiated by a San Francisco businessman that alleged a business partnership between the two newspaper publishers would create a regional monopoly on readership and advertising.

The two companies agreed to rescind an agreement to share national advertising, distribution and production in the Bay Area under a settlement announced Wednesday with San Francisco businessman Clint Reilly.

New York-based Hearst, which owns the San Francisco Chronicle, invested $300 million in MediaNews in a complex deal that helped finance the Denver-based publisher's purchase of the Contra Costa Times, Monterey County Herald and San Jose Mercury News last year.

In the federal lawsuit filed in July, Reilly alleged that the business partnership would limit competition in the regional newspaper market, drive up subscription prices and reduce journalistic diversity. He cited the April 2006 cooperative agreement between the two companies.

The companies decided to rescind that agreement to "put to rest the uncertainties and suspicions Mr. Reilly raised for what it meant for the relationship between Hearst and MediaNews," said Hearst attorney Dan Wall. "There isn't any compelling business reason to do it."

While Hearst and MediaNews agreed to cancel the 2006 agreement, the settlement does not bar them from forming a business partnership in the Bay Area in the future, Wall said.

The settlement will not affect Hearst's investment in MediaNews outside the Bay Area, the companies said.

Both Hearst and MediaNews are privately held companies.