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SAN FRANCISCO (AFX) - A federal judge on Friday declined to block McClatchy Co.'s plan to sell three Bay Area newspapers to MediaNews Group Inc.
The decision comes amid allegations that the $1 billion deal -- which includes the $737 million sale of the Monterey County Herald, San Jose Mercury News and Contra Costa Times -- would give the Denver-based MediaNews chain a monopoly in the Bay Area.
U.S. District Judge Susan Illston's decision came in response to an antitrust lawsuit brought by San Francisco real estate magnate Clint Reilly, who sought to temporarily block the transaction. Reilly was concerned that MediaNews could have a monopoly on readership and advertising.
Illston ruled that newspapers face competition from other news sources that also advertise. She ruled: "As an initial matter, there will continue to be other sources that continue to provide consumers with 'news, editorial, entertainment and advertising content' such as the television, radio and the Internet."
The judge left open the possibility that she would entertain arguments in the future challenging the assumption.
Joseph Alioto, Reilly's attorney, said he would still proceed with his client's lawsuit.
Illston's decision does not mean the deal will go through in the end. Justice Department regulators have not signed off on the deal and the government has not indicated when it will conclude its own antitrust investigation.
MediaNews' lawyers told Illston that the deal needs to get closed within days as financing agreements begin expiring.
Gary Pruitt, McClatchy's chairman and CEO, said the company is waiting for Justice Department approval before closing the deal.
Sacramento, Calif.-based McClatchy reached an agreement in April to sell the three Bay Area papers to MediaNews with backing from Hearst and the other publishers. McClatchy got the papers as part of its $4 billion acquisition of San Jose-based Knight Ridder Inc.
Reilly's challenge comes six years after he turned the sale of the San Francisco Chronicle into a legal marathon.
Reilly tried to block Hearst from acquiring the San Francisco Chronicle in 2000, but a judge rejected his claims that the sale created a monopoly for Hearst, which already owned the rival San Francisco Examiner. The litigation delayed and complicated the deal.
MediaNews, which claims the Denver Post, already owns eight San Francisco Bay area newspapers, including the Oakland Tribune. Copyright 2006 Associated Press. All rights reserved. This material may not be
Copyright 2006 AFX News Limited. All Rights Reserved.
