Reason to Question

A chunk of the carrying costs for the property have been paid for the last few years by Mondo Media, the digital animation and production firm that has had offices on the third floor of the 135 Mississippi building. But several sources make it clear that Mondo Media will soon be moving from the building.

Last week, the commercial real estate advisory firm of Grubb & Ellis was listing 9,778 square feet of space for lease on the building's second and third floors, including the space now occupied by Mondo. The asking rent was $15.50 per square foot, per year, on what is known as an "industrial gross" basis that, I am told, generally means the tenant is responsible for electricity and janitorial services. An agent has described the office leasing market in that part of town as slow.

Simple multiplication suggests that a failure to fill the space with a paying tenant or tenants would blow a $150,000-a-year hole in the budget for carrying the building at 135 Mississippi.

Such are the worries that dog commercial landlords on a regular basis. Are they the kind of worries that spur struggling newspaper owners -- owners who have jumped into the financial dark and found it scary -- to file lawsuits and launch self-serving propaganda offensives in hopes of a settlement that provides a cash windfall?

I'd say it's reasonable to wonder.

It is all but impossible for me to describe the incredulity with which the Weekly's ad sales staff greeted the Bay Guardian's lawsuit against the Weekly, the Express, and New Times.

Essentially, the suit claims that New Times' Bay Area papers have discounted ads below the cost of printing the newspaper pages that carry them, using profits from other New Times papers to cover the resulting losses, and offered secret deals to keep businesses from placing ads in the Guardian. This chicanery, the Bay Guardian claims, has stripped it of advertisers, forcing it into a financial corner.

To understand the outrage of our ad salespeople at the Guardian's claim, you would have to have been at my side, listening to salespeople mutter about the Guardian's pricing policies.

For a long time, I took the complaints with a grain of salt (only newspaper reporters, I've come to learn, bitch more than newspaper ad salesmen) -- until the Guardian filed its lawsuit. Then I challenged some of the bitchers: If it was really the Bay Guardian that was cheating, I said, prove it.

They did. And did and did.

An exquisitely absurd example they showed me involved a food service establishment that I won't embarrass by naming.

Here's what happened: The Bay Guardian offered a 1/5-page ad to the food establishment. The offer, as recounted in writing by the food establishment, went this way: The establishment would pay $250 a week over the life of the contract, plus $50 in "trade" (meaning that Bay Guardian personnel could eat their way through a $50 tab at the establishment each week for free). The establishment would get a 1/5-page black-and-white ad, plus one color (ordinarily something that costs extra). Also, the ad would be "upsized," for free, to 1/4 of a page eight times during the year.

At SF Weekly, the food establishment had been paying $327 a week, plus $50 in trade, for a black-and-white ad a little bit smaller than what the Guardian offered. In other words, the Bay Guardian undercut our prices by $4,000 over the course of a year (not even counting the upsize and color giveaways) on a single small ad.

Now, this is a less than brilliant way to do business; it's also absurd. Here's why: The Guardian's discount price for the aforementioned food establishment ad translates, in a positive analysis, to $1,500 for a full page of advertising. In its lawsuit, the Guardian claims SF Weekly has been violating the law by selling ads for less than the cost of producing the pages they sit on. And what was the cost to produce a page of advertising that the Bay Guardian posited in its very own lawsuit? It was $1,700. In other words, the Guardian sold this account at less than its own estimate of the cost. Now that's absurdity for you.

But not quite exquisite absurdity.

No, the exquisitely absurd facet of the Bay Guardian's food service ad discount involves its timing. This fire-sale offer for ad space was pending -- according to the advertiser's written account -- after the Bay Guardian filed its lawsuit alleging the Weekly was engaged in dastardly discounting practices.

In my opinion, the least reasonable discount I ran across involved a massage parlor. In a 52-week advertising agreement I've seen, the Guardian offered the parlor a one-column-wide-by-2-inch-deep ad in the paper's adult section for $42. A Weekly ad rep said he didn't even try to match the rate, noting that the lowest he'd be allowed to go for such an ad would be $150, or more than three times what the Guardian charged. The rep said the parlor was allowed to extend the ad for another year -- at the same giveaway rate. For those of you who are counting, over two years that's an $11,000 revenue gap between our rate and theirs.