Unfair Lawsuit Act

The other alleged secret rebate involves the controversial deal between the Weekly and concert promoter Bill Graham Presents (now LiveNation) for the naming rights to the Warfield Theater. The 2005 agreement — made nearly one year after the Guardian filed its lawsuit — immediately created controversy. The Guardian said Bill Graham Presents (BGP) — affiliated with media giant Clear Channel — pulled its advertising from the paper after the naming-rights deal went down. Tim Redmond, the Guardian's executive editor, told the Berkeley Daily Planet that BGP had been one of the paper's top 10 advertisers.

Perhaps the most intriguing argument to dismiss the lawsuit flips the David-versus-Goliath story pushed by the Guardian on its head: The Weekly's lawyers contend that Brugmann is using his lawsuit to unconstitutionally gut this paper's news operation.

Unlike other alt-weeklies who rely heavily on freelancers, Village Voice Media relies heavily on local full-time editors and staff writers (who get health benefits) at each of its papers. And unlike many other news organizations, Lacey says writers are perhaps the most important component of his company. The result: His writers win lots of awards for their journalism.

He points to the Pulitzer Prize won this year by LA Weekly food critic Jonathan Gold, as well as having four young writers in the chain named as Livingston Awards finalists the most of any news organization in the nation. Here in San Francisco, former SF Weekly writer Lisa Davis won the prestigious George Polk Award in 2002 for environmental reporting for her investigation of mishandled radioactive waste at Hunters Point Shipyard. "This isn't fucking happenstance," Lacey says.

Happenstance or not, one thing is for sure: Paying salaried reporters costs a lot of money. Lacey says he and his longtime business partner Larkin believe the investment in editorial is worth it — even if a paper is losing money. "It's our belief," Lacey says, "that if we stay with this and hang with it, eventually the readers will respond to it."

Lacey says that with this lawsuit, Brugmann is trying to force his own economic model on the Weekly — one that relies heavily not just on freelancers, but also unpaid interns, instead of full-time reporters. "Bruce can't tell us how much to invest in putting out the newspaper we want to put out," Lacey says.

If the Guardian won its lawsuit, it would ultimately force this company to cut editorial costs, the Weekly's lawyers argue. That, they say, would be a violation of the news company's First Amendment rights to spend its money how it sees fit.

It's a provocative — some may say exotic — argument, which requires some background: The Guardian alleges that the Weekly illegally sold ads below cost to kill the competition. The average "cost" of a newspaper page includes all the overhead expenses that go into printing it. One of the biggest expenses is the reporters' salaries and benefits paid to produce content for the page.

The Guardian is, in effect, demanding that the Weekly raise its ad rates in a depressed print-media market where even the San Francisco Chronicle — the only paid-circulation daily in town — is losing tens of millions of dollars. This would result in less advertising and income for the Weekly, thus forcing the paper to have to make cost cuts in personnel.

While newspapers aren't exempt from anti-trust laws, the attorneys say that California's unfair practices act was created in the 1930s and intended to "apply to commodities like bread and milk, and not fundamental rights like free speech." While they acknowledge that there's no exact case law on point, they cite a U.S. Supreme Court decision throwing out Florida's "right to reply" law that gave politicians the right to respond to criticism from a newspaper in that newspaper. In that case, the high court decided that the law illegally interfered with editorial decision-making in the press by forcing newspapers to publish something they didn't want to print.

The Weekly's lawyers write: "There is no free press distinction — none — between the application of a statute in a manner that requires an editor or publisher to "publish that which he would prefer to withhold'" — like column space for a politician — "and the application of a sales below cost statute in a manner that would require that they "withhold that which they would prefer to publish' simply because ad revenues are insufficient to offset editorial and distribution costs at the levels editors and publishers choose."