A Higher Court

The legal tussle between SF Weekly and the Bay Guardian rises to a new level.

The Guardian, however, argues vociferously in favor of California law as it was interpreted by trial judge Marla J. Miller: If the jury found SF Weekly sold even a single ad below cost that "injured" the Guardian, any and all below-cost ads were presumed to have an anticompetitive intent. According to the Guardian, the standard set by the U.S. Supreme Court just doesn't apply in California. It's that simple.

Both briefs also provide a recap of the facts at trial. The Guardian's argument is largely circumstantial; claiming that SF Weekly lost money every year since New Times bought it in 1995 (actually, SFWeekly posted operating profits in 2000 and 2001), it suggests that only a predatory plot could explain a willingness to absorb such deficits.

The Guardian says it's SF Weekly's fault that Guardian display advertising revenues fell from $7.6 million at the end of 2000 to $4.5 million by the end of 2007.

But SF Weekly's brief argues that it's absurd to think the two papers compete only against each other, and quotes internal documents in which both Brugmann and executive editor Tim Redmond talk at length about the wide array of media competitors in the Bay Area.

SF Weekly also cites Harvard economics professor Joseph Kalt, who testified for the defense and noted that, based on the numbers, the Guardian stance of solely blaming SF Weekly makes no sense.

Both papers, Kalt testified, saw revenues grow during the boom years of the mid-to-late 1990s. Both saw revenues fall beginning with the dot-com bust in 2000 (combined, the two papers' revenues dropped from $19 million in 2000 to $12.5 million in 2006). Both suffered from the exodus of thousands of readers to the Internet.

Not so, Brugmann said during the trial: He made the remarkable claim that his newspaper's revenues had been unaffected by Web competition, a position that seemed to pose the Guardian as the only American newspaper to earn that distinction.

If a predatory strategy were in place, Kalt argued, SF Weekly's revenues would have been rising during the damages period of 2001 to 2007. Instead, he said, the data showed that advertisers were moving away from print media, which explained why revenues at both papers were going "down, down, down."

Now that the Guardian has responded, SF Weekly will file one additional reply with the court, probably by the end of February. Once that reply is received, the Court of Appeal will set a date for oral arguments, or could issue a ruling based on the pleadings.

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