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New Times Cuts Deal to Close L.A. Paper

October 03, 2002|TIM RUTTEN and J. MICHAEL KENNEDY | TIMES STAFF WRITERS

Readers of alternative newspapers in Los Angeles have one less alternative: New Times is dead.

The paper was killed as a part of an arrangement negotiated in secret by the nation's two leading alternative newspaper chains during the last three months. The result looks very much like a good old-fashioned capitalist deal--trading cash for markets. Legal experts said the deal could raise antitrust issues.

The Phoenix-based New Times chain agreed to close 6-year-old New Times Los Angeles, ceding its Southern California niche to L.A. Weekly, which is owned by New York-based Village Voice Media. In exchange, Voice Media paid New Times a cash fee, which sources put at more than $1 million. Voice Media also agreed to shut down its Cleveland Free Times in consideration of a smaller cash payment from New Times, leaving that city to the latter's Cleveland Scene.

Both closures were immediate, and staff members were asked to clean out their desks by midday Wednesday.

Michael Lacey, executive editor of the New Times chain, said 21 of the Los Angeles paper's journalists and some of its advertising staff are being offered jobs elsewhere in the chain. The paper's two film critics will remain in Los Angeles on the company's payroll. Overall, New Times Los Angeles employed about 70 people. Forty-eight workers lost their jobs at the Cleveland Free Times.

Executives at both shuttered papers said all workers, even those who might be hired by other papers in the chains, have received severance payments.

New Times was an amalgam of entertainment journalism and bare- knuckles cover stories and columns with a penchant for name-calling.

Alex Ben Block, executive director of the Los Angeles Press Club's board, decried the deal as one struck "for marginal economic gain by two large, profitable corporations looking to cut costs in a difficult business environment." New Times Los Angeles' closure, he said in a statement, leaves the city "poorer in spirit and soul."

Lacey informed the paper's writers and editors of the closure Tuesday night at Shutters hotel in Santa Monica, where they had gathered to attend what they thought was an editorial meeting.

"None of us had an inkling of what was coming," said Managing Editor Jack Cheevers, who will assume the same post at New Times' SF Weekly.

Lacey, according to New Times Editor Rick Barrs, said, "I'm sad to say that the paper will cease publication with this issue. The post-9/11 economy killed us. We just never recovered from the advertising downturn after that. Mike ordered 20 bottles of wine and we drank it all."

Among those at Tuesday's meeting was Jill Stewart, the paper's political columnist. She said she knew something was up when Lacey ordered all 20 bottles of wine opened at once. "He said he was literally sick to his stomach, that it was the worst thing he had to do in all his life," she said.

The deal left New Times with 11 weekly publications stretching from Palm Beach, Fla., to San Francisco. Village Voice Media now publishes seven alternative newspapers, the largest of which are L.A. Weekly and New York's Village Voice. Both companies are privately held.

Talks between the chains' financial officers began in July and concluded Monday, according to David Schneiderman, chief executive of Voice Media. The money transfers occurred Tuesday afternoon, hours before the closures were announced to selected members of the papers' staffs.

"It started with financial guys on both sides talking about the problems in Cleveland," Schneiderman said. "It's a smallish market where we were both at each other's necks. Then the discussions expanded to Los Angeles. That essentially broke the impasse we had in Cleveland, and Monday [New Times CEO] Jim Larkin and I signed off on the deal."

Neither Schneiderman nor Lacey would comment on the size of the cash payments.

Both Schneiderman and L.A. Weekly Publisher Beth Sestanovich said they were unconcerned about the arrangement's antitrust implications, because both Los Angeles and Cleveland retain numerous print and broadcast outlets.

"It's not as if we're leaving Los Angeles with one newspaper," Sestanovich said.

Legal experts, however, were skeptical. "This could raise rather interesting antitrust issues," said Don Hibner, an expert on antitrust with law firm Sheppard, Mullin Richter & Hampton. "On its face, it doesn't seem right."

Contracts or written agreements that reduce output or raise prices are prohibited by the Sherman Antitrust Act. Even though both New Times and the Weekly are distributed free, there probably will be an increase in their advertising rates, Hibner said.

"That's going to injure advertisers," he said. "They will likely pay more and people will have less to read, that's a reduction of output. It looks like they're agreeing to pay money to stop the other guy from competing in their backyard. That's what antitrust laws are designed to prevent."

New Times Los Angeles employees were told that the doors of their Westside office would close at noon Wednesday. One of those leaving the building was Erika Ginter, a 26-year-old layout editor. When she walked into the office Wednesday morning, it seemed like another work day.

"I'm totally, utterly amazed," she said. "We had no idea. We just finished remodeling the office. They spent hundreds of thousands of dollars remodeling, so it totally shocked us."

By late Wednesday afternoon, New Times' Web site had disappeared, replaced by the Web site of L.A. Weekly.

*

Times staff writer Meg James contributed to this report.

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