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Bay Area papers' deal blocked

November 29, 2006|From the Associated Press

SAN FRANCISCO — A federal judge Tuesday temporarily blocked the consolidation of some of the San Francisco Chronicle's business operations with those of rival newspapers owned by MediaNews Group Inc.

Denver-based MediaNews, which owns the Oakland Tribune and seven other Bay Area newspapers, acquired the Monterey County Herald, San Jose Mercury News and Contra Costa Times from Sacramento-based McClatchy Co. this year.

The complex $1-billion deal included $300 million in financing from Hearst Corp., owner of the Chronicle.

In July, U.S. District Judge Susan Illston let the deal go through. But in issuing Tuesday's restraining order, she said a letter had recently surfaced showing that New York-based Hearst had an undisclosed motive for investing in the deal -- to consolidate its Bay Area advertising and distribution operations with those of the Chronicle's competitors -- a possible antitrust violation.

"Such agreements would alter the court's analysis of this case as a whole," Illston wrote, and would "increase the likelihood that the transactions at issue here were anticompetitive and illegal."

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