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Weekly papers' battle over ads is a full-court press

The Beverly Hills Courier accuses the Westside Chronicle of stealing 'trade secrets.' A countersuit alleges unfair competition.

June 21, 2007|John L. Mitchell | Times Staff Writer

While the fates of media giants Dow Jones, Tribune and McClatchy play out in the business pages of newspapers nationwide, another press battle is quietly taking shape on a much smaller scale on the Westside of Los Angeles.

Two weeklies, the Westside Chronicle and the Beverly Hills Courier, are locked in a turf war over advertising, endorsements and readership. Bad feelings and court appearances are piling up.

The legal tiff started in March 2006, days after the Westside Chronicle published its first issue. The Beverly Hills Courier filed a lawsuit accusing the Chronicle's publisher, Vipin Sahgal, and several people on his staff -- most of them former Courier employees -- of stealing "trade secrets" and asked the courts to block the paper from contacting its advertisers.

"The lawsuit was filed to snuff out the competition because Vipin had the temerity to exercise his 1st Amendment rights and start a newspaper," said lawyer Jeffrey A. Lipow, who represents the Chronicle.

The Chronicle countered with its own lawsuit, accusing the Courier's publisher, Clifton S. Smith Jr.; its parent company, San Marino Tribune Co.; and three major investors of unfair competition, interference and slander. (Sahgal said Smith called him a con artist, hence the slander allegation.)

Signs of the war were evident in the Chronicle's first anniversary issue in March, a paper loaded with testimonials from local elected officials. Among the most prominent, Los Angeles Mayor Antonio Villaraigosa praised the free weekly for having "established itself as an important, respected newspaper."

Los Angeles County Supervisor Zev Yaroslavsky offered his congratulations, describing the Chronicle as one of the "most informative and professionally run community newspapers -- and websites."

But something was missing from that special anniversary issue: There wasn't a word of praise from any officials in Beverly Hills, the region's crown jewel of advertising.

"I got zero, nothing," snapped Sahgal, miffed at being snubbed by the Beverly Hills mayor after five requests.

But if Sahgal was annoyed, he wasn't surprised. In Beverly Hills, the Westside Chronicle is considered a regional weekly, devoting usually no more than two pages to Beverly Hills news, unlike the more concentrated coverage in the city's two hometown favorites, the Courier and the Beverly Hills Weekly.

"My loyalty is to support the local business community, and the Courier and the Weekly fit that description," said former Beverly Hills Mayor Steve Webb, who chose not to respond to Sahgal's request for a letter of endorsement.

Sahgal insists there's something else behind the reluctance to advertise in his paper.

"What they are telling me is that I don't fit in," he said. "It's like they're saying: 'You're a foreigner and you don't belong.' "

The 67-year-old native of New Delhi moved to the United States in the late '60s and began work as a corporate managing consultant. An expert in mergers and acquisitions, he earned the nickname "the Wizard" buying and selling troubled companies and dabbling in television shows, country music and furniture.

In 1988, a small investment firm owned by Sahgal violated federal securities laws -- and alarmed Wall Street -- by falsely saying it had made a "firm offer" to buy a Van Nuys-based supplier of automotive wheels, a federal judge later ruled.

About the same time, Sahgal was part of a group that bought and later sold a microwave cooking products unit from Litton Industries Inc.

"I'm a true professional without a profession," he claims. "Challenge is a motivator."

Before starting his paper, Sahgal worked as a consultant for the Courier, Beverly Hills' oldest weekly newspaper, and was a legal client of its publisher. When Sahgal left, he hired away the paper's general manager, its art and design coordinator, a display account executive, a production graphics operator, an associate editor, sales manager and a youth and sports editor (his son).

In its lawsuit, the Courier accused Sahgal of scheming to take away its advertisers -- stealing the paper's "trade secrets" -- and asked the court to issue an injunction. But after six days of testimony last year, a Superior Court judge in Los Angeles refused to grant a preliminary injunction. Smith and his attorney did not respond to numerous requests for comment.

"What are the trade secrets?" asked lawyer Fred Fenster, who once represented Sahgal and writes a weekly column in his paper. "The information that you are trying to protect must be something that is unavailable to competitors," he said, adding that names of newspaper advertisers cannot be considered trade secrets because they are in the paper.

The legal squabble, Fenster said, is an indication of how competitive the free weekly newspaper market is.

"It's a battle for survival because there are only a limited amount of companies who will advertise," he said.

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