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Tuesday, January 29, 2008

Guardian's Co-Publisher: No Sales Calls in 35 Years

Posted By on Tue, Jan 29, 2008 at 5:38 PM

By Andy Van De Voorde

Executive Associate Editor, Village Voice Media

The Bay Guardian’s lead witness in its predatory-pricing lawsuit against the Weekly admitted on the stand Tuesday that she has not personally made a sales call in the past 35 years.

Despite holding the title of “co-publisher,” and telling the jury that she is the person in charge of the Guardian’s “business side,” Jean Dibble acknowledged under cross-examination from Weekly attorney H. Sinclair Kerr Jr. that she has not sat down to talk with advertisers about their businesses for at least two decades.

Dibble’s admissions came shortly after she had testified under direct examination about the Guardian’s rates and its relationships with advertisers.

Dibble also admitted to Kerr that the Guardian has skimped on its Internet presence at a time when millions of readers are abandoning print newspapers for the Web. She told Kerr that her paper, which she and her husband, Bruce Brugmann, started in 1966, completely eliminated its Web department after the economic downturn that followed the terrorist attacks of September 11, 2001.

“It was one of the areas we just couldn’t keep, so we just did away with it,” testified Dibble, who earlier had reminisced about the days of “hot type.” Only in the past year has the Guardian hired back a staffer devoted to its Web site, she said.

Further insight into the Guardian’s tenous relationship with the Internet came during another exchange between Dibble and Kerr in which the Weekly attorney noted that tens of thousands of people in their 20s had left San Francisco after the dot-com bust in 2000. After Dibble acknowledged that Guardian readers have “gotten older” in recent years, Kerr asked her, “How familiar are you yourself with the Internet?”

“Somewhat,” she responded after a short pause. “Somewhat familiar.”

Her apparently nascent understanding of the Web was hinted at earlier, when she noted under questioning from Guardian attorney Ralph C. Alldredge that, at industry conventions, “We have people from the Internet come in and talk to us.”

However, Dibble’s admitted lack of expertise regarding the digital age didn’t prevent her from testifying earlier about whether the Internet is to blame for the Guardian’s reduced amounts of display advertising. It was her insistence that “less than half of 1 percent” of the Guardian’s display ads were lost to Web competition that led to the exchange with Kerr in which she admitted not having met with advertisers to discuss their concerns or motivations for more than twenty years.

“I have to depend on my sales staff,” she told him.

The co-publisher’s detached relationship with the operations of her own newspaper might explain why, according to deposition testimony, she is paid only $15,000 per year while Brugmann, to whom she has been married for 48 years, pays himself $168,000.

Dibble’s unfamiliarity with details also was underscored when Kerr asked Dibble to tell him how many advertisers had left the Guardian for the Internet -- or for the Yellow Pages or other competitors. She simply replied “very few” to each inquiry, but could not provide specifics.

The Guardian’s persistent efforts to deny or diminish the impact of the Internet on its sagging financial fortunes have been a running theme in the lawsuit, and for good reason. Unless it can convince the jury that the Weekly is to blame for what Alldredge called the “shrinking product” put on the streets by his client -- and not the same economic conditions that have led the San Francisco Chronicle to lose more than $1 million per week in recent years -- the Guardian will have a hard time proving damages.

On that score, Alldredge told the jury during his opening statement that “this case doesn’t involve a claim about classified advertising.” He specifically referred to the devastating effect the free-classified Web site Craigslist has had on print publications. The implication was that the Guardian was as aware as anyone of the Craigslist phenomenon, so of course would not attempt to blame its classified flameout on the Weekly.

But what Alldredge didn’t tell the jury -- and which came out only when Kerr cross-examined Dibble -- was that the Guardian actually did blame the Weekly for its loss of classified revenue when it sued its longtime rival in October 2004. Not only that, the Guardian maintained that claim as a fundamental part of the litigation until the third quarter of 2007, shortly before the case was slated to go to trial. By that time, literally dozens of articles had been written across the country about how Craigslist was decimating newspaper classifieds -- and it was common knowledge that the Weekly’s own classified department had suffered serious losses.

One theme Kerr returned to often during his cross-examination of Dibble and his opening statement was the fact that the Weekly has responded much more nimbly to the newspaper industry’s changing times. For instance, Kerr told the jury that, rather than suing anyone, the Weekly’s parent company, Village Voice Media, has started its own free online classifieds site,, to compete with Craigslist.

“The reason you withdrew [the classified advertising] claim is that you finally admitted the Internet competition had an effect -- isn’t that right?” Kerr asked Dibble.

She replied in the affirmative.

Kerr’s cross-examination of Dibble provided considerably more sparks than the two sides’ opening statements, which were essentially efforts to outline their respective cases for the jury.

Alldredge went first and devoted most of his 65-minute oratory to the Weekly’s alleged misdeeds.

The Weekly has lost money for eleven straight years, he said (a claim, Kerr noted, that the Weekly contests), and the losses continue to escalate. He claimed his client has lost “millions of dollars in business directly to the defendants just in the past six years.”

But Alldredge also took pains to lower the jury’s expectations with regard to proof. The Weekly doesn’t have to be found solely responsible for the Guardian’s losses in order to be culpable, he said; rather, its role in the Guardian’s self-proclaimed misery “just has to be substantial.”

Not only that, Alldredge argued, but the Guardian, which posted a modest profit last year despite the doom-and-gloom rhetoric of its lawsuit, shouldn’t even have to prove that it's a losing operation in order to claim damages. “You don’t have to lose money to be damaged,” he said.

Kerr told the jury that the Guardian’s constant complaining about “below-cost sales” on the part of the Weekly is a legalistic smokescreen. “The reason we were selling below cost is because that is all we could get for the ads,” he said.

In earlier court filings, the Guardian has admitted to making below-cost sales itself. And Kerr also got Dibble to admit that the Guardian itself lost money every year for the first “eight or nine years” of its existence. If the Weekly can be put under suspicion for posting several consecutive years of losses, he suggested, so could the Guardian.

Still more evidence of below-cost sales on the part of the Guardian came out when Kerr asked Dibble about the fact that New Times isn’t the only party to the lawsuit that has attempted to build a chain.

In fact, Kerr noted, when times were better, the Guardian attempted to build its own mini-empire in the Bay Area, taking on the East Bay Express in the early 1990s by starting an East Bay version of the Guardian. Though New Times’ chain-building efforts proved successful, Brugmann and Dibble posted less impressive results: Their East Bay version lost so much money that it had to be shuttered within two years. Dibble admitted selling below cost in that instance, and agreed with Kerr when he suggested that that didn’t mean she and Brugmann were attempting to “injure” the Express.

(Kerr’s point was relevant because under California state law, it is not illegal to make a below-cost sale. It is only illegal if that sale is made in an effort to injure a competitor -- which is what the Guardian is accusing the Weekly of doing.)

Dibble admitted making still more below-cost sales with another Brugmann bust, a publication called FYI. That glossy magazine was aimed at tourists, and despite being published during the height of the dot-com boom, it quickly fizzled. Again, Dibble admitted to Kerr, the below-cost sales made as part of the magazine's death spiral were not part of a plot to “injure a competitor.”

Attorney Alldredge chose not bring up the Guardian’s own history of selling below cost during his opening, instead choosing to hammer away at what appeared to be his central theme about the Weekly: “If a business isn’t operated for a profit, there must be something else going on.”

The attorney seemed especially perplexed by the fact that the Weekly had not made more stringent efforts to reduce costs. By contrast, he told the jury, the Guardian laid off large numbers of employees, including in the editorial department. He described that as an example of his client “living within its means.” The same point was made by Dibble, who told the jury under questioning from Alldredge that when faced with either cutting staff or circulation, the Guardian chose to cut staff first when it suffered a financial downturn after the dot-com implosion.

The perverse suggestion that a newspaper should get brownie points in a lawsuit for firing more journalists than its competition was something Kerr made a point of addressing.

“One thing [the Weekly] resisted was reducing the editorial side,” he told the jury during his opening statement. “We kept our reporters on, and kept their salaries at a high level, to see if we could survive this difficult time.”

That decision -- along with a steady commitment to the Weekly’s Web site -- appears to have paid off, he added. To make his point, Kerr showed the jury a chart of readership based on research done by The Media Audit. The chart showed both papers’ print readership declining, but the Weekly’s slowly overtaking the Guardian’s in recent months.

Several jurors perked up when Alldredge, during his opening, presented a series of e-mails written by executives from the Weekly’s former parent company, New Times Media. Alldredge put the missives up on a screen, describing them as “war” rhetoric. They included references to implementing “guerrilla strategies” and making “frontal assaults.”

In one exchange, New Times chief executive officer Jim Larkin wrote to Weekly publisher Josh Fromson and observed, “No way should [the Guardian] stay ahead of us in ad count like that.”

“They won’t -- that is the loudest drum I am beating around here,” Fromson replied.

Kerr suggested to the jury that businesses use similar bravado every day when sizing up their competitors. He also promised the panel that the Weekly will put into evidence e-mails from Guardian employees that make it clear the Guardian was just as keen on taking business away from the Weekly -- and used far more disparaging language while attempting to do so.

The intense competition between the papers was further illustrated when Alldredge told the jury the Weekly produced a regular “Guardian report” to track its rival’s ad base. But that observation appeared to be undercut when Dibble later acknowledged that the Guardian also kept regular tabs on the Weekly’s advertisers, even breaking them down by category.

As Kerr reminded jurors in his opening, “They did it -- we did it.”

Dibble was still on the stand at 1:30 p.m. when Superior Court Judge Marla J. Miller dismissed the jury for the day. Her cross-examination by Kerr will resume Wednesday morning at 8:30 a.m. at the courthouse on McAllister.

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