Its own documents say its high rates — not the Weekly’s low ones — were the problem.
By Andy Van De Voorde
The first Bay Guardian salesperson to testify in the newspaper’s predatory pricing lawsuit against the SF Weekly took the stand Friday, as part of the paper’s effort to prove the Weekly stole Guardian customers by offering them illegally low prices.
But Mary Samson’s appearance backfired when Guardian attorneys put up examples of e-mails between her and her customers.
Samson, who works as the Guardian’s national sales representative, testified about three specific accounts she claimed her paper had lost to the Weekly because of price.
Samson first cited Crunch Fitness, a company that runs gyms across the country. She told the jury she used to have full-page, four-color ads from the customer, but lost them to her competitor. But when April 2007 e-mails between her and the Crunch representative were shown to the court, they revealed that Crunch wasn’t actually advertising with the Guardian at the time those messages were written.
The e-mails also contained a note from the Crunch rep: “Hey, Mary, we had to cut the Guardian because of cost; we’re doing TV in San Fran, keeping the Weekly because of cost.”
That notation seemed to suggest that the customer chose not to advertise with the Guardian not because the Weekly’s prices were so low but because the Guardian’s prices were too high.
A similar dynamic characterized correspondence the Guardian put into evidence about its dealings with Parrot Cellular — which Samson admitted advertised only “infrequently” with her publication to begin with.
In one e-mail, the Parrot rep noted that, “I just don’t have that much money to buy an ad right now. … It’s a struggle since they [national phone companies such as AT&T] cut our co-op budgets.”
The Parrot spokeswoman also told Samson that she “didn’t want to spend a fortune,” and noted that she was paying “less than $2,000 for that size/color for SFW and Metro SV [which Samson told the court meant Metro, an alternative weekly based in San Jose].”
It’s unclear why the Guardian chose to highlight the correspondence, given the clear implication that Parrot simply couldn’t afford the Guardian’s higher prices given the cellular company’s lower advertising budget — and that another local weekly, not just the Weekly, was also offering the customer a better deal.
The third account Samson referred to was H&M, a fashion retailer with stores around the world. Guardian attorneys began by showing the jury e-mails between Samson and an agency spokeswoman in which they discussed the possible placement of ads in the Guardian.
Significantly, however, the e-mail string stopped just as the conversation approached the subject the Guardian considered most important: why and how H&M was wooed away.
Instead of relying on a written document, Samson herself testified about what H&M’s agency representative allegedly told her: that “they were able to get a better deal with the Weekly and the East Bay Express.”
However, under questioning from Weekly attorney Ivo Labar, Samson acknowledged that she did not know what the terms of that “better deal” were, and as a result had no idea how much her paper allegedly “lost” because H&M preferred to do business with other papers.
Labar pressed the point that none of the three customers Samson had mentioned had been called by the Guardian to testify. At one point, he asked her, “Wouldn’t the best way to find out why Crunch Fitness decided to do business with the Weekly be to ask Crunch Fitness?”
Samson’s reply? “I don’t understand.”
The Guardian also called two witnesses to testify about a subject which first came up yesterday: a January 1995 meeting at which the Weekly staff met with leaders of New Times including executive editor Michael Lacey.
Both of those witnesses were asked to leave by New Times after it purchased the paper.
Carrie Fisher, a former Weekly associate publisher who now works at Creative Loafing, an alternative Weekly in Atlanta, began her testimony by reminiscing about the “cordial relationships” that existed between the Weekly and the Guardian prior to New Times’ arrival.
Those warm and fuzzy times ended abruptly upon New Times’ arrival, Fisher said. She described a collision of forces at the meeting. “Picture a room full of artists and salespeople — your typical San Francisco twentysomethings at the time; soft-soled shoes and gently spoken,” Fisher told the court.
By contrast, she told the jury, the New Times contingent “had boots on,” and their apparently un-California-like footwear clattered loudly on the floor.
“It was a very strong, intimidating entrance into the room,” she said.
And they were hardly “gently spoken.”
“[Lacey’s] use of profanity was shocking,” Fisher told the court.
Fisher was called as an “intent” witness — someone the Guardian hoped would convince the jury that New Times offered low prices because it meant to injure the Guardian. And the meat of her testimony was her claim that Lacey, who is an editor and not a salesman, spoke about advertising as well as editorial issues at the meeting. Fisher conceded she “couldn’t recall [Lacey’s] exact words,” but she remembered the gist: New Times didn’t just want to compete with the Guardian but wanted to put it out of business.
Fisher’s “gist,” however, didn’t jibe with testimony offered Thursday by Jennifer Lopez, another former Weekly employee. Lopez told the jury she didn’t recall Lacey talking about the business side of the operation, but did remember his emphatic comments about the poor quality of journalism being practiced by both papers.
Fisher did agree with one thing Lopez said on Thursday — that Lacey at one point threw a copy of the Guardian on the floor. In her version, however, there was no “stomping” of the helpless tabloid, and she also did not say she may have dreamed the episode, as Lopez did in her deposition testimony.
Fisher noted that Lacey invited the Weekly staffers out for a drink after the meeting, but said she declined to go. She didn’t speak again with Lacey, she added, and never had a discussion with anyone at New Times about pricing.
The second person from the 1995 meeting to testify as an “intent” witness was Andrew O’Hehir, a former Weekly editor who now writes for Salon. Like Fisher, he told the jury he couldn’t recall Lacey’s exact words to the staff, but said they were “words to the effect” that New Times wanted to put the Guardian out of business. He also said Lacey told the group New Times had “deep pockets” which would allow the Weekly to compete aggressively with the Guardian on both the editorial and business sides of the operation.
Under cross-examination from Guardian attorney H. Sinclair Kerr Jr., O’Hehir denied that he was disappointed at having been asked to leave the Weekly after being told its journalistic quality under his direction wasn’t acceptable. The word “disappointed” implied an emotional reaction, he said. Instead, he said he simply didn’t agree with Lacey’s opinions and decisions.
Kerr also asked O’Hehir whether it was true that Salon, his new employer, has lost large amounts of money throughout its existence. The question was pertinent because the Guardian has implied regularly during the trial that because the Weekly has lost money in consecutive years it must be engaged in improper conduct. O’Hehir told Kerr that Salon has been in business for “twelve years plus” and has lost money every year, although it is now “close to break-even status.”
According to published reports, Salon has lost $80 million during its existence. The Guardian alleges that the Weekly has lost roughly $25 million since 1995, although the
Weekly disputes that claim and has yet to present its case.
During the afternoon, jurors were treated to a surreal legal stage play: Guardian attorney Ralph C. Alldredge playing the role of New Times chief executive officer Jim Larkin for purposes of reading his deposition testimony into the record.
The Guardian chose not to call Larkin to the stand, but instead read passages from his deposition that seemed aimed at convincing the jury the absent Larkin was unresponsive to a series of questions about the purchase of the Weekly and the ensuing business strategy employed by New Times. At the deposition, Larkin said he had little recollection of the Weekly’s purchase, which occurred thirteen years ago.
Guardian attorney Richard P. Hill seemed especially interested in an email—also displayed during the Guardian’s opening statement—in which Larkin referred to “guerrilla tactics.” Larkin said he couldn’t remember why he used the term.
Hill also attempted to press Larkin/Alldredge on various questions regarding Weekly strategy. The New Times boss repeatedly responded that he delegated authority to his publishers and thus was unfamiliar with many details. He told Hill he should ask New Times chief financial officer Jed Brunst about the question of cost-per-inch, and added that in his dealings with publishers he gives them wide latitude to operate papers in the manner they see fit — as long as they prove capable of making a profit.
As with Samson, however, the e-mails the Guardian presented to the jury included passages that seemed to work against its conspiracy theory. For instance, in one message, written in June 2005, a New Times employee wrote to Larkin that “San Francisco is our highest operating cost market which is not offset by any premium pricing due to competition.”
That is another way of saying the paper wanted to raise its rates in one of American’s most expensive cities, but was having a hard time because of market pressure.
And in a March 2005 e-mail from Larkin himself, the CEO asked his chief operating officer, Scott Tobias, how fast the company could raise its rates at the East Bay Express. (New Times sold the Express last year to a group of local investors, who immediately laid off several editorial staffers and laid off several more a few months later.)
“If you can raise rates, that’s when you make the money,” Larkin told Hill at the deposition.
Larkin’s disembodied voice — again provided by Alldredge, will return to the stand when the trial resumes Monday at 8:30 at the courthouse on McAllister.