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Tuesday, February 5, 2008

Bruce Boils Over

Posted By on Tue, Feb 5, 2008 at 6:42 PM

Under oath, Brugmann loses temper, credibility

By Andy Van De Voorde

Bay Guardian publisher Bruce Brugmann exploded on the stand Tuesday, pounding his hand on the witness box, raising his voice, and growing red-faced during a rigorous cross-examination by SF Weekly attorney H. Sinclair Kerr Jr.

The emotional display came near the end of nearly two hours of often-turbulent back-and-forth during which Kerr exposed numerous contradictions in Brugmann’s testimony.

Despite being on the stand for the better part of the day, a grumpy Brugmann provided no evidence to bolster the Guardian’s claims that the Weekly and its former parent company, New Times Media, had engaged in predatory pricing. But he definitely made things interesting.

The Guardian chief bickered with Kerr over the fact he hadn’t gone on local sales calls in years. He sparred with the attorney over the fact he had incorporated so he could pay himself rent at the same time he was laying off employees. He even questioned the accuracy of written statements from his own wife, co-publisher Jean Dibble, which directly undercut the Guardian’s claim that the Weekly is responsible for its financial troubles. And he blamed “tax reasons” for the fact that he pays Dibble a salary of just $15,000 per year while he collects $180,000 himself.

But what really set Brugmann off was Kerr's questioning about a sponsorship deal the Weekly made with Bill Graham Presents in 2005. In that deal, the Weekly agreed to buy naming rights to the Warfield Theater; BGP, which was owned by the Clear Channel concert firm at the time, agreed to spend roughly 85 percent of its local weekly advertising budget with the Weekly.

The deal was comparable to Tide paying Jeff Gordon to put its logo on his race car, but it clearly got under Brugmann's skin.

Brugmann’s volcanic display built slowly. The heat first was turned up when Kerr asked him to characterize his reaction when he heard about the deal.

“You were distressed, right?” the attorney asked.

Brugmann replied that “distressed” didn’t capture the full extent of his ire.

“You were upset?” Kerr inquired.

That word, too, didn’t cut it, Brugmann said, as a group of Guardian employees in the gallery chuckled approvingly.

“You were distraught?”

“I doubt you can come up with a word,” said Brugmann, which prompted more tittering from his troops.

“I think I can,” responded Kerr, who then proceeded to show the jury an e-mail written by former Guardian sales boss Jody Colley in which she suggested that if the Guardian wanted to get business back from BGP, it should “call off the dogs on our ‘fuck SFW/New Times/Clear Channel’ campaign.”

“I think this may capture it,” said Kerr. “Fucking the New Times.”

Brugmann said an earlier note saying he was “damn mad” about the deal was a better description. “That’s more my kind of language,” he added.

But when Kerr went on to read portions of the e-mail in which Brugmann vented at Guardian employees who’d had the audacity to try and mend fences with BGP, Brugmann went ballistic, shouting as he explained why he was so teed off.

“Two chains got together to screw an independent newspaper out of hundreds of thousands of dollars,” he thundered.

And despite the ferocity of his reaction on the stand, Brugmann used even stronger language in the 2005 e-mail. “I could not believe [Guardian] people would go ahead and make contact with a representative of the enemy without strategizing firsthand [with him and Dibble],” he wrote. “It has all kinds of legal ramifications and sends up the white flag just as we are about to launch into a strong editorial attack.”

That “editorial attack” consisted partly of a Guardian advertisement which Kerr then displayed for the jury.

Entitled “Who’s in Bed with Clear Channel?” it accused the Weekly of “fooling around with a greedy Texas corporation that’s hell-bent on muzzling dissenting voices and homogenizing the media.”

And Brugmann’s blood pressure didn’t go down when Kerr pointed out that the Guardian itself had been in bed with Clear Channel, accepting advertising from the firm for at least five years prior to lambasting the Weekly.

“You didn’t run cartoons like this while you were collecting hundreds of thousands from Clear Channel, did you?” the attorney asked.

Brugmann’s response: “We take advertising from anyone.”

Apart from providing a well-deserved bit of theater for a jury that appeared to have been bored to tears yesterday when Guardian attorneys spent the day reading deposition testimony into the record, Kerr’s questions underscored the hypocrisies that are endemic in the Guardian’s case.

Why, if the Guardian believed Clear Channel to be “evil,” as its executive editor Tim Redmond has written, would it do so much business with Clear Channel, and only wage a “campaign” against it after losing a chunk of that business to its hated rival?

And why would its top executive use military terminology -- and then point the finger at New Times for similar rhetorical infractions?

During his rant over the Warfield deal, Brugmann referred to the fact he had once served in the infantry, where fraternizing with the “enemy” and raising “white flags” is frowned upon.

Yet earlier in the trial, Guardian attorneys made a point of noting a handful of e-mails from New Times executives in which “war” rhetoric such as the phrase “guerrilla tactics” was used. (A New Times executive later explained that the term refers to handing out free merchandise at nightclubs and bars.)

Brugmann’s clear animosity toward New Times yesterday undercut another key component of his case: The assertion that the Weekly was “out to get” the Guardian while the Guardian simply wanted a fair competition.

Brugmann’s insistence on blaming the Weekly and pooh-poohing other economic factors was underscored when Kerr questioned him about his eye-raising claim that the dot-com bust and the terrorist attacks of September 11, 2001 “didn’t really” have an effect on the Guardian’s business.

To make his point, Kerr showed the jury shareholders’ reports from 2002 in which Dibble herself described what was afflicting the Guardian.

“The Bay Guardian was not immune to the recession of 2001, which hit advertising revenues in publications across the country very hard,” she wrote. The paper, she added, had seen a “substantial decline in its direct and agency national advertising” because of the economic downturn. The classified section, Dibble noted, was down 14.1 percent in part owing to the “demise of the dot-com industry and ripples from that throughout the business community.”

“Would you agree with that statement that Ms. Dibble wrote?” Kerr asked.

“To some extent,” replied Brugmann, who added that Dibble’s remarks were “just notes” that had to be appreciated in context.

“We didn’t feel the recession affected us that much,” he went on to say.

“[Dibble’s] sentence suggests to the contrary, correct?” replied Kerr.

“Not really,” Brugmann says. “It just says ‘not immune.’”

Brugmann was oddly unflattering to his wife of 48 years when Kerr asked him about the stark disparity in their salaries.

“Do you really think you’re worth ten times more than Ms. Dibble?” Kerr asked.

“Not ten times,” noted Brugmann, the implication being that a lower multiple was in order.

But really, Kerr wanted to know, only a paltry $15,000 for Dibble?

In a comment reminiscent of Barack Obama’s observation that Hillary Clinton is “nice enough,” Brugmann responded, “I think she’s worth a little more than that.”

He went on to say that “tax reasons” explained the disparity, but did not tell the jury why his wife was the one stuck with the lower paycheck.

That’s not to say that Dibble is having trouble collecting cash, however. Kerr also questioned Brugmann about the fact that he and his wife began receiving a new string of monetary payments from Guardian accounts after they purchased a new office building in 2002.

That, Kerr pointed out, was about the same time they were laying off personnel, something Brugmann had lamented earlier in the day during questioning from his own attorney, Richard P. Hill.

Did the Guardian make cuts? Hill had asked.

“Alas, we did,” Brugmann replied.

Was one round of cuts enough?

“Alas, it was not.”

And was that second round of cuts enough?

“Alas, no.”

Brugmann did not use the word “alas” in responding to Kerr’s question about his real estate purchase. Instead, he attempted to explain that he and Dibble’s decision to buy a building for more than $5 million at a time when the paper was hurting was actually a “great deal” because it allowed the couple access to money they couldn’t otherwise have gotten their hands on.

They did so by forming a limited liability corporation and then having the Guardian pay its rent directly to them.

Previously, when it was renting from other landlords, the Guardian paid $28,000 per month.

At the new Brugmann-owned building, Kerr noted, that rent skyrocketed to $55,000 per month.

“So at the same time you’re reducing staff, you were increasing the rent the Guardian was paying to Brugmann, LLC, right?” he asked.

“That is not the point,” Brugmann said. “The point is that this gave us capital to keep the paper going.”

An equally strained dynamic suffused Kerr’s and Brugmann’s discussion of the nature of competition in San Francisco. Kerr repeatedly hammered the theme that the Guardian competes with dozens of publications, along with competitors such as Internet sites and radio stations.

Brugmann was equally determined not to agree.

The irresistible force finally seemed to overcome the immovable object when Kerr showed the jury a Guardian document — co-written by Brugmann himself — in which the publisher provided a neat summary of the issue.

“Our competition is extensive, widespread, diverse, and constantly changing,” Brugmann wrote. “In essence, our competitors are anyone who wants to talk to our community, to reach our existing and potential audience.” Those competitors, he added, included “dailies, our Weekly competitor, city magazines, niche-market papers, neighborhood papers … and now online.”

So what about it? Kerr asked Brugmann. “Would you agree there’s widespread competition?”

Somewhat incredibly, Brugmann responded that the passage actually referred to “editorial competition,” not advertising.

“Can you show me where in that paragraph it says it’s editorial only?” the attorney replied, an obvious note of skepticism in his voice.

“It’s implicit,” said Brugmann.

What was quite explicit, however, was a second passage in the email that jurors saw if they were paying attention: A reference to competitors trying to “steal our market.”

Brugmann was also evasive when Kerr pulled out documents illustrating his longtime dislike of New Times. That history of animosity is relevant because the Guardian has attempted to show malicious intent on the Weekly’s part. Its only evidence of such intent are claims by three witnesses who claim New Times executive editor Michael Lacey talked about “driving the Guardian out of business” during a staff meeting in 1995.

Kerr asked Brugmann about a 1996 story in the San Francisco Examiner by reporter David Armstrong. In that article, Armstrong noted that Brugmann “gives back-handed credit to the Weekly for expanding the market, but vows to run its chain owners out of town: ‘This will be their Afghanistan,’” he growls.

Brugmann’s first response: “David who?”

He then attempted to get a laugh out of the gallery by saying, “When I make that statement, it’s usually ‘Vietnam.’”

The Guardian contingent in the back responded with dutiful chortling.

“You were going to use the guerrilla tactics used in Vietnam to drive the SF Weekly back to Phoenix, right?” said Kerr.

“No, no, no,” answered Brugmann. “We’ve never said we want to drive them out of the city, but we want a level playing field.”

That comment prompted Kerr to unveil another document, this one a February 2001 email from former Guardian managing editor Melissa Houston to the Guardian’s editorial staff.

“Your input and ideas are invaluable in keeping us on track — and as I love to say — to kill the SF Weekly,” she wrote.

“Was that the objective of the Guardian at the time?” Kerr asked.

“I can’t speak for my staff,” Brugmann replied. It wasn’t my objective.”

But over and over, Kerr returned to the theme that Brugmann, who had the alternative Weekly business to himself for nearly three decades, simply never got over the fact New Times opted to compete with him in his backyard. And Brugmann’s hostile response to seemingly minor questions did seem to indicate he has New Times on the brain.

For instance, Brugmann didn’t even want to acknowledge something that has been widely reported in San Francisco and across the country in trade journals: That the San Francisco Chronicle, the “monopoly daily” he has been excoriating for decades and which he claimed in a failed 1970 lawsuit was an octopus snatching business away from smaller publications, is today losing money at an alarming rate.

“The Chronicle’s lost a lot of money, haven’t they?” Kerr asked, noting for the jury that the total is now over $300 million and rising — an incredible $1 million per week.

“I have no idea what they’ve lost,” said Brugmann. “I think they’re whiners.”

The irony of his comment having escaped him, Brugmann went on to try and turn the tables on Kerr.

What’s your source on that?” demanded Brugmann. “Mike Lacey? Where are you getting this stuff?”

Kerr hadn’t said a word about Lacey, who watched Tuesday’s proceedings from the gallery. But it wasn’t the first time Brugmann had blurted out the name of his New Times rival in an apparent Freudian slip.

Lacey’s name also came out of nowhere when Kerr was quizzing Brugmann about how closely he monitors ad sales at his own publication. Brugmann holds the title of publisher and is testifying in a case that is exclusively about advertising sales, Kerr noted. But when was the last time he had gone out on a sales call?

Brugmann initially answered that he didn’t go on sales calls because “as an editor, it’s not a good idea.”

But, perhaps not eager to appear as out-of-touch as Dibble did when testifying on the subject last week (she admitted she hadn’t gone out to talk with a customer in 35 years), Brugmann began backtracking.

He has gone on some calls, he told Kerr, but mostly during visits to Las Vegas and New York City for industry meetings.

It took Kerr several tries before he got Brugmann to answer a simple question: “How many sales calls did you go on last week?”

“I didn’t make any,” Brugmann finally acknowledged, his face flushing.

And last month? “I didn’t make any.”

How about during the entire year of 2007?

At that point, Brugmann took a bizarre turn. “Mike Lacey would blast me if I was an editor out making sales calls,” he said, raising his voice. “I know he would.”

Added Brugmann, “I don’t want to give him any red meat.”

It was unclear why Brugmann would bring up Lacey during such a discussion.

But interestingly, Guardian attorney Hill hinted at a possible explanation for Brugmann’s Lacey obsession during his own examination of his client.

Most of Hill’s questions were generic queries designed to allow Brugmann to charm the jury with tales of his smalltown boyhood in Rock Rapids, Iowa, his stint in the military, and his various trips abroad on behalf of international media organizations. Any regular reader of Brugmann’s blog would already have heard most of the anecdotes.

There was the obligatory reference to the fact that his college basketball career at the University of Nebraska came to an end when “Wilt Chamberlain came into the conference at Kansas.”

(More chuckles from the Guardian coffeeklatch in the back.)

There was his tale of how an Army colonel ordered him to write complimentary stories for the camp paper at Fort Carson, Colorado.


There was his marriage to Dibble in Tokyo, interrupted when he had to “go back and cover the revolution.”

(No laughs for that one.)

Brugmann’s trip down memory lane even extended to telling the court the name of the column he wrote while working on his high school newspaper: “Across the Aisle from Bruce Brugmann.”

(Can’t-miss material.)

But it was when Hill got serious that he seemed to tap into the frustrated ambitions that have always appeared to lay just beneath the surface in the Guardian’s suit.

“If the SF Weekly keeps pricing its retail display ads at the levels you have seen, can you be assured that the Guardian will survive?” Hill asked.

“We will fight to survive any way we can,” said Brugmann.

Hill then posed a question that appeared to take the questioning into the realm of the metaphysical.

“Do you feel like your survival is completely within your control?” he wanted to know.

No, responded a beleaguered Brugmann.

Seconds later, Hill posed his odd question again.

“If you can’t as a businessman and a longtime journalist control your own survival, why do you do it?” he asked.

Brugmann again said he simply wanted a level playing field. He didn’t comment upon, nor did he appear to acknowledge, the smug sense of entitlement implied by the query: that in a free-market economy, any business should have a legal right to “completely control its own survival.”

If Brugmann’s examination occasionally veered into surreal territory, testimony heard earlier Tuesday from Guardian sales and marketing director Jennifer Lachman stayed much closer to the underlying claims in the suit.

But though Lachman exhibited none of Brugmann’s ego, she quickly ran into problems of her own when Weekly attorney Ivo Labar began his cross-examination.

In an effort to underscore the point that the Guardian is guilty of many of the discounting practices of which it has accused the Weekly, Labar asked Lachman if her paper ever waives color charges for advertisers. Such activity was “very rare,” said Lachman, and had never happened during her six-year tenure with the Guardian.

Labar immediately produced a copy of a sales contract dated October 26, 2007, which showed that the Guardian had “comped” the color for a local nightclub ad. As a result, the price plummeted from $953 to $353.

Lachman said she “hadn’t reviewed” the contract.

“How many other contracts have you not reviewed?” asked Labar.

Lachman also denied that the Guardian bonuses its salespeople for getting ads from competing publications — relevant because the Guardian has attempted to make hay out of the fact the Weekly does so.

Again, Labar referred to a document that showed otherwise.

“Does that refresh your memory?” he asked.

“Not really,” said Lachman. “I mean, it says that.”

Lachman went completely off the rails when Labar pressed her about a Guardian document from 2003 in which sales executives talked about “cherry-picking” advertisers from the Weekly and determining “what it would take” to get their advertising.

Positioning in the paper could be a factor, the document noted.

So Labar, apparently pressing the point that customers have many reasons for not wanting to advertise in the Guardian other than the Weekly’s lower prices, wanted to know: Hadn’t a customer known as Aneu dropped out because the Guardian couldn’t give it guaranteed positioning?

Lachman offered a confident reply: The customer had quickly come back to the Guardian. “I know,” she said. “I talked with him about it.”

Her point was that the Guardian hadn’t really lost Aneu in a dispute over positioning. But that wasn’t the point Labar intended to make. And by then the trap had been set.

“Did you know the Guardian is claiming Aneu as a ‘lost customer’ in this case?” the Weekly attorney asked.

Lachman responded by saying that Aneu was only out of the Guardian for one week.

“Did you know the Guardian is claiming it as a lost customer for much more than one week?” Labar said.

“I don’t know,” said Lachman.

The trial will resume Wednesday morning at 8:30 a.m. The Guardian is expected to call its own controller, Sandy Lange. In an unusual legal maneuver, it then apparently plans to call Weekly publisher Josh Fromson, followed by the aforementioned Lacey, as part of its case.

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