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Friday, February 22, 2008

Reality Check

Posted By on Fri, Feb 22, 2008 at 11:11 AM

In its best year ever, the Guardian made a 5 percent profit. So how does its damages expert imagine a world in which the Guardian has a 75 percent profit margin?

By Andy Van De Voorde

As The Snitch was sipping his coffee and checking the morning line at Bay Meadows today, he took time to surf past the Bay Guardian’s Web site and check in on the competition.

Your faithful courthouse correspondent always likes to see how the Guardian is covering its predatory pricing lawsuit against the Weekly, in part because he appreciates the rhetorical dexterity necessary to cast a patina of logic onto a case that seems to spin further into the ether with each passing day.

As an aside, it would appear that Guardian publisher Bruce Brugmann checks up on the competition as well. On Thursday morning, the big brute was standing next to The Snitch waiting to go through the metal detector at the courthouse on McAllister Street when the two journalists (your Superior Court bureau chief uses the word loosely, of course) happened to arrive at the gate simultaneously.

Brugmann gestured, almost as if in a curtsy, to signal The Snitch through.

Thank you, said The Snitch, who while growing up in the witness protection program was always taught by his mother to be polite, especially to six-foot-five bullies capable of holding you upside down by the ankles and shaking free all the change in your pockets.

“You’re covering your first trial,” said Brugmann, with what The Snitch recognized to be Iowa sarcasm (The Brute is a native of Rock Rapids, Iowa and has regaled readers of his blog with many stories of teenage hijinx back in Mayberry).

“Oh, not the first one,” replied this blogger, whose thin, grey shadow has darkened many a courthouse door over the years.

“It sounds like it,” replied Brugmann.


Of course, it’s not the first time Brugmann or his pony-tailed lieutenant Tim Redmond have poked and prodded The Snitch.

A couple of weeks back, they sent a mass email to Village Voice Media employees across the country suggesting that your humble servant’s reporting skills weren’t up to snuff and requesting volunteers to take his place.

The Snitch would like to pause at this moment to assure his readers that he will never spam the employees of the Bay Guardian.

But getting back to today’s trial coverage over at the Guardian.

Redmond filed a short post pooh-poohing the Weekly’s efforts to impeach the testimony of Guardian damages expert Clifford Kupperberg, which of course is his right in a society that, despite the Guardian’s efforts to promote Soviet-era government control of the media, still possesses a First Amendment.

However, a couple of assertions in Redmond’s story had The Snitch doing a spit-take into his cup of joe.

Wrote Puffy:

“The crux of the [Weekly’s] attack on Kupperberg’s data: The projection he showed for lost profits during 2001-2007, the period when the Guardian is charging the Weekly was selling ads below cost, exceeded the level of profits the paper had made in the previous few years.”

“Exceeded the level of profits the paper had made in the previous few years”?

Let’s try exceeded any profit the paper made in its entire history.

As The Snitch reported yesterday, according to its own financial statements, even during the golden age of the mid-to-late-1990s--during a period Kupperberg conceded that the Weekly’s sales methods didn’t affect Brugmann’s paper--the Guardian rang up profits ranging from a high of $511,815 to a low of $37,309 (bet the office Christmas party was bleak that year).

The paper’s average profit margin during that period? A cat’s hair over 2 percent, or less than the average retiree earns on his market-interest account.

The Guardian only produced records going back to 1988 for the trial, and the total, combined profits during that period don’t even reach the low end of Kupperberg’s damage range, which was around $4.4 million (and keep in mind, the Guardian wants to treble the damages, meaning even that low-end figure would really be around $14 million).

Puffy also had this to say:

“How, [Weekly attorney] Rod Kerr asked, could Kupperberg suggest that the Guardian would have made profits of well over 10 percent a year when the most the paper had earned in the previous decade was about 5 percent?”

To say Kupperberg talked about profits of “well over 10 percent” is technically accurate, but wildly misleading.

As The Snitch reported yesterday, the smiling CPA showed charts that had the Guardian earning imaginary profits of up to 32 percent—and in one case, suggested that the paper would have earned an eye-popping 75 percent return on additional revenue he claimed it would have made if not for the Weekly.

“Well over 10 percent” indeed.

To put it all in perspective, between 1988 and 2000, the Guardian regularly posted results in the 1-to-3 percent range. In 1990, for instance, it reported a net profit of $104,482 on total revenues of $4.6 million.

Operator: Cancel that call to Wall Street.

Yet Brugmann wants the jury to award him as much as $35 million to salve his alleged wounds.

As The Snitch can say from experience, that’s a lot of trifectas at Bay Meadows—and a lot of chutzpah.

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