Mayor Mike Bloomberg's News Service Says We're Facing a Bankruptcy. Uh, No We're Not.
As most in the world of media reporting are aware, one of the Voice's sister papers, SF Weekly, was sued by a competitor, SF Bay Guardian, and almost two years ago the Guardian won a $15 million verdict. SF Weekly is appealing that decision, and that appeal should be heard this year.
Just recently, however, the Guardian has been making some noise about trying to collect on the judgment before the appeal is heard, leading to various news stories, some more accurate than others.
But we were caught by surprise by the really garbled story put out this morning by the Bloomberg news service which suggested that the Guardian was somehow about to force this newspaper, the Village Voice, into bankruptcy.
We're posting the letter that a company lawyer, Randall Farrimond, has sent to Bloomberg's media reporter, Greg Bensinger, explaining how badly he screwed up the story, and asking for a correction. The letter, after the jump...
Dear Mr. Bensinger:
I enjoyed speaking with you yesterday afternoon. So I was surprised and disappointed by the several serious inaccuracies in the story about this matter that Bloomberg published today under your byline. These inaccuracies are as follows:
Your headline states:
"Village Voice Newspaper May Face Forced Bankruptcy in Ad Fight"
This headline trumpets a possibility of "bankruptcy" that just doesn't exist. The article goes on to state that "The Village Voice, a New York City alternative newspaper, could soon face U.S. Bankruptcy Court proceedings."
As I explained to you yesterday in some detail, the only three defendants in the California lawsuit are SF Weekly, LP, East Bay Express Publishing, LP and New Times Media LLC. There is no judgment against Village Voice Newspaper, Village Voice, LLC (the company that operates the Village Voice Newspaper), Village Voice Media Holdings LLC, Village Voice Media LLC, or any other company other than the three named defendants. Since Village Voice is not a defendant or a judgment debtor, there is simply no basis for a bankruptcy proceeding against Village Voice, so your headline and article are fundamentally inaccurate.
Your article states further that "Bay Guardian is considering petitioning to put the Village Voice chain into involuntary bankruptcy to collect the debt." It is simply ludicrous to suggest that any of the companies that are not parties to the California action might somehow be facing "bankruptcy" as a result of that judgment.
Your article also states:
"Village Voice Media LLC, lost a $15.9 million judgment for ad-price fixing"
Again, Village Voice Media LLC was not a party and there is no judgment against it. Maybe even more importantly, the judgment in California was not for "ad-price fixing." "Price fixing" occurs when competitors collude to raise prices to the detriment of its customers. SF Weekly was never accused of this. Instead, Bay Guardian accused SF Weekly of "predatory pricing," that is setting its ad rates too low. Bay Guardian sought an injunction to force SF Weekly to raise its ad rates above what SF Weekly would prefer to charge its advertisers based upon normal market considerations. So if there is any price fixing here, it is the Bay Guardian, and not SF Weekly or the other defendants, which has tried to use the courts to fix prices.
Your article continues:
"A Village Voice Media affiliate sued West Coast rival Bay Guardian Co. asking a judge to rule it doesn't have to pay the judgment"
While you and I did not discuss the specifics of the Delaware action, this action does not ask a judge to rule that any "Village Voice Media affiliate" doesn't have to pay the judgment. It asks a judge to rule that the partnership or membership interests of New Times Media LLC in certain Delaware companies cannot be sold in order to satisfy the judgment against New Times Media LLC, because this is what Delaware law provides and Bay Guardian's rights are limited by Delaware law because New Times Media LLC and most of the other entities are Delaware entities.
Your article also states:
"The ruling gives Bay Guardian a lien on all the Village Voice group's newspaper properties"
As you and I specifically discussed at some length, there is no lien on "all the Village Voice group's newspaper properties." Any liens are only against the property of SF Weekly, LP East Bay Express Publishing, LP and New Times Media LLC. It does not extend to the property of any other newspapers.
Your article continues:
"Farrimond said assets of Village Voice Media outside of California weren't subject to the original ruling."
While it is true that Village Voice Media assets outside California are not subject to the judgment, this is because no Village Voice Media assets are subject to the judgment at all, whether inside or outside California. Village Voice Media is not a defendant and does not have a judgment against it. We discussed at great length yesterday the difference between the three companies that are defendants in California, and the separate companies that operate other newspapers that are not defendants and are not liable for this judgment.
You quote a Bay Guardian representative to say:
"You learn in civics class that when you get a judgment against you, you have to pay,"
Yes, but you also learn in civics class that you have a right to appeal. As you and I discussed, this judgment is presently before the California Court of Appeal and is not final until review by the appellate courts is complete.
You state that:
"Village Voice Media claims it only has enough assets to pay $80 million to lenders led by Bank of Montreal, he believes it can afford to pay the judgment based on court records showing it had $191 million in assets at the end of 2007."
What we actually claim is that the assets of companies other than those of SF Weekly, New Times Media LLC and East Bay Express Publishing are irrelevant. There is no judgment against Village Voice Media or any other companies.
With respect to my response, you state:
"He said the combined assets of his clients are less than Adkisson claims, without providing specifics."
Adkisson does not appear even to be referring to the assets of "my clients" that you and I discussed, which are the three defendants in the California case, New Times Media LLC, SF Weekly, LP and East Bay Express Publishing, LP. Adkisson appears to be referring to the combined assets of various newspaper companies around the country, almost all of which are not defendants and are not liable for the judgment. What I did tell you is that East Bay Express Publishing has no assets, New Times Media LLC is just a holding company with partnership or membership interests in other companies, but without any other assets of its own, and that the assets of SF Weekly are obviously far less than that $191 million number that Adkisson is throwing around.
We must demand that you publish a correction setting straight the various inaccuracies described above, that you distribute the correction to everyone who has received your original story, and that you do so in a manner that will ensure that your readers will give the same consideration to your correction as they might have given to the original story. It is extremely important to us that the several inaccuracies in this article are remedied immediately and are not permitted to stand uncorrected among your readership. Thank you for your immediate attention to this.
Very truly yours,
FARRIMOND LAW OFFICES Randall S. Farrimond
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