The Connecticut Attorney General’s office released a stunning statement directly to Tastie Fish Friday morning concerning the business practices of the Hearst Corporation.
Sources had previously indicated to Tastie Fish in August that Hearst Media’s acquistion of the New Haven Register was the subject of an antitrust investigation by the State Attorney General.
Unable to independently authenticate the veracity of the rumors, our reporters opted not to run the story until we had confirmation from the Attorney General’s office.
Jaclyn M. Severance, the spokeswoman for the Connecticut Attorney General’s office, emailed the following statement to our newsroom this morning.
“Over the last several months, our office undertook an antitrust inquiry and review of Hearst’s acquisition of the New Haven Register and several daily and weekly newspapers formerly owned by Digital First Media. A similar review was undertaken in 2016 regarding Hearst’s acquisition of the Norwalk Hour newspaper.
“The reviews were intended to assess any implications that the transactions may have on competition in the relevant markets in Connecticut. While we understand and appreciate concerns about the number of editorial voices in a given newspaper market, it is important to note that antitrust law is not the appropriate vehicle to address that concern. An antitrust review focuses on the competitive implications of a proposed merger: in this case, primarily whether the acquisition would allow Hearst to obtain market power and thereby enable it to charge more to consumers for the purchase of the newspaper and/or charge higher prices for advertising.
“Our reviews included assessment of market share in the given geographical areas as well as discussions with major advertisers and other potential stakeholders.
“With both transactions, there was no significant overlap between the Connecticut newspapers circulating in Fairfield County and in New Haven County. In other words, the two newspapers do not compete with each other – for example, consumers in New Haven do not substitute the Connecticut Post for the New Haven Register.
Further, there are significant alternatives to the New Haven Register and Connecticut Post that constrain price increases, e.g., New York newspapers and Internet news Web sites, in particular. Additionally, the market for advertisers is no longer limited to print newspapers alone, but also extends to broadcast and digital alternatives.
“Even viewed conservatively, antitrust analysis of the impact of the transactions on prices – as compared to the market prior to the completion of the transactions – was not deemed to result in a substantial lessening of competition. As such, both of these reviews are now closed with no further action to be taken.”
The bombshell revelation confirmed sourced material that Tastie Fish had yet to publish, and raises massive questions about the Hearst Media acquistion strategy not just in Connecticut, but all over the United States.
This isn’t the first time The Hearst Corporation has been investigated for engaging in practices that could be deemed anti competitive.
In April 2001, the Justice Department, at the behest of the FTC, filed an antitrust Lawsuit against the Hearst Corporation for failing to submit documents to antitrust investigators that were needed to evaulate to legaility of the sale, among other procedural errors.
Here is a passage from the FTC website
“The staff of the Federal Trade Commission has negotiated an agreement with The Hearst Corporation (Hearst), which staff will propose to the Commission as a way to settle a permanent injunction action filed by the FTC. According to the Commission’s April 5, 2001 complaint, Hearst failed to provide documents required by premerger notification law and then consummated a merger that monopolized the integrated drug information database market. On November 9, 2001, the defendants, The Hearst Trust, The Hearst Corporation and a wholly owned subsidiary, First DataBank, Inc., signed a stipulation for entry of a final order to settle that suit”.
As far as we know, The Hearst Corporation had not engaged in questionable practices prior to the Connecticut Attorney General’s investigation.
But the company is “being watched” according to legal sources.
The statement also indicated that the purchase of the Norwalk Hour was the subject of an antitrust investigation in 2016.
Odds are, any future sale involving Hearst Media, and print/digtial news outlets in Connecticut will face scrutiny from the Connecticut Attorney General.
Based on track record, the rate at which companies are being purchased by the conglomerate, and public concern regarding the free press, the Connecticut Attorney General should keep tabs on the machinations of Hearst Media, the absence of competition makes such a requirement almost obligatory.
The Hearst Corporation is worth roughly $16.5 billion dollars according to rough estimates, news outlets in Connecticut don’t have a chance to compete with such a company if the former is permitted to consistently buy information vehicles all over the state.
The Hearst Corporation is among the biggest companies in the world, a cornerstone American business, the standard in digital and print media.
The Hearst Corporation was founded almost 130 years ago, the company owns a portion(20%) of ESPN, the Houston Chronicle, Cosmopolitian, Esquire, and 50% of the television network A&E.
Hearst Media is diversified, making a fortune in the business information industry, in fact it’s merger with First Data Bank Inc is what drew the attention of the Federal government in 2001.
Despite the state investigation being closed at this point in time, well placed sources in Washington DC have informed this magazine that federal scrutiny is ongoing, and could intensify in the next year or so “based on an array of mitgating factors”.
There is great concern within the Connecticut free press regarding the rise of Hearst Media in the state, and it was exacerbated by the The Hearst Corporation’s purchase of the New Haven Register, and the Connecticut Magazine among others.
Several print reporters in the state of Connecticut(including some under the Hearst Media umbrella) have spoken with this magazine in advance of this story on the condition of anonymity
Here are some highlights.
“It’s too much power, they own practically every newspaper in the state, which makes generating digital and print advertising revenue almost untenable”
“What’s the point of the free press if a private company owns all the newspapers?”
“This is not only about the free press, its about free trade, difficult to do business when 75% of the marketplace is owned by the same people”
“It’s not been that bad, several people were fired, but the transition was workable, it produced an ethical deliema you know, they did buy several news properties before us, but I try to focus on my team, and not think about it.”
The anxiety surrounding the swelling power of Hearst Media runs rampant among Connecticut news outlets that struggle to generate revenue within the media marketplace.
In an email earlier this week, Betsy Lordan, a senior public affairs specialist for the Federal Trade Commission, told Tastie Fish that “As a matter of policy, the FTC does not comment on proposed mergers or on the activities of any particular business.”
A high level government source explained the problem with Hearst Media.
“There is legal monopolies, such as prescription drugs, because such business encourages innovation, it encourages others to come along, and create a better drug. Competition is vital to the economy, which is why we have laws that guard against anti competitve behavior”
By that defintion, Hearst Media not a legal monopoly, the advertising marketplace has been decimated after the congolermate purchased “8 dailies, 11 weeklies, and a robust collection of digital outlets” in a state the size of Qatar.
Such behavior does not encourage competition or innovation, which is the proviso that allows pharmaceutical companies to corner the market.
In buying up so many news properties in a small state like Connecticut, Hearst Media is supressing competition and suffocating innovation.
Tastie Fish is in the process of examining every acquisition of news media outlets that Hearst Media has executed in the last decade or so.
From what we understand, we are not alone in that pursuit.
An email seeking comment from the New Haven Register, the Norwalk Hour, and Hearst Media did not garner a response as of Friday evening.
More on this story as it develops