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Hearst, MediaNews plan to go to trial

Rather than backing down and changing their business plan, MediaNews Group and Chronicle owner Hearst Corp. plan to go to trial and fight charges that they are conspiring to create a Bay Area newspaper monopoly, the AP is reporting.

Last week, U.S. District Judge Susan Illston granted a temporary restraining order sought by San Francisco businessman Clint Reilly (left) to stop the two companies from merging their distribution and national ad sales departments. MediaNews, headed by Dean Singleton (right) owns most of the Bay Area’s dailies including the San Jose Mercury News, Contra Costa Times, Oakland Tribune, Palo Alto Daily News Group and Marin Independent Journal.

Illston said such a move could pave the way for “price manipulation” and make it harder for new competitors to enter the market. Today the AP is reporting that “he publishers said they planned to move forward with the consolidation by winning the right to do so at trial by proving the plan is not anticompetitive.”

“Riley’s allegations are hyperbole and don’t have any substance,” Hearst attorney Daniel Wall said in an interview. “We do intend to prove, at trial, that nothing we contemplated would be unlawful.”

Joe Alioto, Riley’s attorney, said the publishers “have no chance” of pulling that off.

“It’s a price-fixing agreement. They’re gonna fix the prices of advertising,” he said. “This is first-year law school stuff.”

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