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WASHINGTON, D.C. -- The Department of Justice has approved a
$120 million deal that will allow The Hearst Corporation, which
operates The Houston Chronicle, to buy its major daily newspaper
competitor in Houston, The Houston Post, because The Post is a
"failing firm."
Under the agreement between Hearst of New York City and The
Houston Post's owner, Consolidated Newspapers Inc., of Houston,
Hearst would acquire the assets, which include the plant and
press equipment now used to publish The Post.
Anne K. Bingaman, Assistant Attorney General of the
Antitrust Division, said, "After an extensive search the only
remaining interested purchaser was Hearst."
Under long established Supreme Court doctrine, a company may
qualify for the failing firm defense. When the three elements of
that doctrine are met a total defense results which provides for
complete protection against an antitrust challenge. The
Department said that in this case, each of the three elements of
that defense were satisfied:
The Houston Post was unable to meet its financial
obligations in the immediate future.
The Post was unable to reorganize successfully under
Chapter 11 of the Bankruptcy Act.
The Post had completed good faith efforts to elicit
reasonable alternative offers of acquisition that would keep its
assets in the market.
The Department said that the efforts made by The Houston
Post to find a purchaser other than Hearst were extensive and
thorough. Contacts with potential purchasers were made by an
experienced broker over a period of months. In the course of
these efforts, almost 50 potential purchasers were contacted,
including virtually every large newspaper and media company, as
well as several other companies and investors that had operations
in Texas. While these efforts turned up a few interested firms,
the Department said that after obtaining additional financial
information, each declined to purchase The Post, leaving only
Hearst as an interested purchaser.
The Department's investigation was completed expeditiously
to avoid the failure of The Post, which would have harmed its
consumers, employees and creditors.
The Department said that under the offer made by Hearst, The
Post's stockholders will not profit from the proceeds of the sale
which largely will be given to creditors and employees.
Well, if you read all that, you might be a moron, but now you know what happened to The Houston Post. The Chronicle was making a smart business decision, it eliminated the competition, but what stinks is that it didn't become a better paper because of it.
In fact, it became far, far worse, as you'll see back at The Moronicle homepage