In a case of significant ramifications for the newspaper industry, the Federal Trade Commission and the Times Mirror Corp. yesterday announced a tentative agreement that could bring to a close a three-year legal dispute over the advertising structure of the Los Angeles Times.
In papers filed at the FTC, the parties asked that the case, filed in July 1977, be withdrawn from adjudication before a commission administrative law judge so that the commission could consider a proposed consent agreement.
Although the settlement agreement was not made public, Times Mirror Corp. said in a statement, the newspaper could "continue to use annual volume discount rates for retail display advertising," in line with "stipulated index values" set forth in the proposed settlement.
The proposed settlement must still be approved by the commission, which will not formally hear the joint proposal for a few months.
In 1978, Katharine Graham, then publisher of The Washington Post, called the case "very troubling." Further, Graham said, "a dozen years ago, none of us would have dreamed that rate increase cards might be subject to federal scrutiny in that way."
The Los Angeles Times leads all other newspapers in advertising volume and the Times Mirror Co. is the largest publicly held newspaper corporation in the country.
In the FTC complaint, the company was charged with "unreasonable restraints of trade and unfair methods of competition" in utilizing a rate structure that gives discounts to high volume advertisers.
The complaint also said that the rate differentials were substantial and the bulk advertisers could take advantage of yearly bulk contract rates.
THE FTC complaint also charged the company with monopolization "in the lines of commerce in which its favored purchasers are engaged, or to injure, destroy or prevent competition between the favored and non-favored purchasers."
Presumably, in letting the rate structure stand, the FTC agreement would sharply alter the rate differentials that the newspaper can offer to bulk advertisers, thus limiting the rate discounts that frequent advertisers could obtain.