When a newspaper's in financial trouble, it may be able to find a friend in the federal government.
Under the 1970 Newspaper Preservation Act, a failing newspaper can merge its production and business operations with a competitor in the same city, if the attorney general approves their application.
It's up to staff members of the general litigation section of the Justice Department's Antitrust Division to make a recommendation in such cases, a task they have had to perform four times since the act was passed.
Officials of The Washington Star and The Washington Post discussed setting up such a joint operating agreement as a way of saving the Star, but could not reach an agreement. The Star yesterday announced that it plans to cease publication on Aug. 7.
Five of the 15 attorneys in the general litigation section regularly monitor the trade journals of the newspaper industry, and had discussed the Star's deteriorating financial picture among themselves, according to Alan Marx, the section's acting chief.
The joint operating agreements, however, "are unlike anything else we do," he said.
Usually the lawyers prosecute antitrust cases that involve mergers and acquisitions, in everything from book publishing to dairy cooperatives. But instead of building a case against the newspapers, the lawyers simply compile information about their application and make a recommendation to the attorney general.
"It's a little different from taking the position that this merger is illegal and then gathering all the facts we can to support the position. In this case, we don't really have a position," Marx said.
But some people, he noted, criticize the fact that the recommendation is made by the same office that won a Supreme Court case blocking an operating agreement between two newspapers in Tuscon. That case prompted Congress to pass the Newspaper Preservation Act, which legalized existing joint operating agreements between 22 newspapers in 44 cities, including Tuscon.
The Justice Department and the Federal Trade Commission had initally opposed the law, claiming that it would permit price-fixing, profit-pooling and other practices that would discourage competition.
"It was pointed out then to Congress they were going to have problems having the Justice Department make this kind of administrative agency determination," Marx said. "But we've tried to be balanced in the reports we've issued, and it is all on the public record."
Of the four applications reviewed since the law was passed, three have been approved, in Anchorage, Cincinnati and Chattanoga. (The Anchorage papers have since split up.) The fourth case, involving the Seattle newspapers, is pending.