San Francisco in 2010 is a strange place for an old-school newspaper war. This is the city where the dot-com industry started, where Yelp is the way to make dinner plans, where Digg is headquartered, where Apple just unveiled its new tablet computer, where Google employees awaken in fancy condos and then roll to the Googleplex in Mountain View inside company-provided, wireless-equipped vans. This center of the new, paperless world order has now become ground zero in a seemingly endless battle to the death between two struggling print publications, SF Weekly and the San FranciscoBay Guardian. It's a war straight out of the last century in its ruthlessness and its destructive potential, and it continues to escalate even as, all around them, the entire words-on-paper industry is in a state of collapse. They're like dinosaurs, fighting over the rotting bones of a soon-to-be-extinct animal.
On one side there's Michael G. Lacey, 61, the executive editor and a co-owner of Village Voice Media, a self-described "prick" who comes complete with "spiky gray hair, watery pale-blue eyes, and spreading shanty-Irish honker," as New York magazine memorably put it. On the other side is Bruce B. Brugmann, 74, editor and co-owner of the Bay Guardian, a classic San Francisco lefty who likens his civic role to that of a Revolutionary War pamphleteer and has made his own bearded visage a kind of logo for his business.
These two men have hated each other for decades, but with increasing venom since 1995, when Lacey showed up in San Francisco in cowboy boots to announce that he and his partners had just purchased the tiny SF Weekly and planned to make a huge success of it. Brugmann welcomed them by saying, as quoted in 1996 in the San Francisco Examiner, that Lacey and company would find his city to be "their Afghanistan." (On cross-examination at a trial that became the center of their feud, Brugmann clarified that he'd really meant it would be their Vietnam. "My point is always Vietnam," Brugmann said. "That's the best analogy that I use.") Lacey has responded that "Brugmann and his collaborators" represent a venal foe that needs to be dealt with harshly and wants only "to run us out of town."
In fact, it's Lacey's company that was recently found guilty of trying to run Brugmann's business out of town. After a six-week trial in 2008, a jury found that SF Weekly and its parent company had sold ads below cost, had done this with intent to harm the Bay Guardian, and had caused financial injury to the Bay Guardian in the process. The amount that jurors and the court decided SF Weekly's parent company owed the struggling Bay Guardian: $16 million, payable immediately or subject to interest charges. SF Weekly and its parent company have appealed the decision.
So much is riding on the outcome of this war -- including more than $21 million (those interest charges add up quickly), the manner in which people are allowed to do business in the state of California, and the reputations of two of the alternative-newsweekly industry's most stubborn personalities -- that the winner is bound to profoundly wound the loser, possibly mortally.
If its parent company's appeals are not successful, SF Weekly could end up shuttered, leaving San Francisco with one less editorial perspective and many fewer employed journalists. Its parent company -- which under the leadership of Lacey and his majority co-owner, Jim Larkin, has become the largest alt-weekly chain in the United States, publisher of the Village Voice, the LA Weekly, the Seattle Weekly, and 11 other papers -- could end up in bankruptcy; or be forced to sell off some of its papers to pay the multimillion-dollar judgment; or have its assets seized by its largest creditor, Bank of Montreal, to which it currently owes $80 million; or, in the worst-case scenario, all of the above. (Lacey wouldn't comment for this story, but Andy Van De Voorde, VVM's executive associate editor, agreed to be interviewed one day before this article went to press. He dismissed all of the above as "legally ludicrous doomsday scenarios." An attorney for the Bay Guardian countered, "Those are all potential outcomes," and noted that the Bank of Montreal actually just declared VVM in default on that $80 million loan.) If, on the other hand, the appeals on the SF Weekly's behalf are successful, the Bay Guardian -- which has no parent company to absorb its out-of-pocket legal expenses and has cast this as a fight for survival -- could go out of business, ending a long and storied run by a San Francisco institution and, of course, sending a different batch of working journalists into the ranks of the unemployed.
All of these things are now possible in an incredible fight that still rages today, despite relatively humble beginnings, in January of 1995, in a loft office in downtown San Francisco.
I nto that loft office, in January of 1995, walked four executives from a company called New Times. It was around four o'clock in the afternoon, and the entire staff of the SF Weekly -- then a small publication that began its life as an even smaller publication called Calendar -- had been summoned into the largest room the paper had. The mood was anxious. The paper's absentee publisher, a local businessman named Scott Price, had just sent out an e-mail telling everyone that the paper was being sold to an out-of-town entity, New Times, and word among the staff was that these folks liked to clean house whenever they took over another media property.
Desks were moved out of the center of the room, the better to accommodate all the people involved, about 30 total: writers, editors, ad salespeople, delivery-van drivers. "Picture a roomful of artists and writers, your typical San Francisco twentysomething, thirtysomething person, soft-soled shoes, a little bit gently spoken, Doc Martens mostly, very casual," one person who attended the meeting recalled years later on the witness stand. "And they come in."
"They" were the four New Times executives: Lacey; his majority co-owner, Larkin; his chief operating officer, Hal Smith; and his Denver Westword publisher, Patty Calhoun. They arrived wearing cowboy boots, the sound of their steps echoing on the wood floor. They leaned up against some desks. Like they owned the place. Which, but for some final signing on the dotted line, they did.
Introductions were made. Then there was a brief explanation of where New Times was from (Phoenix, Arizona) and what, at the time, it occupied itself with (operating five alt-weeklies around the country, in Dallas, Denver, Houston, Miami, and Phoenix, with SF Weekly becoming the sixth paper in the corporation's portfolio). Then Lacey rose and began to pace, cursing at an impressive clip. This was not a crowd that was easily offended by the word fuck, but its forceful repetition, combined with the tenseness of the occasion, would stick in people's minds.
No warm greetings from Lacey, no kind wishes for ongoing professional relationships with everyone in the room. Instead, according to testimony in the court record, he disparaged the writing of the paper's staff, the neighborhood in which they worked, and the product they put out. He told them things were going to improve now that he owned the place, but this would involve some big changes. No more political endorsements. (Younger readers don't vote, he would later explain.) Less coverage of city hall. (Not what the 18-to-35 demographic wanted, he thought.) Longer investigative pieces. (To get at the "bigger picture" of San Francisco.) And a total ban on drawing inspiration from what, at the time, was unquestionably the city's dominant alt-weekly: the Bay Guardian, founded in 1966, fascinated with the workings of city government, fond of picking fights with the local power structure, stamped each week with the motto "Print the news and raise hell," and long a tribune for a certain strand of crusading West Coast liberalism.
To make clear his point about the changing frame of reference, Lacey grabbed a copy of the Bay Guardian off one of the desks in the room, threw it to the ground, and stomped on it. People who were at the meeting recall Lacey saying, "We don't want to just compete with the Bay Guardian; we want to put the Bay Guardian out of business" and "We want to be the only game in town" and "We're going to bury the Guardian." Also remembered by someone at the meeting: Lacey pointing out that his company had "deep pockets." People then working at the SF Weekly took this and other statements to mean that his company planned to funnel profits from its out-of-state media properties into San Francisco in an attempt to make the SF Weekly more widely read, and thereby capture a larger share of one of the biggest advertising markets in the United States.
Which, it turned out, is precisely what ended up happening.
A lmost exactly 13 years after that tense takeover meeting, a trial opened in superior court in San Francisco. It was late January of 2008, and a jury of 12 San Franciscans was being asked to decide whether the SF Weekly had illegally sold advertising space, the primary source of revenue for free alt-weeklies like the two in question here, for much less than was needed to cover the costs of publishing.
The Bay Guardian believed this had occurred, and through its lawyers alleged that the SF Weekly had engaged in "predatory pricing." That is, the SF Weekly had sold ads "below cost," subsidizing the resulting losses with cash from the "deep pockets" of New Times (which used those deep pockets to buy the entire Village Voice Media chain in 2006).
The aim of this "below cost" ad-pricing scheme, allegedly, was to force the rival Bay Guardian to lower its own ad prices and, as a consequence, suffer losses that it didn't have the deep pockets to sustain. The endgame: pushing the Bay Guardian into a downward financial spiral from which it could never recover, leaving SF Weekly the only alt-weekly in town.
Without question, something had happened to the Bay Guardian in the years since New Times first came to San Francisco. When the trial opened in 2008, the Bay Guardian was a shadow of what it had been in 1995, its staff cut nearly in half, its circulation slumping, its revenues way down, and its market share declining precipitously. The paper's lead lawyer warned jurors that a part of the fabric of San Francisco was about to go out of business if they didn't use their power to "right a wrong."
Even the most interesting trials can get tedious, but this one never seemed to go too long without some form of entertainment. The witness list alone included names like Jennifer Lopez and Carrie Fisher (the former an ad rep for the SF Weekly at the time of the infamous 1995 meeting, the latter an associate publisher from the same period; a Guardian lawyer gamely apologized that they weren't the Jennifer Lopez and Carrie Fisher the jury might have been hoping for). Lopez, upon being asked whether she recognized Lacey in the room during her testimony, responded affirmatively and noted, "Shaved your mustache." Later, Lacey ended up apologizing to Lopez on the stand for suggesting that she shouldn't have been offended by his crass language at the 1995 meeting because, after all, she'd sold escort ads.
Fisher, for her part, introduced Patti Smith into the proceedings (mistakenly; she meant to refer to Patty Calhoun, the Denver Westword publisher) and was the one who recalled fine details of the 1995 meeting with Lacey, down to the ebb and flow of the "energy" in the room and the sound of the New Times executives' boots.
It was Andrew O'Hehir, editor in chief of the SF Weekly in 1995 and now a senior writer for Salon.com, who recalled the "deep pockets" statement and emerged from the trial with the notable distinction of being someone Lacey said under oath he'd "wanted to kill." Which forced another on-the-stand clarification from Lacey, who explained he'd only been expressing anger that surfaced back in 1995 when he encountered O'Hehir's "snotty upper-class elite" intentions, as SF Weekly's editor, to court "an increasingly small, sophisticated, cutting-edge audience of underemployed graduate students and disaffected radicals."
Lacey added, in case anyone on the jury remained confused: "At this point, I have not killed anybody."
(O'Hehir, reached by phone in New York recently, admitted that he's something of an effete liberal intellectual, but added: "I've never had a one-on-one conversation with Mike Lacey in my life." O'Hehir said he also never pushed the idea that the SF Weekly should target the demographic Lacey described. Perhaps, O'Hehir suggested, Lacey was just "turning me into some sort of left-wing ultraintellectual straw man." And what about Lacey's statement that he'd wanted to kill O'Hehir? O'Hehir hadn't heard about it until our conversation. "Vintage Mike," O'Hehir said. "God bless him.")
The substance of what Lacey offered during his testimony was interesting. He didn't dispute that he'd had a low opinion of the Bay Guardian back in 1995 and made clear that this low opinion had, if anything, sunk lower in the intervening years. Nor did he dispute that he'd cursed a notable streak at that takeover meeting in the SF Weekly offices. ("Apparently the testimony is that I was profane, which is true," Lacey said. "I mean, my father was a sailor.") He'd been there that day to, as he put it, "be the prick."
But Lacey strongly denied making -- or, in some cases, remembering -- the specific statements attributed to him, though he admitted that he can be "intemperate" and "too expansive." Then, on cross-examination, Lacey conceded he might indeed have mentioned something at that SF Weekly takeover meeting about becoming "the only game in town." Then, when pressed further on whether he'd uttered the phrase "deep pockets," he replied in apparent exasperation: "I mean, I suppose anything is possible."
Still, on the question of whether the SF Weekly had priced its ads below cost in an effort to injure the Bay Guardian, Lacey and his lawyers were clear: Yes, the SF Weekly sold its ad space at a loss for years on end, putting the paper in the red -- for a total of $20 million lost over the course of 11 years. But those low ad prices and the steep annual losses were a result of market conditions in San Francisco, the lawyers for SF Weekly and New Times argued, not an illegal attempt to put a competitor out of business.
Further, they argued that Brugmann, the Bay Guardian's publisher, had brought whatever financial troubles he was having on himself. Brugmann and his paper, they said, were suffering financially because they'd simply become out of touch with the new San Francisco.
"And do you think," a New Times lawyer asked Bay Guardian executive editor Tim Redmond during the trial, "that maybe one of the reasons that people don't want to read the Guardian is they're not interested in what you're writing?"
Redmond replied: "No, I don't think that's true at all."
The exchange continued:
Q: Sir, you've written hundreds of articles about attempting to promote public power in the city of San Francisco, right?
A: That's correct.
Q: After a person has read one of those articles several hundred times, do you think they grow weary of reading them?
On top of the suggestion that the Bay Guardian's obsessions were no longer interesting or relevant, the New Times lawyers also argued that the paper was having trouble adapting to the rise of the internet, just like every other major print-media publication in the country. For Brugmann to think that his business should be on some kind of upward trajectory at a difficult moment like this was delusional, they said, a sign of how highly he regarded his editorial instincts and how little that regard had to do with reality.
"The sum total of injury to Mr. Brugmann is to his vanity," Lacey testified, acidly.
Looked at one way, the jab was just another example of the profound dislike these two alt-weekly chieftains have developed for each other. The record has grown quite thick. Brugmann has denounced the "leering neoconism" that he sees at the heart of Lacey's politics, which he derides as "frat-boy libertarian." Lacey has called Brugmann a "bull-goose loony" and likened talking to him to engaging "a homeless paranoid in conversation about the contents of his shopping cart." (That was from a more-than-4,000-word screed -- Lacey's word -- that he published in 2005.) Brugmann has printed bumper stickers that say "Corporate Weeklies Still Suck," and to this day hands them out to visitors. Lacey has noted that Brugmann, for all his independent talk, once had among the investors in his paper Donald Werby, a billionaire real-estate mogul who bankrolled the Church of Satan ("No, really," Lacey wrote) and was indicted for paying off underage prostitutes with cocaine before dying in 2002. ("I missed the Bay Guardian's coverage of their investor's indictment on child prostitution charges," Lacey added.) This January, when the SF Weekly accused Brugmann of "celling out" his anticorporate principles by preparing to rent space on the roof of his paper's building to some T-Mobile cellular towers, Brugmann retorted that the story's reporter was simply "a Mike Lacey protege." The feud goes on and on, leading even Lacey's and Brugmann's respective underlings to detest each other. Not long ago, Van De Voorde, who works under Lacey, expressed the desire to strangle Brugmann's number two, Redmond, with Redmond's ponytail.
In addition to being another installment in this long-running exchange of invective, Lacey's on-the-stand dig at Brugmann's "vanity" was an example of how profoundly he and his lawyers seem to have misjudged the San Francisco jury. The jury evidently was not moved by SF Weekly's insinuations that Brugmann is just some crazy old coot who can't take a little competition, and they resisted any charitable interpretation of Lacey's insouciance and unfiltered mouth. Instead, the jury -- "a San Francisco jury," wrote Van De Voorde in an e-mail, "that is the operative phrase" -- appears to have been far more influenced by the Bay Guardian's depiction of New Times as a rapacious, predatory, out-of-state chain.
Here's Bay Guardian lawyer Ralph Alldredge, in his opening statement at the trial, talking about Lacey and his co-owners:
When they came to San Francisco, when they looked at San Francisco, what did they see in San Francisco? They saw an alternative newspaper that was already here, that was a local independent business, owned by people who had founded that business, who were fiercely independent and would never sell… How can you get that market without buying that newspaper?
Well, the evidence will show that the Bay Guardian had a weakness, and the weakness was part of what its strength was, and that was that it was owned locally and owned independently. It didn't have a lot of resources to fall back on. So that if it were facing a situation where someone could spend as much money as they wanted to produce a product that was as good or even better maybe than the Bay Guardian's, and sell it for a price that was less than the Bay Guardian's, they could take that market away. That's the weakness of the Bay Guardian, and that was obvious to anybody who was looking and knew this business.
After six weeks of trial, the jury firmly endorsed this theory of the case, leading to the $16 million judgment against SF Weekly and its owners -- an amount far greater than observers think the SF Weekly was then worth (or is worth now). Which meant that if the debt were to be paid in full, it would likely have to come from somewhere further up the chain.
The story might have ended there, with a check from Phoenix grumpily cut for Brugmann and a long sigh issuing forth from Lacey and others, expressing, say, the need to move on and thus minimize additional exposure in such difficult media times. Instead, it's continued into appeals and collections and further rounds of recrimination, becoming "like some kind of Greek myth where the two protagonists are still fighting over a city that died 85 years ago or something," said O'Hehir. Having gone into online-only journalism after being let go from the SF Weekly in 1995, he now sees something deeply archaic and wasteful in this protracted battle over the intention behind the prices that were once set for ads printed on paper, especially considering that publishers no longer see ads on paper as the revenue stream of the future, and are everywhere searching out and testing other ways to make money.
"I think that they have been fundamentally left behind," O'Hehir continued, speaking of Brugmann and Lacey. "They really are fighting over something that is a dead issue now. Because the model of journalism that these guys are fighting over is in deep trouble. They really are the last two tyrant-osaurs, long after the asteroid hit the planet."
The longer it goes on, the more the potential jeopardy for all involved increases. For example, in 2006, about a year after the lawsuit's filing and two years before the initial $16 million judgment was awarded, New Times, still robust and growing, completed its purchase of the VVM chain of alt-weeklies, and took on that chain's name. This put Lacey (new title: executive editor, Village Voice Media) and his co-owners in charge of a total of 14 alt-weeklies around the country. When the judgment against New Times came down, Lacey and his co-owners, now at the helm of a corporation with close to $200 million in assets reported during the trial, had a lot more assets to protect than before.
Van De Voorde, the New Times editor who became executive associate editor for VVM, wrote on an SF Weekly blog shortly after the judgment was awarded that Brugmann and the Bay Guardian's victory amounted to merely winning "the lawsuit lottery." He advised: "Don't count the money yet, Bruce."
Lacey and the other SF Weekly owners had immediately asked the California Court of Appeals to overturn the judgment, arguing that the trial court misinterpreted the state's law on predatory pricing. The California Unfair Practices Act, their lawyers argue, should be interpreted to mean that any plaintiff in a predatory-pricing suit has to prove the company it's suing had a rational plan to both lose money through below-cost sales and to make that lost money back after dispensing with its competition, by raising prices as the new monopoly player in whatever market is in question.
Early on, the trial court had ruled that the Bay Guardian did not have to do this, and only had to prove that the SF Weekly and its owners sold ads below cost (which they admitted right off the bat), did so with the intent to harm the Bay Guardian (which they disputed, but the jury didn't believe), and in fact caused financial harm to the Bay Guardian (which the jury decided they did). "Recoupment ability," as it's called in the appeal briefs -- as well as in federal antitrust laws that require it be proved in predatory-pricing cases, and in laws in other states that do, too -- was not a question the jury in San Francisco had to consider.
The California Unfair Practices Act has its origins in the Great Depression and was created to protect consumers, but in this case it is being manipulated, the SF Weekly lawyers contend in their appeal, by an established player in the San Francisco media market (the Bay Guardian) that wants to punish a new entrant into that market (the SF Weekly and its out-of-state owners) for initiating a price war that actually could have benefited local consumers (in this case, local consumers of print advertisements). Or, as Van De Voorde put it in a recent online comment attacking a story on the subject, the willingness of SF Weekly's new owners to come into San Francisco and lose money while growing their new media property into a more powerful journalistic force "was used against [them] at trial by the journalistic porch-sitters at the Bay Guardian, who would rather stick their hands in somebody else's pocket than work for a living."
Lawyers for the Bay Guardian say the law is not being used in this way, and they argue that there's a difference between California predatory-pricing law and other predatory-pricing laws around the country precisely because those other laws have been eroded over time -- to the benefit of corporate interests and the detriment of consumers -- while California's law has not.
Christopher Leslie, a professor at the University of California Irvine School of Law, who's an expert on predatory-pricing restrictions, said California is well within its rights to have a predatory-pricing statute that differs from those of other states and the federal government. His reading of the state's Unfair Practices Act is that it "doesn't say there needs to be recoupment," which means, Leslie said, that if the SF Weekly's lawyers are to prevail, they will have to convince the appeals court to read that meaning into the statute. While federal predatory-pricing laws have been interpreted in this manner over time, reading a recoupment requirement into California state law, Leslie said, "is going to require more of a stretch." That's because California's present law is already quite specific about what it does, and does not, require.
So far, the appeals process has been a long one, with voluminous briefs filed in which the Bay Guardian essentially tries to remain in the victim position while the SF Weekly and its owners have tried to cast themselves as the real victim here. At present, it's all grinding toward expected oral arguments in San Francisco later this year, after which the appeals court will sort out what state law really requires in this case. It could be winter again before there's an answer.
Meanwhile, there is another matter to litigate, one with equal if not greater importance to the financial future of the parties involved.
Normally in California, if the losing party in a lawsuit wants to prevent the victor from, say, collecting on a $16 million judgment while the case is on appeal, then that losing party will post a bond for the judgment amount.
In other words, the losing party pays a bonding company to effectively put $16 million on ice, to be awarded to whichever party prevails. In exchange, the court system freezes all collections efforts until the appeals process is over.
This is not happening in the case of Bay Guardian Co., Inc. v. New Times Media LLC, et al.
Instead, the losing party, made up of Lacey and his co-owners, is both refusing to pay its debt and refusing to post a bond while the appeals process inches along. Which means that, in the eyes of the law, they owe Brugmann the $16 million right now (and, of course, a lot more than that, since the original judgment collects interest at a rate of about $5,000 a day for every day that it goes unpaid). The present debt total: $21 million and counting.
Lacey's position, outlined in a January 12 memo to all VVM employees, is that it would be stupid to post an appeal bond because the processing costs alone (potentially several million dollars) would amount to money out of his company's pockets that couldn't be recouped when -- and to him it's a matter of when, not if -- the judgment is overturned. "Given the strength of our legal position," Lacey and co-owner Larkin wrote, "it is our belief that even the fees on such a bond would far exceed any amount we would ever be forced to pay the Guardian."
That's their opinion. The Bay Guardian's lawyers, of course, have a very different opinion. In any case, the refusal by Lacey and his company to post a bond or pay the judgment debt has set up some high-stakes legal brinkmanship as the Bay Guardian, now publicly likening its opponents to a "deadbeat dad" and "a media version of Bernie Madoff," tries to go after $21 million of the company's assets immediately. This has forced Lacey's lawyers into a game of debt-collection whack-a-mole, as they appear regularly in various federal and state courts on two coasts trying to delay or deny the Bay Guardian's money grab.
So far, the Bay Guardian has succeeded in seizing two newspaper delivery vans from the SF Weekly (a lawyer working for SF Weekly shrugged them off in court last month as "old, decrepit vehicles" worth less than $3,000), having rent checks from subtenants in the SF Weekly's offices forwarded over to Brugmann, and, in a decision delivered on March 9, being awarded half of the SF Weekly's monthly advertising revenue. (The Bay Guardian estimates this could bring in about $200,000 each month; the SF Weekly and its owners are appealing the decision and Van De Voorde, in an e-mail on March 10, said that "the SF Weekly is absolutely not going out of business.")
The assigning of so much SF Weekly ad revenue over to the Bay Guardian triggered a situation that Randall S. Farrimond, a lawyer for SF Weekly, described in a March 16 court filing as "havoc." The Bay Guardian had immediately mailed notices to all of SF Weekly's advertisers, advising them that it would be taking a cut of SF Weekly's ad payments going forward. In response to this and other developments, the Bank of Montreal declared SF Weekly's parent company, VVM, to be in default on its $80 million loan and filed suit against the Bay Guardian in Delaware (where SF Weekly is registered as a company). In San Francisco, the bank moved to protect its "senior" lien on all of SF Weekly's assets by mailing SF Weekly advertisers a second letter, telling them that "all monies" owed to SF Weekly must now be mailed to the Bank of Montreal's Chicago branch. "Havoc" is not a bad word to describe what SF Weekly's advertisers must be experiencing right now. Farrimond wanted a temporary restraining order to allow time to sort out all the confusion. The court denied Farrimond's request and ruled that, for now, the Bay Guardian's cut of SF Weekly's ad revenue will be forwarded to the account of a neutral bank pending future hearings.
All of this has no doubt been a huge hassle and presumably at least a bit of an embarrassment for the owners of the SF Weekly, but in the end it's small change -- only about $20,000 has actually been collected by the Bay Guardian so far -- relative to what Brugmann has his eyes on.
Brugmann has retained a California collections lawyer, Jay Adkisson, who cowrote, as Adkisson puts it, "the all-time best-selling book on the topic of asset protection," to represent the Bay Guardian. If Adkisson knows something about protecting assets, he also knows something about unprotecting them. He's a no-nonsense man who pilots planes despite having only one eye (he lost the other to choroidal melanoma cancer 10 years ago) and likes to say things about the SF Weekly and its owners like "They've taken the position that we'll get the money when we pry it out of their cold, dead hands. Suffice it to say, their hands are starting to feel pretty cold and clammy."
It's impossible to imagine that the amount of the judgment, $21 million and counting, can be covered by the assets of the SF Weekly alone -- the newspaper posted a loss of $1.3 million as recently as 2007 -- and so Adkisson's logical next step is to go after the assets of the paper's parent company.
That's exactly what he's done, only to be told that New Times is now, as Lacey has described it, "simply a holding company" with no money to its name.
It turns out that after New Times bought VVM, the entity formerly known as New Times took a middling, nonlucrative place in the new corporate hierarchy. This is all most easily understood not from the middle, however, but from the bottom up.
At the bottom of VVM's present corporate structure are the alt-weekly newspapers themselves, according to documents related to the lawsuit, with each newspaper run by its own operating entity. SF Weekly, for example, is run by the entity SF Weekly, LP; LA Weekly is run by LA Weekly, LP; and Seattle Weekly is run by Seattle Weekly, LLC. Above these operating entities is New Times Media, LCC, the holding company with reportedly no money inside. According to lawyers involved in the case, there's no money inside because the money has moved on up to other entities that now control New Times Media, LLC. Those entities are Village Voice Media, LLC, and Village Voice Media Holdings, LLC.
According to trial documents, VVM's assets totaled $191 million in 2007 -- so there's likely to be money up there somewhere. However, recall the timing of New Times' takeover of VVM and you'll begin to see Adkisson's present challenge.
The takeover took place two years after the lawsuit against SF Weekly was filed, which is how you get the lawsuit title: Bay Guardian Co., Inc. v. New Times Media LLC, et al.
VVM is not mentioned because it had nothing to do with SF Weekly back then.
Since VVM and its top operating entities were not originally named as defendants by the Bay Guardian, they never became what are called "judgment debtors" -- the ones who owe the $21 million and counting.
On February 9, Adkisson filed a motion in San Francisco Superior Court to formally add Village Voice Media, LLC, and Village Voice Media Holdings, LLC, to the list of judgment debtors in the case. He argues that VVM is the "successor and alter ego" to New Times, and therefore the Bay Guardian should be able to go all the way to the top of the VVM corporate hierarchy in search of its $21 million. A hearing on the question is set for April 9.
In the meantime, Adkisson believes that a San Francisco court ruling from January 7, which placed a lien on New Times Media, LLC, at the request of the Bay Guardian, gives the paper another recourse: the ability to eventually sell off assets that New Times Media, LLC, controls. This holding company may not have money inside it per se, but it does have ownership interests in 14 alt-weeklies around the country, and those alt-weeklies are all worth something.
"We've got a lot of options," Adkisson said.
This perceived bounty of ways to get what he's now owed has not stopped Brugmann from complaining. He noted recently that instead of simply posting an appeal bond, Lacey's company is trying to use its "complex corporate structure" to stiff him.
In response, Farrimond, the SF Weekly lawyer, told me: "We're entitled to rely on whatever we can, legitimately, to get the appeal heard and decided. If the complex corporate structure were to help with that somehow, there certainly wouldn't be anything wrong with it."
True, though this does put VVM executives in the somewhat awkward position of trumpeting how intricately corporate they are -- not the usual alt-weekly selling point. Why doesn't VVM just do something to end this? Putting up an appeal bond would be pricey, sure, but at this point the company could be on track to spend more on the attorneys who are fending off Brugmann's aggressive collections effort than it would have on a bond fee. More to the point, the difference between the judgment total now ($21 million and counting) and the judgment total when the appeal was filed ($16 million) is very likely greater than the cost of putting up a bond would have been. Van De Voorde put the processing costs for an appeal bond at "several million." Barry Page, chief operating officer for California's Surety 1 appeal bonds service, said VVM could actually have gotten an appeal bond for as little as a few hundred thousand dollars, provided it put up enough collateral. Whatever the case, if Lacey and company were worried about creating potentially unrecoupable out-of-pocket expenses, well, they've already created them, in spades, by letting the judgment debt gather so much interest while all the lawyers involved remain very busy (and expensive).
The problem VVM has with putting up an appeal bond, said Van De Voorde, is that it would have to be VVM that puts up the bond, since the SF Weekly doesn't have enough assets to collateralize one. VVM's position, however, is that it will not be held liable for its subsidiary's debts in this case -- meaning no bond, ever, from VVM. Another unspoken reality: If VVM were to put up an appeal bond, it would guarantee that if SF Weekly loses its appeal, the money would be there for Brugmann to have immediately.
In other words, VVM is banking heavily on winning at the appeals level and, barring that, limiting any liability to SF Weekly and New Times Media, LLC (which together might not even yield the full judgment amount).
"It's a $25 million gamble," Adkisson said, estimating the amount of interest the judgment total will have accrued by the time the appeal is decided.
Why take such a risk? Adkisson, who said VVM has repeatedly rebuffed efforts to settle the matter out of court, has a ready answer: "They're cowboys. They're really cowboys. They've always been that way, and for lack of a better term, they're stubborn."
At the trial, in an effort to humanize the two big bosses, lawyers for both Lacey and Brugmann tried to use each man's time on the witness stand to paint a sympathetic picture for the jury. The target image in both cases: an earnest small businessman at heart, perhaps a bit prickly and eccentric, but thoroughly committed to the importance of good journalism and deeply connected to the local urban life.
What emerged instead -- in the 3,885 pages worth of argument and testimony -- was more interesting: a portrait of two intensely driven men, both with strong connections to more rugged areas of the country, both extremely stubborn, and both having channeled their passions for writing and their discontent with mainstream journalism into the creation of successful alt-weeklies at around the same time. They were, the testimony reminded, pioneers in the alt-weekly movement who came to define distinct strains of the genre. That's no small feat, and requires a willingness to bare teeth when necessary.
The first alt-weekly in the United States, the Village Voice, appeared in 1955 in New York City with Norman Mailer among its founders. Brugmann's paper in San Francisco arrived a little later as something less literary-minded and more singularly political, a publication befitting a lefty pamphleteer. Lacey's idea of an alt-weekly, different still, emerged shortly thereafter and evolved into more of an investigator of corruption and abuse of power no matter the figure's politics, a publication befitting a man who sees himself as sort of an equal-opportunity pain in the ass. However, what most set these two men apart from each other, and ultimately set them on a collision course, was that one of them, Lacey, ended up turning his initial success into a multistate alt-weekly conglomerate. That brought him into Brugmann's territory.
At the trial, Brugmann got to explain his life story before Lacey did. Brugmann's lawyer led the way:
Q: Are you from San Francisco originally, or did you come from somewhere else?
A: No, I'm the classic immigrant. I'm from a little town in Iowa called Rock Rapids… This is a farming community of 2,800 people… My readers know it as the great gateway to the West. I write about it all the time; that's my hometown. My grandfather, CC Brugmann, started a drugstore in 1902 -- "Where drugs and gold are fairly sold since 1902." My father then came into the store and I was to be the third generation, but I had ink in my veins and was not ever gonna be a druggist.
He went to the University of Nebraska to play basketball. "I was six foot five and you could play center in the Big 5 at that time," he said. "But Wilt Chamberlain came into the conference at Kansas at seven foot two, 250 pounds, so that was the end of my career right then." Brugmann joined the school paper -- "worked my way up from sports editor to editorial page editor to the editor in my junior year" -- and then went to the graduate school of journalism at Columbia University on a scholarship in 1958.
Q: Where did the Columbia School of Journalism place in the world of journalism schools at the time you went?
A: It was at that time acknowledged as the number one school in the country, and that's where the Pulitzer Prizes are housed.
He graduated from Columbia with a master's in journalism and in 1958 was drafted into the army. Brugmann then shipped off to Korea, where he ended up writing for the Stars and Stripes, "the famous military publication, which was started in a little town in the South during the Civil War, became quite famous during World War I, even more famous during World War II, famous during Korea, still famous, and that's where you hope you can go in the service instead of being an infantryman."
During his two-year stint there, he met his wife and future copublisher, Jean Dibble, and married her in Tokyo. In 1960, the couple moved to Milwaukee, Wisconsin, where Brugmann got a job at the Milwaukee Journal but after three years realized, "I really didn't want to spend my life on a daily newspaper." He wanted his own paper, and he wanted it to be alternative to and compete with the local dailies. He chose to start it in San Francisco.
The first edition of the Bay Guardian came out in October of 1966, put together in the living room of a home Brugmann and Dibble still live in today. Dibble had studied history at the University of Nebraska and then business at the Harvard-Radcliffe Program of Business Administration -- at a time when women were not allowed into the Harvard Business School, which resulted in Harvard professors traveling over to the women's campus at Radcliffe to teach students like Dibble -- and so she gravitated toward the handling of the project's finances. "Essentially what happened for the next six years was that we only published when we could pay off the bills from the last issue," Dibble recalled on the stand. "And at the same time, we were trying to raise capital, more capital. That was not easy, so we published very irregularly until about 1972. It was -- it was quite a struggle."
Early on, Brugmann had a clear sense of what he wanted the Bay Guardian's voice to be. They focused on "save-the-Bay stories," pieces that called attention to local developers polluting San Francisco Bay. Later, in the 1970s and '80s, the paper coined the term "Manhattanization" while arguing against high-rise buildings downtown. "For example, we did a cost-benefits study that showed that high-rises cost more money to the city in services, police, et cetera, than they brought back in taxes. That drove the chamber of commerce mad because they couldn't deal with that argument. Later, we did another study showing that -- not that high-rises produced a lot of jobs, but that the small businesses created the new jobs in the city, which knocked out another one of their arguments. These kinds of things we've done all the way through our history, but the nice thing was we had some results here." In the mid-1980s, the people of San Francisco passed Proposition M, which slowed down commercial high-rise development.
By the 1990s, the paper was bigger than ever, with a staff of over 90 people and revenues of around $8 million a year. So was San Francisco. As the dominant alt-weekly in this fast-growing city, the Bay Guardian seemed to have a nice future. It had won local and national journalism awards (including the prestigious Polk Award, for a 2005 look at "subhuman conditions" in San Francisco housing projects), it had a growing audience, and it had enough profit every year to keep expanding the business. As for New Times' purchase of the tiny SF Weekly: "We knew the people at the New Times," Brugmann recounted. "We were aware that they had deep pockets and deep resources and they used them in other markets. We knew that they would be tough, and we knew there would be consequences." But he thought the Bay Guardian had certain advantages:
We'd been around for a long time. We were part of the community. We were accountable to the community, people knew who we were. We had a history, a legacy, we had a brand, and we had a kind of journalism that would work in San Francisco. We proved that we were a progressive paper in a progressive city. We were a neighborhood paper in a city of neighborhoods. So we felt that we would be able to compete and compete effectively.
To press his advantage, Brugmann launched advertising campaigns that cast the SF Weekly's new owners as corporate carpetbaggers from Phoenix. One campaign used the slogan "Take back San Francisco." Another used Brugmann's face next to the slogan "Read my paper, dammit!" None of it worked. On a recent week in San Francisco, the Bay Guardian, which once printed papers that regularly ran to 160 pages, was offering a comparatively anemic 52-page issue. The SF Weekly, while also shrunken from its heyday because of the economic downturn and the general troubles facing print media, was nevertheless thicker, at 64 pages.
When Lacey took the stand, he wryly noted what a central role his name, e-mails, and statements had been playing in the trial thus far -- "I'm the executive editor historically and more recently the mascot, apparently, of the Village Voice papers" -- and then followed his lawyer through a series of introductory questions.
Lacey described being a divorced father of two young men and said that he resided "here in San Francisco." ("I also reside in Phoenix, Arizona," he added.) His oldest son, he said, was a freshman in college. "He applied here to go to the University of San Francisco," Lacey said, "but his senior year, he discovered girls, or they discovered him, and so he didn't get in, and so he is now at the University of British Columbia attempting to get his grades back to the level where he can get in."
Q: Okay. And how about yourself, did you -- did you go -- did you finish college?
A: Um, no, actually.
Q: And how about your parents, did they go to college?
A: No, my father was a sailor and was signed in underage during the Depression, sort of another -- one less mouth to feed. So he was in the navy and stayed in the navy until after World War II, then joined the merchant marines for several years, until I came along, at which point he became a construction worker and worked in Local 2 out of New York City. My mom was a nurse, became a nurse, so she had some schooling, but it was -- in those days I guess it would be the equivalent of junior college, associate of arts kind of thing, so she was a nurse.
Q: Okay. And did you attend college at some point?
A: Yes, I attended Arizona State University for a number of years and sort of split my time between working heavy construction and attending class with -- with the results comparable to my oldest son I think at this point.
Q: Some things kind of follow in the family, I guess, huh?
Q: At some point you developed an interest in journalism, correct?
A: From a very early age, actually.
Q: When was that?
A: Well, my father, although he wasn't college educated, was determined that I at least be informed, so he would bring home a newspaper and he made me read the newspaper every day when I was in early grade school, a newspaper called the New YorkJournal-American. And I started a newspaper in grade school, much like Mr. Brugmann, I guess, and continued an interest in journalism, read newspapers and magazines all my life.
Q: And that interest continued through high school and into the time that you were studying at Arizona State University?
A: Yeah. I mean, I took a journalism class at ASU that was -- I -- they graded on attendance, which was always difficult for me. I wanted to be graded on my work, and I didn't realize at the time that they were in a better position to be setting the standard. So, anyway, I took one journalism class, it wasn't my cup of tea, and I decided to -- to actually get involved with doing community newspaper work and journalism rather than formally in an educational setting.
It was the dawn of the '70s, and Lacey, involved in the anti-Vietnam War movement, responded to the shooting of four antiwar protesters at Kent State University by the Ohio National Guard by organizing a memorial demonstration. Students, he said during his testimony, "asked when were we going to burn down the ROTC building at ASU. And, you know, that -- that was a crazy idea. This was -- we were in Phoenix, Arizona. This wasn't Madison, Wisconsin, it wasn't Berkeley, and I asked people where they were getting this impression that that was our intent. And they said from the morning newspaper, from the Arizona Republic. And so we -- I mean this is literally like some Andy Hardy movie about 'Come on gang, let's put out a newspaper.' We thought that the thing to do was to put out a newspaper to distribute and to let people know that that isn't what we were doing. We were trying to honor the students who had been shot at Kent State."
That was the first issue, with a cover story by Lacey about the construction workers in Arizona who had come out to the demonstration to show these antiwar kids "what America was truly about." Lacey added, "I was interviewing one of the construction workers when he excused himself and walked out onto the field and sucker punched the leader of the antiwar movement in Arizona… knocked out his front teeth, knocked him unconscious, and the construction worker then returned… and finished the interview with me." That issue was put together in some student's bedroom, distributed for free, and called New Times. "We were trying to signal that there was something fresh in the air," Lacey said. "That the received wisdom from daily newspapers was changing and that these were, in fact, new times."
Then the office moved to a closet in a clothing store in a strip mall. (Lacey was friendly with the store's owner.) New Times was run as a collective -- "a wildly impractical organizational scheme," Lacey recalled -- but it worked well enough, and at some point, they sold enough advertising to rent space behind a Pete's Fish & Chips. "We wanted to do magazine-style journalism," Lacey said. "Which is a long form of journalism. It's different than -- than what happens in daily newspapers where you see there's a newspaper formula, it's the five Ws in the inverted pyramid, and they're trying to get in and out of a story fairly quickly. We were trying to write magazine-style stories that had context, that had lots of reporting, had background, allowed some editorial voice for the writer." Soon they were putting out 48-page issues and printing about 30,000 copies.
It was during this time that Lacey met his future majority co-owner, Jim Larkin. "Jim was an extraordinarily erudite writer and really sort of understood the politics of Phoenix in a sophisticated kind of way. Although his family is blue-collar, they had been there for a very long time… He just knew the place, and so I got a hold of him and said, 'Look, let's sit down and talk,' and it was -- it was great. I mean he was a live wire, someone who was very interested in the desert, and he grew up reading the same magazines that I read growing up, and so it was sort of like an instant understanding, an instant recognition, I guess."
Q: Do you know whether Mr. Larkin finished college?
A: No, he didn't finish college, either. In our defense, this is in 1970 and '71, okay?
In the late '70s, the paper began building a reputation for investigative reporting. "We were the first paper to document the -- and report upon -- the Indians who were dying at an alarming rate with leukemias and lung cancers in Arizona because of the uranium mining that they had done for the government, and the government was refusing to make good on their health benefits, refusing to take care of them. Caught a United States senator lying, presenting perjured testimony to get out from under a DUI charge. I caught a congressman bundling campaign contributions from car dealers illegally under the table. This same congressman also was keeping an enemies list on precinct workers within his own party in an effort to purge anybody that wasn't conservative enough out of the party. You know, the stories that we made our bones with in Arizona tended to be hard-hitting news stories, and when [ArizonaRepublic investigative reporter] Don Bolles was blown up in Arizona [while working on a story about the mob] in the late '70s, 1977, I think, a team of journalists from around the country, which was the beginning of [the organization Investigative Reporters and Editors], came into Arizona, not necessarily to solve this heinous murder, but to explain the conditions under which mobsters thought they could get away with blowing up a reporter, setting a car bomb off in his car. And although the daily newspapers participated in the research on this, when the series was done, they refused to run this, and so the IRE came to us and we published all of that series."
New Times writers won national awards, and at one point the paper was a finalist for a Pulitzer. Success begot more success, which begot more advertising, which begot bigger newspapers and greater profits, and then, in 1983, Lacey and Larkin (who had taken on the title of publisher) decided to buy Denver's Westword from Calhoun, a "force of nature" whom Lacey enjoyed seeing at the bar at national alt-weekly conferences. They made a success of the Denver purchase, so they decided to do more cities: Miami, Dallas, Houston. Then, in 1995, they did San Francisco.
While we're on the topic of origins and connections between weeklies, this is a good place to point out some things about TheStranger, founded in 1991 in Seattle by Tim Keck, who had moved to the city from Wisconsin after cofounding and then selling his stake in the Onion. The alt-weekly world, for all its growth over the years, remains relatively small. The Stranger's editorial director, Dan Savage, writes a weekly syndicated sex column that now runs in every VVM paper except Seattle Weekly, which is The Stranger's direct competitor; The Stranger gets national advertising through a relationship with a national advertising group called Voice Media Group, which is owned by VVM; The Stranger's ownership structure, like VVM's, makes use of LLC protections (though it has only one LLC in its ownership structure, many fewer than VVM possesses); like the Bay Guardian, The Stranger has minority owners, though none associated with the Church of Satan as far as we know; some Stranger employees used to work for Seattle Weekly, though not me; and The Stranger's owners operate one other weekly newspaper, the PortlandMercury, making them arguably the owners of a chain of alt-weeklies, if two links can be considered a chain.
"That's the problem with empires," Brugmann was saying. We were sitting in a bar called the Connecticut Yankee, in the Potrero Hill neighborhood of San Francisco, just a few blocks from the warehouselike building that houses the Bay Guardian offices. "Empires become costly, and instead of one problem during hard times, they've got 17, maybe 18 problems. See, we're not empire builders. We're not interested in owning an empire. I think the moment you start moving to become a chain, you lose a lot of your alternative roots."
It was February 10. Earlier in the day, hoping to get a comment from a company that was only intermittently responding to my questions, I'd stopped by the offices of the SF Weekly, in an office park that looks out over Mission Bay. I'd waited in the paper's reception area -- facing a large sheet of copper with the SF Weekly logo cut out of it -- until the paper's editor, Tom Walsh, came out. The publisher, Josh Fromson, was away. (Perhaps he was preparing for a deposition he had to give the next day; the trial may be over, but the questioning of VVM employees and executives by the Bay Guardian's collections lawyers continues, eating up a significant amount of everyone's time.) Walsh told me he wouldn't give an interview. "No comment," he said, referring me back to VVM corporate, which had declined to speak to me. Then he politely but firmly showed me the door.
When I arrived at the Bay Guardian offices, it was nearing cocktail hour and Brugmann had been itching to introduce me to something called the Potrero Hill Martini. "I'd serve you one in my office," he said, "but I checked the ice and it's melted. You can't serve a martini without ice." There was no arguing with that. First, however, he gave me a tour of the editorial department -- an ornately messy workplace full of plants, old political placards, and quiet writers tucked into various corners and cubicles. The paper's city editor, Steven T. Jones, was wearing a tan fedora-like hat. On Jones's wall: a copy of the Constitution, a Grateful Dead poster, and some retro agitprop blaring the message "Grow Hemp for the War."
Brugmann led me past an office completely filled with boxes of documents and evidence related to the trial, then up to the roof for what he called "the alternative view of San Francisco." Pointing to the southeast, he showed me "the goddamn Potrero Hill power plant, spewing out ruinous material every minute of every day." To the west: the hill known as Twin Peaks and the giant red-and-white Sutro Tower, used to broadcast TV and radio signals. "Another big scandal," Brugmann told me. "A huge tower that was done secretly, very quietly." To the north: downtown San Francisco and, beyond the tops of some buildings, the tip of the Transamerica Pyramid. Brugmann is fond of saying that the establishment press looks at his city from the top of the Transamerica Pyramid down, while his paper looks at the city from the bottom of the Transamerica Pyramid up.
Brugmann was wearing a black cable-knit sweater vest over a purple dress shirt, along with tan pants and a gold watch. We headed back downstairs, stopping for a moment one floor beneath the Bay Guardian editorial offices, where the online content-ranking site Digg rents space from Brugmann and his wife (who own the entire building, having bought it in 2002 after the Bay Guardian's old landlord wanted to raise the rent). It's not clear that Brugmann understands exactly what Digg does, even though it's part of a technological revolution that is digging the business model right out from under his industry.
We headed back upstairs and sat in his office for a moment. On the bookshelf: countless bound volumes of the Bay Guardian, plus works on Cointelpro, censorship, the Bush war cabinet, and the history of San Francisco. It could be the West Coast headquarters of what historian Richard J. Hofstadter described as the paranoid style in American politics, I thought. Or perhaps the future headquarters of the Organization for People Who Were Once Dismissed as Paranoid Until It Turned Out They Were Right.
We left for the bar, Brugmann driving us in his small, messy sedan, old copies of the Bay Guardian stashed along the dashboard, his trunk full of the latest edition, which he likes to personally deliver here and there. The clock in his car was running three hours slow, which seemed like a hard thing to account for. He said it had something to do with recent work on the vehicle, though if work had been done, it clearly wasn't completely successful; aside from the clock being on New Zealand time, his "Check Engine" and "ABS" lights were on. A ragtime tape played on the cassette player.
The Potrero Hill Martini is made with Anchor Junipero Gin, distilled not far from the Bay Guardian offices. In other words, I found myself drinking a locally produced martini with the publisher of the city's only locally owned alt-weekly in a dark neighborhood bar where he knows the owner and the waitstaff -- message received. As if to seal the impression that this was authentic San Francisco, Bob Dylan's "The Times They Are A-Changing" began to play.
"If they go out of business, that's their own doing," Brugmann said of the SF Weekly.
And what about him? Can he keep up the legal fight and collections effort even if VVM and its lawyers ensure that it drags on for years?
"Sure," he said.
A second martini came for me.
"We used to get along together," Brugmann was saying about Lacey. "I still don't know what -- well, they came to San Francisco and wanted to put us out of business. And our politics are different."
Noticing the second martini glass was empty, Brugmann said, "Why don't you have another one?"
I assented, and my notes began to fade in and out.
Brugmann was saying: "They don't fit in, they're not from here, they don't like it here -- they give that impression." He was saying: "How can you be a real newspaper and not endorse candidates?&am