NEWSPAPER PRESERVATION ACT WEDNESDAY, SEPTEMBER 18, 1968 HOUSE OF REPRESENTATIVES, The subcommittee met at 10 a.m., pursuant to call, in room 2141, Rayburn House Office Building, Hon. Emanuel Celler, chairman, presiding. Present: Representatives Celler, Rodino, Rogers, Brooks, Kastenmeier, Mathias, MacGregor, McClory, and Railsback. Staff members present: Kenneth R. Harkins, chief counsel, and Howard R. Fogt, Jr., associate counsel. The CHAIRMAN. The subcommittee will come to order. Today we are commencing hearings on H.R. 19123, the "Newspaper Preservation Act," and related bills. These hearings have been scheduled in response to a request on July 16, 1968, by Representative Morris K. Udall, for himself and for the Honorable Carl Albert and Representatives Leonor K. Sullivan, Ed Edmondson, Spark M. Matsunaga, Richard Fulton, and Robert W. Kastenmeier. In his letter, Mr. Udall contended that hearings were urgently needed to ascertain whether an exemption from the antitrust laws for certain joint newspaper operating arrangements was appropriate at this time to preserve editorial competition throughout the United States. H.R. 19123, the "Newspaper Preservation Act," is a substitute for a number of bills which were introduced in the last session, and which were referred to as the "Failing Newspaper Act." The substitute bill incorporates changes that result from extensive hearings conducted in the Senate. In an effort to mitigate some of the objections that were made manifest during the Senate hearings, the substitute bill seeks to reduce the scope of the antitrust immunity to be conferred. In summary, H.R. 19123 declares that it shall not be unlawful under the antitrust laws to enter into, to continue to operate, or to renew or amend, a joint newspaper operating arrangement, if at the time such arrangement was first started one of the newspapers to the arrangement "was a publication other than a failing newspaper." In addition, H.R. 19123 provides a procedure for vacating the final judgment of any district court in a civil action that holds a joint newspaper operating arrangement to be unlawful under the antitrust laws. Specifically, H.R. 19123 is concerned with the decision of the U.S. District Court of Arizona in the antitrust case, United States v. Citi zens Publishing Company, the so-called Tucson Newspaper case-280 F. Supp. 978, January 31, 1968. In the Tucson case, the court found that joint newspaper operation that had been active since 1940 constituted a price-fixing, profit pooling and market allocation agreement illegal per se under section 1 of the Sherman Act. The court also found that the defendants had monopolized and acquired monopoly power that violated section 2 of the Sherman Act. In addition, the court found that the acquisition of one of the newspapers in 1965 was a violation of the Celler-Kefauver amendment to section 7 of the Clayton Act. The Tucson case now is on appeal to the Supreme Court of the United States. The antitrust laws embody concepts and principles which long have been considered to be the bedrock of our economic institutions. Piecemeal exemptions from the antitrust laws to cope with problems of particular industries have been given reluctantly and only after there has been a clear showing of overriding need. These hearings are held to determine, for example, whether this overriding need exists. In those instances when Congress has given an exemption from the antitrust laws to particular industries, invariably some form of regulation has been substituted to obtain for the public those benefits that, in the absence of the exemption, competition would be relied upon to provide. Proponents will be asked whether they want regulation of the newspaper business. It is hard to imagine that anyone would want regulation of the newspaper business. If such regulation, indeed, were found to be necessary, most difficult problems are presented by the requirement in the first amendment to the constitution, that the Congress shall make no law "abridging the freedom of speech, or of the press." In the light of these considerations, the subcommittee intends to proceed with utmost caution into this subject. All shadings of opinion will be heard on the numerous ramifications of this proposal. The subcommittee will consider carefully the record of testimony obtained in the Senate in its 22 days of hearings, in addition to the information that will be obtained during the course of these hearings. The subcommittee intends to leave no stone unturned in its examination of these proposals. At this point in the record, I will incorporate H.R. 19123 and copies of its predecessor, the "Failing Newspaper Act." In addition, I include a copy of Representative Udall's July 16, 1968, request for hearings. (Documents follow:) CONGRESS OF THE UNITED STATES, Hon. EMANUEL CELLER, Chairman, Committee on the Judiciary, DEAR MR. CHAIRMAN: After consulting with a number of my colleagues, and on their behalf as well as my own, I want to urge in the strongest possible terms that your committee try to find time to hold brief hearings on the subject of joint newspaper operating arrangements before Congress adjourns. It is my under standing that the proponents of this legislation would require no more than one morning to present their case. The colleagues who share my concern in this matter and who have indicated their strong interest that hearings be held include the Honorable Carl Albert, Lenor Sullivan, Ed Edmondson, Spark Matsunaga, Richard Fulton and Robert Kastenmeier. Each of these colleagues feels as I do that there are compelling reasons for conducting brief hearings before adjournment. The first of these is the likelihood that the Senate will act on an amended version of S. 1312, Senator Hayden's "Newspaper Preservation Act," in this session. Since this is Senator Hayden's last term in office, and since he has been the principal sponsor of this legislation, we feel it is important that the House establish some record on his proposal in this session. A second and more compelling reason is that the preservation of editorial competition in many cities throughout the United States is in real jeopardy today because of the doubt and confusion generated by anti-trust litigation and the failure of the Congress to resolve some of the problems brought to light and, in fact, exacerbated by that litigation. Because of the action brought by the Justice Department against the Tucson newspapers, and the decision there by Judge Walsh declaring the joint newspaper arrangement to be a per se violation of the anti-trust laws, similar joint newspaper arrangements in twenty-one other cities operate under the shadow, indeed the threat of federal interference. This cannot help but inhibit these newspapers in their day-to-day operation and in their planning for the future. Similarly, in those few cities where fully competing newspapers still exist, and where there is a continuing possibility of merger with subsequent loss of one of the editorial voices, the Tucson decision would seriously inhibit any thought of turning to a joint operating arrangement as the means of reducing operating costs while maintaining editorial competition. It is one thing for the United States to defend the interests of the people against the effects of monopoly; it is another to destroy competition where it exists through a failure to recognize important distinctions. It is my feeling, and I think it is the feeling of my colleagues, that failure of the Congress to move into this field of editorial versus business competition in the newspaper field may result in the needless and untimely loss of editorial competition in a number of cities in the next two or three years. Studies by a number of the publishers participating in joint newspaper operating arrangements have proven that, if they are forced to separate their commercial functions, only one of the two newspapers in each city will survive. We cannot afford any further diminution in the number of such editorial voices, for, as Judge Learned Hand said of the press: "It serves one of the most vital of all general interests, the dissemination of news from as many different sources and with as many different facets and colors as is possible." I am well aware of your past interest in the problems of a free and flourishing press in the United States, including your committee hearings of a few years ago. It is my feeling that enactment of legislation along these lines would be consistent with the philosophy which you have often expressed and in harmony with such legislation as the Celler-Kefauver Act. As you know, a number of bills dealing with this problem have been introduced in the House during the 90th Congress. Extensive hearings were held in the Senate on S. 1312. Recognizing a number of deficiencies in the original language, including particularly language dealing with the merger problem. Senator Hayden has secured a committee print of an amended version of S. 1312, a copy of which is enclosed. In attempting to work with our colleagues in the Senate, I believe that a number of my colleague in the House intend to join in introducing bills identical to S. 1312 as amended within the next few days. Your consideration of this request will be greatly appreciated. Sincerely, MORRIS K. UDALL. 90TH CONGRESS 2D SESSION H. R. 19123 IN THE HOUSE OF REPRESENTATIVES JULY 31, 1968 Mr. EDMONDSON (for himself, Mr. STEED, Mr. BELCHER, Mr. KASTENMEIER, and Mr. MATSUNAGA) introduced the following bill; which was referred to the Committee on the Judiciary A BILL To exempt from the antitrust laws certain joint newspaper operating arrangements. Be it enacted by the Senate and House of Representa 2 tives of the United States of America in Congress assembled, 3 SECTION 1. This Act may be cited as the "Newspaper 4 Preservation Act". 5 6 DECLARATION OF POLICY SEC. 2. In the public interest of maintaining the his7 toric independence of the newspaper press in all parts of the 8 United States, it is hereby declared to be the public policy of 9 the United States to preserve the publication of newspapers 10 in any city, community, or metropolitan area where a joint 2 1 operating arrangement has been or may be entered into 5 (1) The term "antitrust law" means the Federal Trade 6 Commission Act and each statute defined by section 4 thereof .7 (15 U.S.C. 44) as "Antitrust Acts" and all amendments to 8 such Act and such statutes and any other Acts in pari materia. (2) The term "joint newspaper operating arrangement" 9 10 means any contract, agreement, joint venture (whether or not 11 incorporated), or other arrangement entered into by two or 12 more newspaper owners for the publication of two or more 13 newspaper publications, pursuant to which joint or common 14 production facilities are established or operated and joint or 15 unified action is taken or agreed to be taken with respect to 16 any one or more of the following: printing; time, method, and 17 field of publication; allocation of production facilities; dis18 tribution; advertising solicitation; circulation solicitation; 19 business department; establishment of advertising rates; 20 establishment of circulation rates and revenue distribution. 21 (3) The term "newspaper owner" means any person 22 who owns or controls directly, or indirectly through separate 225 22 23 or subsidiary corporations, one or more newspaper publica 24 tions. 25 (4) The term "newspaper publication" means a publica |