Us v. SF Weekly et al: The real story

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By Tim Redmond

The latest chapters in our ongoing legal battle with SF Weekly and its parent company have generated a lot of national press. We got Bloomberg News, The Wall Street Journal The San Francisco Chronicle and more.

The best coverage has been in the Stranger, the Seattle newsweekly, where Eli Sanders has been all over the twists and turns of the story.

Here, for the record, is what’s really going on. The Guardian has won the right to put a lien on the assets of the 16 papers owned by Village Voice Media. And we’re moving forward aggressively to collect the roughly $21 million the chain owes us.

Mike Lacey, the executive editor of VVM, has gone pretty ballistic over the latest court rulings and over our statements about the case. He argues that the judgment is still on appeal, which is true. Typically when a judgment like this is appealed, the party that’s on the hook for the money posts a bond; that guarantees that in the end, when all the appeals are exhausted, the creditor will get paid.

Lacey argues that his company can’t manage that:

The absurd amount of the judgment in the Guardian's predatory pricing lawsuit means that an appeal bond would have to be secured with a staggering $30 million in assets. Neither of the two remaining defendants in the suit, SF Weekly or New Times Media, has assets even approaching that amount.

But what Lacey is really doing here is hiding behind VVM’s complex corporate structure. He claims that SF Weekly doesn’t have $30 million in assets, which is almost certainly true – but New Times Media owns the various limited liability companies that control all of the papers (and other assets). You can see how it all works here (pdf document introduced in court).

So it’s crazy to say that New Times can’t come up with the assets to cover a $30 million bond. The empire was valued at the time of trial at roughly $190 million. Lacey could get a bond if he wanted one. And let’s not forget – whatever the LLCs, LPs and other corporate instruments, everyone knows that Village Voice Media, New Times and all of the 16 papers are part and parcel of the same company, with the same management, same headquarters and same ownership.

In fact, Lacey’s position is schizophrenic: On the one hand, he says the company has no assets and can’t pay the judgment – and on the other hand says the company has plenty of assets and can fight off involuntary bankruptcy.

What Lacey is really doing here is exactly what our entire collection effort has been about – he’s using the VVM corporate structure to try to avoid paying. The jury in our case found that the Weekly was guilty of predatory pricing, and that the predatory intent came all the way from the top. Now Lacey wants to say that because there’s a complicated structure, the chain doesn’t have to pay its subsidiary’s debt.

He also claims that

Instead of aiding in an expeditious appeal, the Guardian has repeatedly sought to delay that process, asking for extensions of the deadline by which it must file its brief

Yeah, we’ve asked for some extensions – but Lacey fails to note that his own company lawyers took 150 days – five months – beyond the usual 30 days to file their opening appeal brief. If they were in such a rush for a speedy appeal, why did that opening brief take so long?

See, here’s what I think is really going on. VVM doesn’t intend to pay – now, or after the appeals are over. That’s why there’s no bond – it would guarantee that if we win the appeal we’d get the money. These guys want to drag this out, hide the money and refuse to pay until the end of time.

That’s why we’re mounting an aggressive collection effort. Because we have to.