- The Washington Times - Monday, January 24, 2005

NEW YORK (AP) — Federal antitrust enforcers are investigating plans by Gannett Co., the nation’s largest newspaper company, to acquire a publisher of community newspapers in the Midwest, a Department of Justice official said yesterday.

Gina Talamona, a department spokeswoman, said the department was looking into Gannett’s proposed purchase of HomeTown Communications Network Inc., a Midwest community newspaper publisher based in Livonia, Mich. News of the probe was reported in yesterday’s editions of the Wall Street Journal.

The Journal also reported that the Justice Department has opened a preliminary inquiry into the New York Times Co.’s plans to take a 49 percent stake in Metro Boston, a free daily that competes with the Boston Globe, which is also owned by the Times. Miss Talamona did not comment on the Times deal other than to say the department was aware of it.

The news comes as the newspaper industry appears headed into a new round of consolidation. St. Louis-based Pulitzer Inc., which owns the Arizona Daily Star, St. Louis Post-Dispatch and other dailies, recently hired Goldman, Sachs & Co. as a financial adviser and would explore “a range of strategic alternatives,” including a potential sale.

McLean, Va.-based Gannett, publisher of USA Today, and E.W. Scripps Co. have said they will take a look at Pulitzer, which some analysts say could fetch about $1.5 billion in a sale.

Edward Atorino, a newspaper industry analyst with Fulcrum Global Partners, expressed surprise that the Justice Department was taking an interest in such small deals.

“There have been many transactions that have gone in the past without any scrutiny,” Mr. Atorino said. “Maybe they’re responding to complaints by companies that feel threatened.”

Gannett already owns daily newspapers in Detroit and Cincinnati. It announced in November it would buy HomeTown, whose assets include one daily paper and 58 weekly and twice-weekly community newspapers in Michigan, Ohio, Kentucky and Indiana. A spokeswoman for Gannett declined to comment.

The Times deal for a stake in Metro Boston has already generated a complaint from Herald Media Inc., which owns the Boston Herald, a daily tabloid rival of the Globe, the Journal reported. Herald Media said the deal would hurt Boston readers and advertisers.

A spokeswoman for the Times defended the proposed investment, saying it “would give advertisers more options and readers more news” and that the deal would be “pro-competitive” for greater Boston.

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