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Syracuse Broadcasting Corp. v. Newhouse

August 31, 1956

SYRACUSE BROADCASTING CORPORATION
v.
SAMUEL I. NEWHOUSE, THE HERALD COMPANY, THE POST-STANDARD COMPANY AND CENTRAL NEW YORK BROADCASTING CORPORATION.



Author: Medina

Before: MEDINA, LUMBARD and WATERMAN, Circuit Judges.

Plaintiff appeals from an order granting defendants' motion for summary judgment and dismissing one of the causes of action alleged in the complaint and dismissing the others for general insufficiency, in an action for treble damages under the Clayton Act, 15 U.S.C. Section 15 for violation of 15 U.S.C. §§ 1 and 2 (Sherman Act) and §§ 13, 13a, 18 and 19. Opinion below not reported. Modified and remanded.

MEDINA, Circuit Judge: This is a suit for treble damages based on the Clayton Act, 15 U.S.C. § 15, for violation of 15 U.S.C. §§ 91 and 2 (Sherman Act) and §§ 13, 13a, 18 and 19. The district judge granted summary judgment for the defendants on one of plaintiff's claims and dismissed the others for failure to state a claim upon which the plaintiff was entitled to relief; and plaintiff appeals.

Plaintiff (WNDR) and one of the corporate defendants are radio broadcasting corporations. Both of the other corporate defendants publish newspapers, which together comprise the sole daily and Sunday newspapers in the City of Syracuse, New York. The defendant, Post-Standard Company is wholly owned by the defendant Herald Company, the majority interest in which, in turn, is owned by the individual defendant Samuel I. Newhouse, who also controls the defendant broadcasting company (WSYR and WSYR-TV). There are three other independently owned and operated radio broadcasting stations in Syracuse and one other television station.

This action is predicated on the following alleged violations of the antitrust laws: (1) Restraining trade in, monopolizing, and attempting to monopolize the dissemination of news and advertising in the Syracuse area in violation of 15 U.S.C. §§ 1 and 2 (Sherman Act) by means of the following acts: (a) refusing to accept newspaper advertisements unless WSYR also received advertising; (b) refusing to accept national or "general" advertising in either newspaper separately, but requiring unit or combination advertising in both newspapers; (c) circulating false statements concerning WNDR; and (d) providing advantages in the newspapers to WSYR which were not provided to WNDR, such as favorable publicity, free advertising, preferred page positions for advertising and secret refunds and rebates. (2) Discriminating in price, by means of the above-stated acts, in violation of 15 U.S.C. § 13 (Clayton Act). (3) Merging and employing interlocking directorates in violation of 15 U.S.C. §§ 18 and 19 (Clayton Act). At the close of extensive pre-trial hearings and on the basis of a voluminous record, Judge Brennan granted summary judgment in favor of defendant on (1), the Sherman Act claims, and dismissed (2) and (3), the claims based on the Clayton Act, for failure to state a claim.

Judge Brennan brushed aside a further charge, made in the briefs and affidavits, but not alleged in the complaint or subsequent statement of claims, nor in any way substantiated, to the effect that defendants' newspapers charged plaintiff "a different rate for advertising than that charged other advertisers for the same class of advertising"; and we think he was justified in doing so. We do not, however, preclude plaintiff from applying for leave to amend the complaint in this respect, before the trial which we are about to order.

ALLEGED REFUSAL OF DEFENDANTS' NEWSPAPERS TO ACCEPT ADVERTISEMENTS UNLESS WSYR ALSO WAS PATRONIZED.

In an effort to bring itself within the doctrine of Lorain Journal Co. v. United States, 342 U.S. 143, plaintiff alleged that the defendants' newspapers refused to accept newspaper advertisements unless advertisements were also placed with WSYR. This was a serious charge. It was flatly denied by defendants, and Judge Brennan very properly, in the exercise of administrative powers which are indispensable to the efficient handling of antitrust cases and others, insisted that plaintiff produce some substantiation. When this was not forthcoming, plaintiff was ordered to "set forth specific instances and details" concerning this charge Plaintiff merely produced a statement that an advertising man had said he had been told that defendants' newspapers would not accept advertising unless WSYR was also patronized. This evidence would not be admissible at a trial; and Judge Brennan correctly decided that as to this charge there was no genuine issue of fact. It is consequently out of the case.

THE MONOPOLY CHARGE UNDER SHERMAN ACT, SECTION 2.

What would seem to be the heart of plaintiff's case is the assertion that as the defendants' two newspapers were the only newspapers in Syracuse, and, therefore, had monopoly power, the imposition of the unit or combination advertising arrangement was illegal per se under the reasoning of Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 608-609. But ordinarily morning and evening newspapers are not separate products which can be viewed as tied to one another. Times-Picayune Pub. Co. v. United States, supra, at page 614. Accordingly, "neither the rationale nor the doctrines evolved by the 'tying' cases can dispose of the [case]" and it "must thus be tested under the Sherman Act's general prohibition on unreasonable restraints of trade." Ibid., at page 614.

While plaintiff's argument is obscure, the meat of it seems to be that but for the newspapers' unit advertising contract, persons advertising their products in the Syracuse area would devote more of their advertising funds to plaintiff's competing medium, that the combination rate is a monopoly rate because defendants own and control the only newspapers in Syracuse, and that a combination advertising rate by newspapers can conceivably be an attempt to monopolize the combined newspaperradio advertising market in and around Syracuse.

We need not now decide whether newspaper advertising and radio advertising are competing products in the same market, as plaintiff's charge on the monopoly phase of the case falls of its own weight, even if it be assumed arguendo that they do compete in the same market. The record discloses undisputed evidence of the total radio-newspaper coverage, two newspapers and five radio stations in Syracuse, and defendants' share of the total advertising revenue is too low to warrant any inference of monopolization by defendants or any attempt to monopolize.

Plaintiff's theory is that its radio station competes in the Syracuse area for the same advertising dollar as do defendants' radio station and newspapers, along with the other three radio stations. Thus plaintiff has defined the "relevant market" in a fashion which destroys its claim of monopoly under Section 2. This is a legal question which we may determine on the basis of the record before us. Times-Picayune Pub. Co. v. United ...


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