»Home | »Philosophy  | »Advocacy | »Weblog  |»Terms
The Center for the Advancement of Capitalism :: www.capitalismcenter.org

First Amendment Follies
[May 12, 2003]

By S. M. Oliva

In Second Amendment law, there is a vigorous debate over whether the Constitution confers individuals with the right to bear arms, or instead recognizes the states’ rights to create and maintain militias. Obviously, we at CAC subscribe to the individual rights interpretation. After all, it would be silly for Congress to write a Bill of Rights composed of numerous individual rights and one collective right. Nobody, for example, would argue the First Amendment was not an individual right, would they? Well, actually they might...

The Justice Department, which currently subscribes to an individual rights view of the Second Amendment, now appears to believe the First Amendment does not apply to individuals, or at least not to individual corporations. This novel legal theory is being peddled before a federal judge in Ohio overseeing the DOJ’s antitrust settlement with Village Voice Media and New Times Media, two national publishers of “alternative newsweeklys.”

We’ve all seen alternative newsweeklys like the Village Voice or the Washington City Paper. They’re irreverent local publications usually stuffed with ads for sex shops, local jazz clubs, and extremely bizarre personals (i.e., “women seeking other”.) Few of us ever think of these papers as a distinct market however, the way steel or computers are a marketplace. For one thing, the designation “alternative” implies these papers act as a competitor, or at least a supplement, to larger existing newspapers, generally the big-city dailies.

Since alternative newsweeklys are generally distributed free of charge, advertising sustains these for-profit businesses. It should come as no surprise, then, that not every alternative newsweekly thrives. Two cases in point were the New Times Los Angeles and the Cleveland Free Times, respectively published by New Times and Village Voice. In each market, these papers faced well established competition from an existing alternative owned by the other company. To stem the massive financial losses that resulted, the two companies sat down and agreed to shut down their failing newspapers. From a businessman’s perspective, this was a simple way to exit a market with some dignity.

The Justice Department, however, saw this as “market-swapping,” an antitrust code word for “doing bad things.” The Government sued the two companies and quickly obtained a settlement (after all, the companies weren’t going to throw more money on these lost causes) requiring each company to sell the assets of their closed papers to third-parties chosen by the Government. The newspapers would then reopen and “competition would be restored,” at least in the DOJ’s mind.

Now, you may be wondering what gives the DOJ the right to force a newspaper to publish. The First Amendment’s command that freedom of the press shall be free of government intervention should reign supreme here. After all, if the government can’t shut down a paper, it certainly can’t reopen one the owner has closed for financial reasons. Under an individual rights view of the First Amendment, it doesn’t matter how “anti-competitive” Village Voice and New Times’ actions were—their First Amendment rights are paramount.

I filed comments with the DOJ expressing that basic point: First Amendment beats antitrust. Last week, the DOJ responded with a rather convoluted argument: We are protecting the First Amendment.

First, the DOJ argues “[n]either news gathering nor news dissemination are being regulated” by the settlement. This is a lie. First, Village Voice and New Times are being forced to sell assets that could otherwise be put to use by these companies in their own news operations. Second, the DOJ explicitly argued that the “different, and at times, opposing views and positions” of the closed newspapers constituted a benefit that consumers were entitled to as a matter of law. This means the DOJ’s settlement was intended to regulate news dissemination by forcing viewpoints into the marketplace. In fact, the DOJ admitted in their reply that media “diversity” constituted a sufficient government interest for purposes of this antitrust prosecution. The DOJ cited a 1945 Supreme Court ruling allegedly in support of this point:

It would be strange indeed . . . if the grave concern for freedom of the press which prompted adoption of the First Amendment should be read as a command that the government was without power to protect that freedom. The First Amendment, far from providing an argument against application of the Sherman Act, here provides powerful reasons to the contrary. That Amendment rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public, that a free press is a condition of a free society. Surely a command that the government itself shall not impede the free flow of ideas does not afford nongovernmental combinations a refuge if they impose restraints upon that constitutionally guaranteed freedom. Freedom to publish means freedom for all and not for some. Freedom to publish is guaranteed by the Constitution, but freedom to combine to keep others from publishing is not.

The case cited dealt with “exclusionary” conduct, namely the Associated Press’ efforts to keep certain newspapers from becoming members. Here there was no such conduct. The Village Voice and New Times did not “combine to keep others from publishing”; the combined to keep themselves from publishing. What’s missing from the above cited opinion is any reference to force. Village Voice and New Times took no action to violate the rights of others, or even to prevent other “alternative newsweeklys” from entering and competing in the Cleveland and Los Angeles markets. They certainly didn’t “impede the free flow of ideas,” as suggested by the DOJ.

Indeed, with the advent of the Internet, it’s laughable to suggest “alternative newsweeklys” are some irreplaceable form of media whose deeds cannot be duplicated. Most Internet weblogs serve a similar function to papers like the Village Voice. Yet somehow the DOJ failed to take that into account when writing their market definition. Out here in the real world, however, no reasonable man would argue the Village Voice enjoys a “monopoly” in the Los Angeles alternative newsweekly market.

The DOJ’s view of the First Amendment in this case implies that speakers have no rights, yet listeners enjoy unfettered power to demand “diverse” information sources. This is certainly consistent with antitrust doctrine, which holds producers are no more than serfs to consumers. But this view flies in the face of two centuries of First Amendment thinking, which has always understood the right as imposing a negative command on the government, rather than a positive grant of authority. The First Amendment certainly does not allow the DOJ to create “diversity” in the marketplace through highly selective antitrust prosecution.

The DOJ’s real concern, however, is not for the readers of alternative newsweeklys, but for the advertisers—those sex shops and jazz clubs I mentioned earlier. In the DOJ’s world, you see, the closing of two failing newspapers meant price increases for advertisers of the remaining paper. In antitrust doctrine, price increases of any kind are suspect, but those that occur following the loss of a competitor are considered a capital crime.

Indeed, the DOJ was so panicked over the plight of alternative newsweekly advertisers in Cleveland and Los Angeles, they forced Village Voice and New Times to divest their assets before the proposed settlement was actually reviewed by a federal judge. In doing this, the DOJ intentionally violated a federal statute which requires them to wait before imposing antitrust judgments. I raised this point in a brief filed with the district court overseeing the case. The DOJ, in response to my brief, said that any delay in reopening the closed newspapers would “undermine the effectiveness” of the settlement. The DOJ said “[r]eaders and advertisers will sooner benefit in Cleveland and Los Angeles as a result of a quick and effective divestiture.”

This statement is breathtaking. It implies that readers and advertisers were so maliciously harmed by Village Voice and New Times that the divestiture order had to be enforced in full before any judicial review could take place. It’s not exactly clear what the imminent harm to anyone was. Even if the settlement took two or three months to obtain approval, would advertisers be on the verge of bankruptcy because they’re being denied a second alternative newsweekly to peddle their smut in? Keep in mind there are plenty of advertising forums intentionally omitted from the DOJ’s market definition so as to shore up their case against Village Voice and New Times. The market, however, is not so confined.

Lost in all this is the fact that Village Voice and New Times closed their papers because they were failing financially. In the world of antitrust, however, failure is not an excuse to stop “competing.” Since consumer interests are paramount to the rights of owners, failing businesses are expected—as a matter of government policy—to continue competing until they are completely insolvent, thus providing consumers with maximum “benefits.” This, of course, is not capitalism but a perverted form of economic Darwinism. If you need a visual to demonstrate what I mean, try this: if golf is the sport of capitalism, cockfighting is the sport of antitrust regulation. No offense to cockfighting fans intended.

 

Search the Center's Website

web capitalismcenter.org

Sign up for CAC's Newsletter
Keep up with the latest news—type in your e-mail address and click Go!

 


» Frequently Asked Questions
You ask the tough questions and we answer them.


» The Moral Basis of Capitalism
Capitalism is the only moral social system. Learn why.


» The Moral and the Practical
Capitalism is practical for the same reasons that make it moral.


» Capitalist Book Club
Purchase the essential texts on capitalism.


» Advocacy
Learn about the Center's projects.


» Media Center
News mentions, press releases and speakers.


» Feedback
Send us a comment or ask a question—we want to hear from you!


   

Copyright © 1998-2012 The Center for the Advancement of Capitalism. All Rights Reserved.
Email: 
info-at-capitalismcenter.org · Feedback · Terms of Use · Privacy Policy · Webmaster