Freedom's Penalty

Does a newspaper publisher have the right to move into a town, drive an existing paper out of business, and establish a local newspaper monopoly? Last week a U.S. district court gave its answer: yes.

The case involved the Harte-Hanks Newspaper Group (eight newspapers in Texas), which in 1954 bought the daily Banner in Greenville (pop. 20,000), a northeast Texas county seat boasting the "blackest soil, whitest people." Harte-Hanks increased the size of the paper and its advertising staff, but could not show a profit. Meantime, the moneymaking, family-owned Greenville Herald, faced with this tougher competition, fell into the red. In 1956 the Herald, weakened by losses, was forced to sell out to Harte-Hanks. By the next year the merged Herald-Banner (circ. 8,694) was making money.

Into that situation moved the U.S. Department of Justice's antitrust division, charging Harte-Hanks with conspiring to restrain trade. The chain, said the government, intentionally operated the Banner at a loss and used revenues from its other newspapers to finance the loss. Harte-Hanks lawyers argued that free competition, not a conspiracy, had made Greenville a one-newspaper town. Greenville, they said, is too small to support two dailies. Last week in Dallas U.S. District Judge T. Whitfield Davidson dismissed the antitrust suit against Harte-Hanks. Said Judge Davidson: "Justice Holmes has said that a man has the right to set up a shop in a small village which can support but one shop of the kind, although there may be one shop of the kind in town. It then naturally follows that one of the two will have to go down. This is one of the penalties of freedom of enterprise."

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