Newspaper Bailout or Anti Anti-Trust Protection? The U.S. Mimic of the Russian Oligarchs.

In the 1890's Congress passed what is know as the Sherman Antitrust Act. This Act was written in the best interests of the consumer by encouraging marketplace competition. The main way it protected consumers was by eliminating a company's' ability to fix prices, rig bids, and divide territories to secure their dominance in a geographical region.

At the onset, the two biggest trust busters were Teddy Roosevelt and William Howard Taft. Since then, governments around the world have been establishing laws to protect the consumer from cartels, monopolies and oligarchs. The European Union has a very distinct Competition Law that recently won a suit against Microsoft for approximately $1.5 billion and in the past prevented mergers of giants General Electric and Honeywell.

Some areas haven't been nearly as successful in protecting consumers like the U.S. or Europe. The 1960's brought us OPEC, the Organization of Petroleum Exporting Countries, whose 12 nations control two thirds of all oil reserves and nearly 40% of the worlds oil production; remember what happened in '08 with the price of oil?. The 1970's brought us the Medellín and Cali drug cartels which were exported to Mexico and present problems there now. Finally, probably the worst case, the 1990's, with the fall of the Soviet Union, brought us the Russian Oligarchs. A 2005 report shows that in 2001, of the 32 industrial sectors that make up 50% of Russia's GDP, the Russian Oligarchs (about 30 people) control an approximate 40% share of sales. This means that the 32 Oligarchs control about 25% of Russia's economy and therefore have a greater influence over government actions. See this article.

What does all this have to do with Newspapers you ask?

In March of 2009 Nancy Pelosi, D-CA, wrote a letter to the U.S. Department of Justice urging Eric Holder, the U.S. Attorney General to ease U.S. antitrust laws and let newspapers merge, staving imminent bankruptcy. Pelosi writes:

“I am confident that the Antitrust Division, in assessing any concerns that any proposed mergers or other arrangements in the San Francisco area might reduce competition, will take into appropriate account, as relevant, not only the number of daily and weekly newspapers in the Bay Area, but also the other sources of news and advertising outlets available in the electronic and digital age, so that the conclusions reached reflect current market realities,”

Pelosi's insistent that Holder allow these newspapers to merge and reduce competition because there's a decline in readership and she wants to protect her prized Liberal media source.

The paper Pelosi is referring to is San Francisco's The Chronicle. And like many industries in these tough economic times, this newspaper is struggling with less and less circulation. Now aside from the economic downturn there could be other reasons for their hardship.

One: The liberals won the White House and liberal papers slamming GW isn't needed any more. Oh you think there isn't a bias in newspapers. Think again! In 2004, the New York Times published an article who's author said, referring to policy issues: "if you think The Times plays it down the middle on any of them, you've been reading the paper with your eyes closed."

Two: People have already become disgusted with the gloating and in-your-face arrogance of media such that people don't want to subscribe to it any more. Here are the reports that show conservative news sources have increased their market share since the election and liberal ones have declined.

Three: Newspapers have thought themselves immune to market cycles given peoples desire to read them as the only news source. The advent, then proliferation of the internet and websites have become the demise of less than business savvy Editors and Directors who still seek the Big One to sell papers, like the Washington Post's, The Watergate Story. What Newspapers need to do is follow Murdoch and run their newspapers like a business.

Murdoch, among other things, is owner of a few newspapers in the world like The Times of London, the New York Post, The Wall Street Journal and others in Australia and Britain. These papers he runs like a business, with a profit motive. When discussing financial matters on a television interview, Murdoch said: "People reading news for free on the Web, that's got to change."Although there's no foreseeable bailout for failing newspapers, with Congress' current ambitions, I wouldn't write it off the list of possibilities.

This brings us to a critical question. When Congress acted to protect consumers from the repercussions of Monopolistic greed, did they intend to have antitrust laws rewritten to suffice the agenda of one group of lawmakers? No, the Sherman Antitrust Act was designed to prevent the formation of cartels who wish to see their organizations dictate prices rather than market forces. If we rewrite antitrust laws to allow newspapers to merge, will they eventually become such that they too are too big to fail, allowing a similar fate to GM and AIG?

The Founding Fathers intended the U.S. to be a constitutional republic with specific, separate branches of government, each able to limit the others power over the people. If this government allows the emergence of oligarchs through revamping antitrust laws, one branch, the legislative, certainly will become a slave to the oligarchs and the laws they want to implement to protect their market share.

Nancy Pelosi, Eric Holder, this is a bad idea. Do not alter antitrust laws granting organizations the ability to merge instead of accepting bankruptcy, that's what it's there for.