Long Island based newspaper Newsday is refusing to accept advertising from a group of fifty car dealers who are suing the paper over its rates, according to a report in the New York Post. In letters sent yesterday, Newsday said its attorneys have warned that it would put the paper at further risk if it continued to run ads from the dealerships.
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The newspaper reportedly said its goal was to limit additional monetary claims that the dealers may seek.
But an attorney for the dealers — most of them small and family-owned businesses — said Newsday was retaliating against his clients and attempting to discourage other advertisers from joining the suit.
Either way, the New York Post report points out, Newsday stands to take a substantial financial hit as auto advertising represents one of the paper’s largest sources of ad revenue.
“Though Newsday will forfeit a significant source of revenue by following our attorney’s advice in severing with you and other advertisers, the principles on which we make this decision are crystal clear,” John McKeon, the paper’s executive vice president and general manager, wrote in the letter, according to the NY Post.
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By GlobalDataThe dealers have accused Newsday and parent Tribune Co. of overcharging them for advertising based on circulation figures that the paper has admitted were inflated. The suit seeks $25 million in compensatory damages and $100 million in punitive damages.
The dealers also contend that they are charged far higher ad rates than the biggest car dealers. They argue that Newsday, which is the dominant paper on Long Island, is violating federal antitrust laws by using its monopoly power to charge unfair rates.
“Newsday is taking a calculated risk that the dealers will just fold their tents because they can’t go elsewhere,” Bellavia said. “If anything, this has made them more resolved.”
The dealer suit against Newsday follows a similar one brought by a smaller group of advertisers in February that accuses the paper of pumping its figures by dumping copies that were unsold, the New York Post added.
