Opinion ID: 609810
Heading Depth: 4
Heading Rank: 2

Heading: Elimination of Lost Revenue Potential

Text: 25 Mercury News argues that it was also justified in cancelling the insert to eliminate lost revenue potential. The district court agreed and granted summary judgment, finding that the defense of lost revenue is supported by undisputed evidence. The district court erred. There exists a triable issue of fact as to the validity and sufficiency of this claimed justification. 26 Mercury News claims that carrying the insert cost the newspaper millions of dollars in lost revenue potential. Mercury News cites its own classified advertising department's revenue analyses from 1984 to 1990 estimating the additional revenue that would have been generated if there was no High Tech insert. But Mercury News realized that complete elimination of HTC, not just the insert, was the only way to recapture lost revenue potential: The only way we might recapture some of the advertising is if there were NO High Tech Careers magazine. Unlike the Statesman in Drinkwine, which competed vigorously from the beginning for the insert revenue, Mercury News rejected strategic suggestions to come up with a good, solid plan and give Westech some healthy competition. Early on, Mercury News merely waited to see what the market does to Westech. They could go out of business. 27 Later, when it became clear that the insert was not going out of business, Mercury News arguably took a more active role: 28 I believe it's too late to refuse the inserts--We've accepted them for so long it's almost like an established past practice. If we went to court, it would cost us $$ and my gut feeling is we'd lose.... Why not keep jacking up the insert price and/or taking away the commission on the inserts? 29 Mercury News called for a plan to minimize job fair exhibitors' ads in the Westech High Technology Careers publication ... [and] get most of the exhibitor advertising back into Mercury News Classified without discounting rates. Apparently, Mercury News wanted to increase its advertising revenue without competing with HTC, which admittedly had lower overhead than Mercury News. 30 At the same time Mercury News decided to cancel the insert, it was running advertisements proclaiming SILICON VALLEY IS ALL OURS and boasting that their 75.3% share of market means that [y]ou only need one newspaper buy to fill your recruitment requirements here. 31 Evidence presented by HTC raises a genuine issue of material fact as to whether Mercury News's lost revenue justification is pretextual. 32 At oral argument, Mercury News suggested that it was actually losing money from the insert because the newspaper's regular advertisers would switch to the lower cost insert just prior to the job fairs. HTC, however, has presented evidence that the Westech job fairs created additional advertising revenue for Mercury News. This, of course, will be the issue at trial. If Mercury News can prove its assertion, it should prevail. Its difficulty on appeal from the granting of summary judgment is that we must find unrebutted evidence in the record to substantiate its claim.