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Globe completes Metro deal

Antitrust inquiry, charges of racism at firm stalled sale

The Boston Globe yesterday said it completed its purchase of a 49 percent interest in the Metro Boston newspaper, a deal that had been delayed by concerns over racial insensitivity in the Metro culture and by a Justice Department antitrust inquiry.

The $16.5 million transaction between the state's largest daily and the free tabloid aimed at younger readers came after the Justice Department concluded its investigation without taking any action and after Metro Boston said it was forming a community advisory board and initiating a diversity and sensitivity training program for employees.

While officials of both parties lauded the deal yesterday, several representatives of the local African-American community said Metro's efforts at fostering diversity were insufficient. Boston Herald publisher Patrick J. Purcell, whose complaint triggered the antitrust investigation, said he disagreed with the Justice Department's decision to allow the sale to proceed.

The venture between the Globe, with a daily circulation of 451,471, and the Metro, which distributes about 180,000 papers daily, will create cross-promotional and cross-selling opportunities between the publications. Although the Globe will make some content available to the Metro, the two editorial departments will remain independent. The agreement also makes the Globe one of a growing number of established papers that have invested in or started up publications that provide a quick and compact digest of the day's news in order to attract the elusive young reader.

In a statement released yesterday, Globe publisher Richard Gilman said ''after several weeks of careful examination of all the issues involved, we're convinced that this partnership will be good for readers, advertisers, and for the community. The Metro has set high standards for its conduct, and we are convinced they are well along in achieving those standards."

In that statement, Pelle Tornbeg, chief executive of Metro International, which publishes Metro Boston and other papers in 17 countries, said ''our goal is to serve as an example for our industry in creating and promoting the advantages of diversity and tolerance in our offices and in our news coverage."

After the proposed sale was unveiled on Jan. 3, it was quickly engulfed by controversy. Purcell criticized the merger as ''anticompetitive" and said it was ''aimed directly at the Herald." On Jan. 11, the Herald asked the Justice Department to intervene, arguing that the agreement would dramatically alter the competitive balance in the Boston market. The same day, Purcell sent a letter to advertisers asking them to lobby federal officials to stop the deal and stating his intention to ''use all our resources to fight this acquisition."

On Jan. 26, the Justice Department confirmed that the agency had opened an investigation into the proposed acquisition. Yesterday, department spokeswoman Gina Talamona said, ''We have closed our investigation. We looked at the competitive effects of the transaction and after a thorough investigation, determined that no action was necessary."

''We disagree with the Justice Department's finding regarding the Globe/Metro merger, " Purcell said in a statement yesterday. ''However, we will continue to compete vigorously, publish a relevant, informative newspaper every day, and provide our advertisers with a fair and efficient marketplace."

At the time Purcell was mounting his challenge, the mediachannel.org website broke the story that two Metro executives had made racially offensive remarks at company events and reported on allegations that the company fostered a culture of discrimination. That triggered protests and expressions of concern from Boston's black community and splashy front-page coverage in the Herald. Globe publisher Gilman issued a statement calling the reported incidents ''reprehensible."

Although the deal was slated to close by the end of January, those disclosures caused the Globe and its owner, The New York Times Co., to delay any agreement while they conducted a review of the Metro organization.

The two Metro executives who made the remarks, Steve R. Nylund and Hans-Holger Albrecht, apologized. Nylund resigned as president of Metro USA but remained executive vice president of Metro International. Albrecht resigned from the Metro International board, but stayed on as president and chief executive of Modern Times Group, a broadcast media affiliate that, along with Metro International, is among the holdings of Swedish conglomerate Investment AB Kinnevik.

Around that time, Metro hired an outside consultant to review its corporate attitudes and practices and vowed to quickly implement any recommendations. A Metro spokesman yesterday declined to comment on the consultant or his work.

But in a column written in yesterday's paper, Metro Boston publisher Peggy Onstad said that after conducting focus groups with employees and senior managers, the company concluded that ''diversity, equity, and fair treatment are not major issues of concern in our workplace." Onstad also discussed Metro's plan to form the community advisory board and implement employee training. ''We have come to realize that all of us require education and training to remain sensitive to the cultural differences that make Metro such a satisfying place to work and a rich source of information for our readers," she wrote.

But some African-American leaders said that the measures outlined did not go far enough.

''It is a good step, but it is a step, and it is hardly enough of a resolution for the Globe to say everything is fine and move on," said state Senator Dianne Wilkerson, a Boston Democrat. ''What I'm looking for is more of a response in ownership from the Globe because it is the institution that has endured and enjoyed the community's respect."

''Sensitivity training is a good start, but they need to go further," said the Rev. Jeffrey L. Brown, pastor of the Union Baptist Church in Cambridge. ''I have to admit I'm really disappointed in that. I'm looking for the kind of substantive change that can't be worked around."

Mark Jurkowitz can be reached at jurkowitz@globe.com.


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