A falling out at the Palo Alto Daily News

Publication Date: Friday Nov 20, 1998

MEDIA: A falling out at the Palo Alto Daily News

Paper's co-founder says news coverage is aimed to please advertisers

by Don Kazak

A long-simmering private dispute among the three founding partners of the Palo Alto Daily News has turned into a public squabble, with one of the three accusing the other two of shaping news decisions to please advertisers.

Dave Danforth, who brought together his business partners, Dave Price and Jim Pavelich, to help him start the Daily News in 1995, says the newspaper is "living a lie" by letting advertising considerations dictate news coverage. Shut out of the newspaper's business and editorial decisions, Danforth says he may sue his partners for breach of fiduciary duty and bad faith.

Pavelich and Price say Danforth was removed from the company's management because he wasn't doing his job supervising the newspaper's distribution.

"We have a minority shareholder who's unhappy, but we're relieved that he's not here," Price said.

Pavelich and Danforth each hold a 40 percent interest in the company, while Price owns 20 percent.

The acrimonious dispute began in August 1996, nine months after the Daily News began publishing, when Pavelich and Price ousted Danforth from management of the paper. Danforth only recently decided to go public with the quarrel by contacting other newspapers, including the Weekly, to tell his story.

Danforth claims the Daily News refused to print three stories he had written and is shying away from running other stories that might upset advertisers or potential advertisers.

Price, who is the newspaper's editor, hotly disputes the claims. He said he never saw the three stories Danforth claims were killed. All three concerned court cases or businesses that had had some difficulties.

Danforth also claims the newspaper makes some of its decisions on what stories to publish in the paper, and where, based on what will satisfy advertisers.

But one of Danforth's potentially most damaging allegations--that the newspaper will print a page one story about a new restaurant if the restaurant buys an ad in the paper--is unproven.

Price called the claim "bull----; that's completely untrue."

When asked to back up his claim, Danforth cited two page one stories about restaurants that appeared on different days in June 1997.

Price said neither restaurant is a Daily News advertiser.

But Danforth countered that the newspaper ran the stories in the hopes that the restaurants would become advertisers.

Price's reply: "We've probably lost advertisers because of our news coverage, and that's cost us money."

Pavelich, who is in charge of advertising, and Price said advertisers are helped by the newspaper in the "Absolutely" column.

"We plug our advertisers in the Absolutely column, but that's the purpose of the column," Pavelich said.

Danforth claims Pavelich has failed to keep a promise he made when the three partners started the newspaper--to stay out of news decisions.

"That paper is living a lie," Danforth said. "That's my major issue. I made my partners promise that this would be a no-holds-barred newspaper, that we would go where the news took us. . . .

"I don't like the fact that this newspaper lacks the courage to report what's going on."

Pavelich says Price is in charge of editorial decisions.

Adds Price: "I think we're the toughest newspaper on the Peninsula. We write more challenging and more confrontational stories than any other newspaper on the Peninsula."

The Palo Alto Daily News began publishing in December 1995. Danforth and Pavelich had published similar newspapers in Aspen and Vail, Colo., respectively, and Danforth brought the three partners together in Palo Alto to try to fill what he felt was a void left by the closing of the Peninsula Times Tribune in 1993.

In the Daily News' early days, Price says, Danforth didn't do his job, forcing Price and Pavelich to help with distribution in order to ensure the paper was stocked in the company's signature red boxes.

Now Danforth is the odd man out, excluded from major decisions at the newspaper and thinking of filing a lawsuit.

"Everything we've done has been completely legitimate, honest and aboveboard, which is why he hasn't sued," Price said.

The dispute doesn't sound like it is going away any time soon. Asked why he chose to publicize the quarrel, Danforth replied, "The language they both understand is publicity. If this is what the readers want, fine, but (decide it) in public."

"This newspaper has thrived despite him, not because of him," Price said of Danforth.

Danforth said he would call a board meeting soon in an attempt to resolve their differences. "I'm going to do what it takes to get that newspaper to where people are proud of it," Danforth said.

Asked about Danforth's desire to work things out, Pavelich replied, "It was worked out." 

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