An Independent Voice Threatened in Utah

The Latest Developments in Our Federal Antitrust Challenge: In late September, the defendants in Utah Newspaper Project dba Citizens for Two Voices v. Deseret News Publishing, Kearns-Tribune filed their answers to our complaint.  And here's our answer to the hedge fund's counterclaims. Those filings come a month after U.S. District Judge Clark Waddoups denied their motion to dismiss the case. The matter now proceeds to discovery. The Initial Pretrial Conference in the case set for Nov. 5, 2014, before a magistrate judge was vacated as the defendants wasted no time throwing up discovery roadblocks. Here is our response to the defendants' motion for a protective order. We are pleased to report that the court has rejected the defendants' request for a deviation from standard practices during the discovery process. The plaintiff's attorneys will now focus on discovery rather than seeking an injunction. A February date has been scheduled for the first pretrial conference.

                         

The Quest 10 document is a summary. For the complete "Transaction Discussion" click here.

                For previous installments of this series, please go to "The Quest" tab

Here is the transcript of arguments on the defendants' unsuccessful motion to dismiss.

Thank you to our legal team at Christensen & Jensen! 

Clark Gilbert, "Dual Transformation," 

and the Deseret News National Edition: 

Utah Newspaper Project has released an analysis of the circulation trends at the Deseret News National Edition. At a time when other print newspapers were barely holding their own or seeing stark declines, Clark Gilbert led the Deseret News to growth of 84 percent in its Sunday print circulation from 2010 to 2012, when it hit a high of 127,050 nationwide.  

This astonishing Sunday circulation success warrants in-depth study, coming as it does in the midst of such dire times in the newspaper industry. The growth took place in the Deseret News National Edition, which Gilbert launched in August of 2011 as a non-denominational, values-based publication. But a closer look reveals that the Deseret News repurposed its section called the Mormon Times that was sent to subscribers of the [LDS] Church News, and those readers were added to the newspaper’s circulation tally.

The analysis: 

Who Owns Local Circuation?

Read the full report by clicking here

Our Reply to the Defendants' Motion to Dismiss: This Isn't Texas Hold'em

The Deseret News and the New York owners of The Salt Lake Tribune seem to have confused their deal to gut the Trib of its assets and revenues with a game of poker where everyone gives up before the winner has to show his cards, but the Law says different.

Alden Global Capital, the hedge fund that is using a new 2013 Joint Operating Agreement with the Deseret News to drain The Tribune to pay off its wealthy investors, had to report to the U.S. Department of Justice just how much money was on the table, as well as other terms of the deal. But the Tribune owner didn’t tell. We say that move lost them the antitrust protection they claim to have under the Newspaper Preservation Act of 1970.

We have sued them to stop and reverse this shady business deal. Their immediate response was to try to get the case thrown out. A hearing is set for 2 p.m. Sept. 8 before U.S. District Judge Clark Waddoups at the new federal courthouse, 351 S. West Temple, Salt Lake City.

In brief, we, the Utah Newspaper Project, dba Citizens for Two Voices, say in a “reply memorandum” that the newspapers’ owners cannot claim protection under the Newspaper Preservation Act because they did not comply with the law’s requirement that specific terms be filed along with JOA amendments:  “Compliance with Section 1803(a) is not a difficult task; had Defendants filed with the DOJ all of the terms and documents required, this element would not be at issue. But they did not, and it is."    Here's the memorandum. And here's their reply to our reply.

U.S. District Judge Clark Waddoups has scheduled a Sept. 8 hearing in our lawsuit challenging the 2013 Joint Operating Agreement between the Deseret News and the New York owner of The Salt Lake Tribune. “We believe there is great urgency in this case, so we're pleased it is moving ahead expeditiously," Utah Newspaper Project members said of the speedy timing for a hearing on the defendants' motion to dismiss.

The  status hearing before Waddoups on Monday, July 21, was the first in the lawsuit filed last month by our nonprofit group Utah Newspaper Project/Citizens for Two Voices. We allege the new agreement between the LDS Church-owned Deseret News and the hedge fund owner of the Tribune violates antitrust law.  That “Joint Operating Agreement” cuts Tribune revenue in half, cedes control of the papers’ business operation to the News and contains a provision granting the News a unilateral veto power over who can buy the Tribune.

Utah Newspaper Project contends those provisions and others in the JOA present an existential threat to the independent voice of the Tribune.

The defendants in the case filed a motion to dismiss earlier this month, arguing we lack standing and that the 2013 JOA is immunized under the Newspaper Preservation Act. It is that motion that is the subject of the Sept. 8 hearing. Utah Newspaper Project attorneys Karra Porter and Dave Richards will file a response in two weeks.  Also before the court is our motion for a preliminary injunction. That will be addressed after the judge rules on the motion to dismiss. It would be rare for the judge to grant an injunction, but our legal team from Christensen & Jensen make a powerful case for it in their memorandum filed last week. Please look for the link to our reply memorandum below.

  Christensen & Jensen attorneys Karra Porter and David Richards
  appeared before U.S. District Judge Clark Waddoups July 21.

July 20 Tribune Coverage of Our Case

John Paton, the New York manager of The Salt Lake Tribune, argues  we are interfering with the digital future of the Trib. A Sunday story in the Trib elaborates on the "Declaration" of Paton filed with the hedge fund's reply to our complaint and motion. Unfortunately, the Trib story waits till the last graphs to point out that a 2011 agreement already provides for the newspapers’ independent digital operations. Utah Newspaper Project/Citizens for Two Voices is challenging the newspapers’ 2013 agreement – you know, the one that cuts Tribune revenues in half, cedes operational control of the Trib to the Deseret News and gives the Deseret News unilateral veto power over who can buy the Trib.

Here are those two agreements, reached in 2011 and 2013

Our Attorneys to John Paton, Deseret News: Show Us the Figures

       A new Joint Operating Agreement threatens to send The Salt Lake Tribune into a downward spiral,  attorneys for a nonprofit group challenging the deal argued this week. The JOA secretly negotiated between owners of The Salt Lake Tribune and the Deseret News cut The Tribune’s revenues in half and ceded operational control to the LDS Church-owned Deseret News. The agreement also includes a unilateral Deseret News veto power over who can buy The Tribune, which attorneys for Utah Newspaper Project/Citizens for Two Voices argue violates antitrust law. 

       In a reply memorandum arguing for a preliminary injunction, the nonprofit group points out that defendants in the case provide no information supporting their claim that the JOA actually strengthens The Tribune, which historically has been the region’s dominant daily newspaper. “The defendants’ response sidesteps Citizen’s contention that, regardless of whether putting the Tribune into a downward spiral is the intent of the new JOA, it is the effect, which is sufficient in itself to grant relief under several of the antitrust provisions cited in Citizens’ complaint,” states the plaintiff’s memorandum. Citizens is asking U.S. District Judge Clark Waddoups to enjoin the deal immediately to prevent further harm to The Tribune and Salt Lake City’s marketplace of ideas.  

       “We know that the grant of a preliminary injunction would be extraordinary, but our attorneys make an excellent case for it,” said Joan O’Brien, chair of Utah Newspaper Project/Citizens for Two Voices. Since last fall the group has been challenging the newspapers’ JOA for violating antitrust law and the Newspaper Preservation Act.

The Plaintiffs' Reply Memorandum

Defendants' Motion to Dismiss Expected, Meritless

The owners of the Deseret News and The Salt Lake Tribune filed a motion to dismiss our complaint this week, a move that Utah Newspaper Project/Citizens for Two Voices expected. Such motions to dismiss are standard operating procedure in commercial litigation, so theirs came as no surprise. Also not surprising were the arguments the defendants' raise to justify a deal that poses such a threat to an indispensible independent voice in Salt Lake's unique marketplace of ideas.

We're absolutely confident that our antitrust complaint will survive this motion and that our arguments will ultimately carry the day. Utah Newspaper Project has standing to bring this case; the antitrust immunity provided under the Newspaper Preservation Act cannot be stretched to cover the defendants' conduct here that so damages Utah's dominant newspaper; and the unilateral veto power that the Deseret News claims to hold over a change in the Tribune's ownership represents an ongoing violation of antitrust law. The motion, filed July 7 in U.S. District Court for the District of Utah:

Defendants' Motion to Dismiss

Our Reply to Their Reply

Citizens for Two Voices/Utah Newspaper Project allege the new Joint Operating Agreement between the owners of the Deseret News and The Salt Lake Tribune poses an existential threat to the Trib. Nothing in the defendants’ federal court filing this week convincingly answers that allegation, members of the nonprofit organization said Tuesday.

“We are eager to get into court and undertake discovery to get at some of the details of this transaction, which does so much damage to the region’s largest newsgathering operation,” said members of the group, which filed a public-interest lawsuit over the deal two weeks ago. The defendants, as does the new Joint Operating Agreement itself, profess a commitment to continued viability of The Tribune, but even a cursory reading of the document tells a different story, said Joan O’Brien, chair of the nonprofit Citizens for Two Voices.

“How is The Tribune’s viability ensured by a contract that cuts its revenues in half? How is its voice strengthened when the Deseret News has control over the entity that produces and distributes the newspapers? And how can anyone argue the Tribune enjoys editorial independence when the Deseret News holds a unilateral veto power over any ownership change?”  O’Brien asked. “The News paid millions to the hedge fund owner of The Tribune for these new JOA terms, which would have been implemented in secret but for an anonymous tipster.” That tip is reproduced below.

The Defendants' Memorandum

The Tribune's Coverage, Deseret News' Coverage

June 16, 2014 – Utah Newspaper Project/Citizens for Two Voices
Filed Suit in U.S. District Court Challenging the Joint Operating Agreement!

Main Documents: Press Release – Complaint  –  Motion for Preliminary Injunction

Declarations: Bramble  –  Conway  –  Gale  –  Miller  –  O'Brien

Our Answers to Frequently Asked Questions

Congratulations to The Salt Lake Tribune!

The Salt Lake Tribune won 75 Utah Society of Professional Journalists awards on June 26, including the "Roy B. Gibson Freedom of Information Award," the "Don Baker Investigative Reporting Award," and the "Quintus C. Wilson Ethics Award" (for its work on revealing the JOA situation). The Trib was named "Best Newspaper," and statehouse reporter Robert Gehrke was named Best Newspaper Reporter. Jennifer Napier-Pearce swept the Best Podcast category and the Trib won for Best Overall Blog and for Best Use of News-Oriented Social Media.  Read More »

June 21, 2014 – The Utah Attorney General opens an investigation into the JOA

The Statement: The Utah Attorney General's Office confirmed today that it has an open investigation into the circumstances surrounding the recent amendment of the Joint Operating Agreement between the owners of the Salt Lake Tribune and the Deseret News.

"I believe in the value of diverse editorial viewpoints and independent news-gathering for an informed citizenry, and I asked our antitrust lawyers to investigate the circumstances surrounding the change to the Joint Operating Agreement," said Attorney General Sean Reyes. "We are not trying to duplicate or interfere with the DOJ investigation as it pertains to any area where they have statutory jurisdiction. But, there may be areas of concern outside of or concurrent with that scope, and we have an obligation to look at them more closely."

"The investigation is being conducted by the newly formed Markets and Financial Fraud Division. Division Director David Sonnenreich said, "We recognize that the Newspaper Preservation Act of 1970 authorizes the United States Attorney General to review and approve Joint Operating Agreements between newspapers, but the state still has an independent interest in investigating and enforcing our antitrust laws outside of the scope of that federal review."  Read More »

The Utah Newspaper Project

The Utah Newspaper Project is an organization of readers and journalists concerned about radical changes to The Salt Lake Tribune’s operational and financial structure. These changes herald an intolerable consolidation of news media control in Utah’s unique marketplace of ideas, leaving residents with fewer sources of independent news and viewpoints. Read More »

The Major Issue, in brief