An Independent Voice in Utah: JOA Litigation Ends
Utah Newspaper Project agreed to dismiss its public-interest antitrust lawsuit on May 31, after the closing of the sale of The Salt Lake Tribune to a local owner. The group is also authorized to announce that the U.S. Justice Department has dropped its investigation upon the signing of new contracts between the owners of the Deseret News and the Tribune. Our nonprofit group is satisfied these developments will allow the Tribune to operate long term, and herald a welcome development in the 65-year-old business relationship between Salt Lake City's two dailies.
The Utah capital's newspaper market was among the first in the United States with a "Joint Operating Agreement." Now, 65 years later, it is one of the last.
JOA's, under which competing newspapers share many business operations, would be a violation of antitrust law, but decades ago Congress passed the Newspaper Preservation Act permitting these quasi-monopolies. The act was intended to serve the public interest by promoting two-newspaper towns. But the LDS Church-owned Deseret News and the New York hedge-fund owner of The Salt Lake Tribune abused the act's limited antitrust exemption in a way that would have denied Utah news consumers the strong voice of the state's largest independent journalistic source.
In late 2013, the Deseret News paid up to $25 million to the Tribune's New York owner for new JOA terms that cut Tribune revenue in half, that ceded near-complete control of the papers' joint business to the News, and that granted the News unilateral power to veto potential buyers and managers of its larger-circulation competitor. The Tribune's owner took the money back to its New York investors, leaving the local paper and its readers "with very little" at a dangerous time for newspapers. Days after an anonymous whistleblower alerted Tribune reporters to the deal, they obtained and reported upon the secretly negotiated contract. And days after that, Utah Newspaper Project formed to challenge the JOA -- first in letters to the U.S. Department of Justice and then in a public-interest lawsuit.
With support of the community, Utah Newspaper Project/Citizens for Two Voices has vigorously fought this deal in court. We are pleased that a new contract and sale of the Tribune has rendered our case moot.
"Deal is Tribune interest for cash": Utah Newspaper Project/Citizens for Two Voices has been challenging the JOA for more than two years -- beginning with this petition to the U.S. Department of Justice and followed by a second letter requesting investigation into the deal. Our efforts began soon after an anonymous whistleblower left a mysterious letter on the desks of three Tribune journalists warning of the ultra-secret JOA negotiations. That cryptic note is how the Tribune's newly named publisher and others learned of the deal that endangers an essential independent voice in Utah's marketplace of ideas. In response to Tribune journalists' reporting on the new deal, the New York owner claimed it was intended to better position Utah's largest newspaper for the digital future. The argument, perfectly logical at first blush, is belied by the fact that Salt Lake's newspaper JOA partners had already delineated their digital operations in a 2011 agreement.
Developments in our public-interest antitrust litigation:
We will seek expedited discovery in the next few months in our lawsuit
challenging the 2013 JOA between the Deseret News and the New York owner of The Salt Lake Tribune. The defendants sought, and we agreed to, a summertime stand-down
in our litigation's discovery process to facilitate negotiations by businessman-philanthropist Jon Huntsman, Sr. to buy the Tribune and negotiate a new JOA with the News. Those talks between Huntsman and owners of the Tribune and Deseret News reportedly broke down last fall, however, requiring us now to again energetically press our case in federal court. Furthermore, the New York owner of The Salt Lake Tribune has countersued
our small nonprofit group. Here is our response to their filing
As part of that countersuit, defendants sought discovery into the identity of every one of Utah Newspaper Project's supporters. This was a discovery request we refused out of consideration of those supporters' First Amendment rights of association. Our response prompted defendants to seek another stay on discovery
while they pursued their motion for summary judgment.
Here is our response
to their request for a stay on our discovery. Our response to their motion for summary judgment will be filed in due course.
Two-for-two in our David-versus-Goliath battle:
The defendants requested dismissal
of our nonprofit group's case, and in September of 2014 U.S. District Judge Clark Waddoups denied that motion
after oral arguments
. (Here is our reply
to the defendants' joint motion.) Soon after his ruling, the defendants again attempted to derail our litigation by throwing up discovery roadblocks
. Arguments of our legal team, led by Karra Porter and David Richards, proved persuasive and the court rejected the defendants' motion
for a protective order that would have deviated from standard discovery practices. In the spring of 2016, the defendants continued their efforts to cloak the discovery process in secrecy, but we are confident the court will recognize the public interest
in the case and again deny this stall tactic.
Our e-series, "The Quest": How did The Salt Lake Tribune, Utah's dominant newspaper, come to be owned by a New York hedge fund? Scores of court documents shed light on the tangled business deals that left the newspaper in in its current precarious position. Over the next several months, Utah Newspaper Project will share some of these historic court documents in an effort to piece together a present-day newspaper puzzle.
Below is Part 26 of "The Quest." Please click on the Quest tab for installments 1 to 25 of this still-ongoing series.
The Quest No. 26
For other installments of this series, please go to "The Quest"
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.
Click here to read the full analysis
Who Owns Local Circulation?
The Salt Lake Tribune and Deseret News of Salt Lake City have embarked on two distinct editorial paths. The Tribune emphasizes coverage of local news while the Deseret News since 2010 has looked to build a national audience based on coverage of certain values it believes attracts like-minded people of faith.
Then last year the Deseret News struck a deal in which it paid millions of dollars to the Tribune’s owners, a New York hedge fund called Alden Global Capital, in return for ownership of their joint printing plant and control of the joint business operations. The deal also gave the News 48 percent of the profits th Tribune had previously received. (The revenue split is now 70 percent Deseret News, 30 percent Tribune.)
A group of former journalists and community members called Citizens for Two Voices/Utah Newspaper Project sued, arguing that the new agreement violated anti-trust laws and would sent the Tribune on a downward spiral that would lead to its demise.
If the Tribune does die, this study shows the dominant newspaper in the local market would be gone, with only the Deseret News left but with a depleted staff and a focus on building its national edition rather than on local events and issues. The Tribune has dominated local print circulation for years and the past five years is no exception.
Read the full report by clicking here
The Utah Attorney General opens an investigation into the JOA
The Statement: The Utah Attorney General's Office confirmed June 21, 2014, 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
Retired Trib Editor Shares Fears for Paper's Future
Former Tribune Editor Nancy Conway has condemned the new Joint Operating Agreement between The Tribune and Deseret News, saying the new contract “more than handicaps The Salt Lake Tribune.”
The deal that gives the Tribune 30 percent and the Deseret News 70 percent of profits – and thus cuts Trib revenue in half -- "almost certainly lays the way to its demise," Conway said in an April 28 interview. And it bears repeating: The Tribune accounts for 60 percent of the newspapers’ combined circulation.
Conway, who was still editor when the new JOA was negotiated last fall, said she was unaware such radical changes were afoot. The intense secrecy surrounding the new contract, which also turns over production and ownership control of The Trib to the Deseret News, shows an awareness by the newspapers’ owners that they were acting contrary to the public interest.
Utah Women's Forum Weighs In
The ranks of Utah Women's Forum are filled with some of the state's most influential and successful leaders. And scores of them recently signed a letter to the U.S. Justice Department protesting a deal with the Deseret News that threatens the strong and independent voice of The Salt Lake Tribune. "Salt Lake City is an exceptional place, a place that requires and deserves the journalistic contributions of at least two major newspapers," states the November 2015 letter signed by about 70 members of the group. Yet a new "Joint Operating Agreement" between the Deseret News and the New York owner of the Tribune threatens that two-newspaper status quo by cutting Tribune revenues in half, by turning over control of the papers' joint business to the News, and by granting the LDS Church-owned News a unilateral veto power over who can own and manage the Tribune. The UWF letter notes that Congress enacted the Newspaper Preservation Act in 1970 'in the public interest of maintaining a newspaper press editorially and reportorially independent and competitive in all parts of the United States…' We are writing out of concern that the law has been abused in Salt Lake City, and now actually endangers the state's independent and dominant newspaper."
Take Action! Please contribute to our public-interest cause,
or Write your letter of protest to the U.S. Deptartment of Justice antitrust division
David C. Kully, Chief, Litigation III Section, US Dept. of Justice Antitrust Division,
450 5th St. Suite 4000, Washington, D.C., 20530
Staff photo taken before sale to TCI. Many of these journalists continue to work at the newspaper, including Paul Rolly, front left, and editor and publisher Terry Orme, who is seated at Rolly’s left.
The Tribune Transcends Ownership
Over the last 17 years, the newspaper has churned through five owners. Such turnover has to be distracting to the paper’s journalism professionals, but they continue to do their jobs admirably regardless of who is issuing the paychecks. And what is their job? To speak truth to power.
This staff photo was taken when the McCarthey family, longtime owners of the newspaper, still had control of that asset. But then a complicated stock deal left The Tribune in the hands of the cable company TCI. A subsequent purchase of TCI by AT&T had the paper’s journalists in the unlikely position of working for a giant phone company. Then, in part due to a number of machinations by The Tribune’s JOA partner, the Deseret News Publishing Co., the newspaper landed in the hands of Denver-based Media News Group. That, despite the McCarthey family's furious efforts to buy the paper back. Financial troubles at Media News Group meant once again a change in ownership. Currently, a New York-based hedge fund, Alden Global Capital, owns the paper. It is that entity that negotiated a plundering of the newspaper through the 2013 Joint Operating Agreement.
A staff that has worked through the decades to fulfill their journalistic mission may not be able to survive this latest development.