Death of a Newspaper Foretold

SALT LAKE CITY (CN) - A joint operating agreement between the Deseret News and The Salt Lake Tribune may well wipe out the Tribune, allowing Mormon-controlled news to dominate Utah, a community group claims in court.

Utah Newspaper Project dba Citizens for Two Voices sued Deseret News Publishing Company and Kearns-Tribune, in Federal Court.

Deseret News Publishing, owned by The Church of Jesus Christ of Latter-day Saints, owns and publishes Deseret News, launched in 1850. Kearns-Tribune owns and publishes The Salt Lake Tribune, founded in 1871 as a source of news independent from the Mormon Church.

According to the 30-page lawsuit, the papers entered a joint operating agreement in 1952, combining printing, advertising, subscription sales and distribution under a single management, now known as MediaOne of Utah.

The agreement "provided roughly equal or proportional management and division of revenues," and was "profitable" for both newspapers, according to the complaint.

"Also from 1952 until the events at issue, the owners of both newspapers acknowledged the importance of preserving both the News and the Tribune," the complaint states. "For example, the 1952 JOA was originally entered into principally as a means of aiding the struggling News, and over the years, the Tribune's owner agreed to various provisions and efforts to help the News improve its circulation."

In 2010, however, the "longstanding and (mostly) peaceful coexistence" between the competing editorial voices changed.

Deseret News Publishing hired a new chief executive, Clark Gilbert. Then in 2011 hedge fund Alden Global Capital purchased MediaNews Group, the sole member of Kearns-Tribune.

"After Alden Global Capital's purchase of MediaNews Group (and, ergo, the Tribune), a representative of the hedge fund approached the Tribune's only competitor with an offer. The full terms of the offer have not been publicly disclosed. However, the ultimate transaction involved the payment of a substantial sum of cash by Deseret News Publishing Company to Alden Global Capital," the complaint states. "Upon information and belief, in exchange for this cash payment and other consideration, the hedge fund agreed to terms of a new joint operating agreement that would effectively eliminate the Tribune as a competitor to the News. Mr. Gilbert, the News' CEO, agreed to the proposal, and the result was a new joint operating agreement executed Oct. 18, 2013, that essentially gutted The Salt Lake Tribune."

The amended joint operating agreement required no consent or pre-approval from the Department of Justice, Citizens for Two Voices says, and was implemented without public knowledge.

Also in October 2013, three Tribune reporters allegedly received an anonymous note, written in carefully disguised block letters, which stated: "Church and John Paton [representative of Alden Global Capital] are renegotiating JOA. Tribune will be left with very little. Deal is Tribune interest for cash."

A Tribune reporter obtained a copy of the 2013 JOA from the Department of Justice shortly after the anonymous note. On Oct. 28, 2013, Joan O'Brien with Citizens for Two Voices and 29 other former journalists and readers of the Tribune requested in writing that the DOJ commence a formal investigation.

The DOJ allegedly confirmed the investigation, in April.

However, because the 2013 agreement was characterized as an amendment to an existing JOA, the DOJ has limited authority to demand pre-approval or revision of the JOA, the complaint states.

"The DOJ's primary authority under these circumstances is the commencement of a civil suit (if appropriate) upon the conclusion of its investigation," according to the complaint, which was filed Monday. "Antitrust investigations often take months to complete, depending upon their scope, levels of cooperation, etc. This lawsuit is brought in part to enable the Tribune to remain in operation pending the conclusion of the DOJ's investigation and decision-making process."

Citizens for Two Voices - a nonprofit that includes former Tribune journalists, readers and subscribers, and advertisers - claims the agreement "almost certainly lays the way to the Tribune's demise."

"Prior to Jan. 1, 2014, the Tribune was consistently profitable. It was not in danger of failing in the near future," the complaint states. "The terms of the October 2013 JOA more than handicap the Tribune. The October 2013 JOA fails to provide sufficient revenue to the Tribune to allow for the Tribune's continued existence. It almost certainly lays the way to the Tribune's demise, because the JOA will not yield sufficient revenue for the Tribune to cover costs.

"The Salt Lake Tribune is in imminent danger of ceasing publication under the terms of the October 2013 JOA."

Nineteen Tribune journalists and other members of the paper's editorial staff were fired in September 2013, with additional layoffs this year, the complaint states.

"Layoffs in response to anticipated revenue loss created an impression that the Tribune was failing prior to implementation of the new revenue split, which was not true," Citizens for Two Voices added.

The group says it recently purchased an advertisement touting its website, to be run in the both the Tribune and Deseret News. Though it paid in full for dual placement, it claims, Deseret News refused to run the ad.

Citizens for Two Voices seeks preliminary and permanent injunctions and demands the 2013 joint operating agreement be rescinded and dissolved for antitrust violations.

It is represented by Karra Porter with Christensen & Jensen.

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