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By Kent Larsen
Tribune-Deseret News Dispute Explodes After AT&T Agrees To Sell
SALT LAKE CITY, UTAH -- The continuing dispute between the Salt Lake Tribune
and the LDS Church-owned Deseret News exploded last Friday after the
Tribune's owner, AT&T Broadband, reached an agreement to sell the newspaper
to the Denver-based MediaNews Group. The Salt Lake Tribune Publishing
Company, which has a contract to run the newspaper, immediately filed a
lawsuit to block the sale, claiming it has the right to purchase the Tribune
in 20021 under an earlier contract. The Tribune also published a series of
articles on Saturday and Sunday accusing the Deseret News and the LDS Church
of orchestrating the sale to force changes in the joint operating agreement
(JOA) the newspaper has with the Deseret News and to silence the Tribune on
issues sensitive to the LDS Church.
AT&T's subsidiary and MediaNews Group announced that they had reached an
agreement on the sale of the Tribune last Friday. Within hours, the Salt
Lake Tribune Publishing Company had filed their lawsuit challenging the
deal. The lawsuit claims that the Tribune has a prior agreement to purchase
the newspaper from AT&T in 2002, and that the current sale interferes with
that agreement, and is therefore illegal. But AT&T disputes that claim,
saying that the prior agreement can't be enforced.
The agreement dates to the Salt Lake Tribune Publishing Company's sale of
the newspaper to TeleCommunications, Incorporated (TCI) in 1997, made mainly
to allow the sale of the Tribune's cable TV systems to TCI. One of the
provisions of the sale allowed the Tribune Company to repurchase the
newspaper five years later, in 2002. But less than 2 years leater, TCI was
purchased by AT&T, and the Tribune became a subsidiary of what is now AT&T
Broadband.
But the court case over this agreement to return the Tribune in 2002 is only
part of the dispute. The finances of both the Tribune and the Deseret News,
and indeed the eventual survival of at least one of the two newspapers, is
also at stake. Analysts have long agreed that a city the size of Salt Lake
can only support one major daily newspaper, given today's newspaper
economics. Recognizing this, the Tribune and Deseret News entered a joint
operating agreement (JOA) in 1952. Under the JOA, the newspapers share the
costs of printing presses, delivery trucks and delivery employees, billing
and advertising employees and a host of other costs. Without the JOA, each
newspaper would have to pay nearly as much alone as they both pay together
under the JOA, raising the costs of both newspapers to prohibitive levels.
But even with the JOA, news reports imply that only the Tribune is
profitable, and it could be that without the JOA both would be losing money.
As a result of its losses, the Deseret News has been pushing for changes in
the JOA. While the agreement does provide for the Deseret News to move to
morning circulation, it does not indicate who should pay for the additional
costs. The Deseret News wants both newspapers to pay for the increased
capacity needed, claiming that both would benefit. And the Tribune has
resisted the move, arguing that the Deseret News should foot the bill.
According to a chronology published in the Salt Lake Tribune, the sale of
the Tribune to TCI in 1997 led the LDS Church to seek to purchase the
Tribune, even threatening at one point to sue AT&T when it failed to follow
through on the agreement negotiated with TCI. The Deseret News claims that
this attempt was only to allow the News to gain control of the JOA, not
close the Tribune.
The desire for changes in the JOA has also led the Deseret News to oppose
the sale of the Tribune back to the Salt Lake Tribune Publishing Company.
The Tribune says it was in negotiations with AT&T earlier this year on such
a sale, but AT&T failed to complete the deal, at least in part because of
the Deseret News' objections. According to Dean Singleton, owner of
MediaNews Group, a JOA typically gives the other party a right to challenge
the sale of its partner, "Virtually all JOA agreements require approval of
the other party to sell, " says Singleton, "That is not uncommon."
The Deseret News' objections to the Tribune's sale put AT&T in a difficult
position. Neither TCI nor AT&T wanted the Tribune, but ended up owning the
newspaper becaue of their cable acquisitions. Then the Deseret News'
agitation about the JOA made it difficult to sell the newspaper. And the
Tribune Company's contract to repurchase the newspaper in 2002 discouraged
other buyers. But in spite of these difficulties, AT&T asked MediaNews Group
to bid for the newspaper, and when Singleton became comfortable with the
Deseret News' JOA position, he decided to go ahead.
The Tribune maintains, however, that the Deseret News' motives go beyond the
JOA and their finances. In an editorial on Saturday, Tribune publisher
Shelledy claimed that the Deseret News was behind MediaNews Group's
purchase, using Singleton as a front man in order to silence the Tribune's
sometimes critical articles on the LDS Church. However, the Deseret News
disputed those claims in a statement published on the front page of Sunday's
newspaper, claiming that it was committed to having two newspapers to serve
the market, and that had it managed to acquire the Tribune from TCI or AT&T,
it would have preserved "the separate editorial voice of the Tribune through
an independent trust, an independent owner or some similar arrangement."
With MediaNews Group's Singleton in the picture, it is likely that neither
the Tribune nor the Deseret News will get what it wants. Singleton, whose
company owns 48 daily newspapers and 94 non-dailies in 12 states, has a
reputation for wringing profit from the papers he owns, and he has already
described the Tribune as "very sleepily managed" in a booming economy that
is "next to Denver . . . by far the most exciting market in the Rocky
Mountain West," both of which imply big changes at the Tribune.
But Singleton is also not likely to give the Deseret News all it wants from
the JOA. Although he told the Deseret News he will cooperate with some
changes to the JOA, including allowing the Deseret News to move to morning
circulation, he scoffs at the idea that the Tribune would not remain the
dominant paper, both in the JOA and in Utah. Singleton reportedly agreed to
pay $200 million for the Tribune, and says "that's what boggles my mind
about this whole thing -- that the [Tribune] management group would think we
would buy a newspaper and weaken it. We have never discussed owning less
than 58% of the JOA." He also says that when he talked with the Deseret News
about the JOA, "We have never discussed giving up control."
Sources:
MediaNews Group To Buy Kearns-Tribune LLC From AT&T Broadband
ATT Press Release 1Dec00 B4
By Kris Hudson: Denver Post Business Writer
Post owner buys Salt Lake Tribune
Denver CO Post 2Dec00 B4
By Kris Hudson: Denver Post Business Writer
Salt Lake Tribune execs sue to block sale
Denver CO Post 5Dec00 B4
By Anne Colden: Denver Post Business Writer
Utah paper controversy shocks owner of Post
Denver CO Rocky Mountain News 5Dec00 B4
By John Accola: Denver Rocky Mountain News Staff Writer
Tribune defies AT&T over sale
Deseret News 2Dec00 B4
By Max Knudson: Deseret News business editor
Paper sues to stop deal with MediaNews Group
Tribune sale -- the truth
Deseret News 4Dec00 B4
A statement by the Deseret News
Management Moves To Block Salt Lake Trib Sale
Editor &Publisher 1Dec00 B4
By Lucia Moses
MediaNews Expects Deal To Be Completed
Media News Group To Buy Kearns-Tribune LLC From AT&T Broadband
Media News Group News Release 1Dec00 B4
Holding Company Owns Largest Newspaper in Utah
Deseret News Demanded Changes
Salt Lake Tribune 2Dec00 B4
By Kristen Moulton: Salt Lake Tribune
Events Leading to The Tribune-AT&T Lawsuit
Salt Lake Tribune 2Dec00 B4
Newspaper Agency Corp. Agreement With the Deseret News Dates to 1952
This chronology is based on the Salt Lake Tribune Publishing Co.'s
lawsuit against AT&T Corp. and AT&T Broadband and on interviews with
Tribune managers.
Suit Aims to Stop Tribune Sale
Salt Lake Tribune 2Dec00 B4
By Sheila R. McCann and Dan Harrie
Tribune Sues to Halt Sale to MediaNews, Kearns-Tribune managers call
AT&T deal with MediaNews illegal, say D.News is behind it
Lawsuit Details D-News-LDS Intrigues to Acquire The Tribune
Salt Lake Tribune 3Dec00 B4
By Kristen Moulton: Salt Lake Tribune
Letter From the Editor
Salt Lake Tribune 3Dec00 B4
Tribune to Add Would-Be Buyer To Federal Suit
Salt Lake Tribune 5Dec00 B4
By Kristen Moulton: Salt Lake Tribune
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