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Posted 24 Feb 2001   For week ended February 09, 2001
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Sent on Mormon-News: 09Feb01

By Kent Larsen

Tribune Co. Delt Setbacks in Sale Lawsuit

SALT LAKE CITY, UTAH -- The Salt Lake Tribune Publishing Company was delt a couple of setbacks this week in its attempt to reverse the newspaper's sale to Denver-based MediaNews Group. On Tuesday the company's lawyers gave up their attempt to add the Deseret News to the lawsuit, saying they had received assurances that the Deseret News would follow any judgement made in the suit even though it isn't a party to the lawsuit. Meanwhile, AT&T Corp., which sold the newspaper to MediaNews, asked the court to withdraw an affidavit supporting the Tribune company, saying that the affidavit was wrong. The Salt Lake Tribune Publishing Company manages the newspaper under contract with its owner, and claims to have an option to purchase the newspaper that the recent sale will thwart.

In dropping the attempt to add the Deseret News to the case, the Salt Lake Tribune Publishing Company gives up its attempt to get a ruling against the News, which, the company says, colluded with MediaNews on the sale. Since the sale was completed, MediaNews has given the Deseret News, as part of the two paper's joint operating agreement, a right to veto any sale of the Tribune, a move that could allow the Deseret News to keep the Salt Lake Tribune Publishing Company from exercising its option to purchase the newspaper. The company maintains, however, that MediaNews Group doesn't have the legal right to give the Deseret News approval over sales.

Meanwhile, former TCI president John C. Malone, who is a current board member of AT&T Corp., claims that a January 10th affidavit he signed for the Tribune company was drafted by someone else and that he did not review it before he signed it. Malone, as president of TCI, negotiated the original sale of the newspaper by the owners of the Salt Lake Tribune Publishing Company to TCI, which subsequently merged into AT&T.

Since Malone now says that the affidavit is wrong, and since AT&T Corp. has challenged the affidavit, saying that the Tribune obtained it "without prior notice to AT&T or its counsel" as required by legal procedures, the affidavit is in question. To fill that hole, lawyers for the Salt Lake Tribune Publishing Company introduced an affidavit from former TCI Chief Financial Officer Donne F. Fisher, who also worked on the original agreement to sell the newspaper to TCI. Fisher claims in his affidavit that the sale agreements were "designed to work in unison to allow the Kearns family uninterrupted management and protection of all the assets related to the operation of the Tribune." But his affidavid is weaker than Malones because he left TCI in 1995, two years before the sale was completed. Fisher claims to have worked as a consultant to TCI on the deal after he left.

These affidavits deal with one of the core issues that the court will face in interpreting the situation: what was the intention of TCI when it purchased the newspaper in 1997. But they also expose a potential problem for the owners of the Salt Lake Tribune Publishing Company. The original sale of the newspaper, made in an attempt to transfer the newspaper's cable assets to TCI, was carefully constructed as a tax-free stock swap. But the swap remains tax free only if the purchaser (TCI) gets effective control over the newspaper. Now, however, the Salt Lake Tribune Publishing Company is arguing that the deal was meant to keep it in control of the newspaper. If it pushes that point too far, the company could face a significant tax bill.


Tribune drops efforts to add News to suit
Deseret News 8Feb01 B4

Witness in Trib lawsuit recants
Deseret News 8Feb01 B4
By Maria Titze: Deseret News staff writer
Ex-TCI executive admits he didn't write statement


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