By Kent Larsen
Deseret News Files Lawsuit Against Salt Lake Tribune Over Morning Distribution
SALT LAKE CITY, UTAH -- The Deseret News escalated Salt Lake City's
newspaper battle on Monday, filing a lawsuit in Utah's 2nd District Court
and claiming that the Tribune used its control over the Newspaper Agency
Corporation to "stifle competition" between the papers by delaying the News'
move to morning publication. The move opens another venue in the ongoing
battle between the newspapers, where the interpretation of the newspaper's
joint operating agreement and the documents surrounding the 1997 sale of the
Tribune are likely to be examined.
The News' lawsuit claims that the Salt Lake Tribune Publishing Company, the
management concern that runs the Tribune, used its control of the Newspaper
Agency Corporation (NAC), the company that runs the joint operations of both
newspapers, to delay the News' plans to move to morning publication. The
Newspaper Agency Corporation told the Deseret News when asked to make the
switch to morning publication in 1997 that the cost to make the switch would
be $25 million and that the Deseret News would have to pay an additional $10
million to cover lost advertising revenue, according to the lawsuit. The
News is expected to make the move this fall.
The lawsuit also claims that the Tribune used the NAC to "engage in
discriminatory practices designed to favor the Tribune and damage the
Deseret News." Those practices include, according to the lawsuit, using NAC
personnel to benefit the Tribune without reimbursing the NAC, collecting
inflated or unfair rent from the NAC, collecting "unreasonable and
unwarranted" monetary assessments against the Deseret News and using the
NAC's billing and revenue allocation practices to "unjustly enrich" the
Tribune and "injure" the Deseret News. Wall says that the Deseret News'
board unanimously approved filing the lawsuit.
However, the lawsuit does not include any claim for monetary damages. "We're
only seeking declaratory and injunctive relief," said Deseret News publisher
Jim Wall. He also says that the News filed the lawsuit in Utah's Davis
County in an attempt to get a jury that wasn't biased toward either
newspaper. Circulation of the two newspapers in Davis county is about equal,
and limited to only 30 percent of the county. But, while Salt Lake Tribune
publisher Dominic Welch admitted that this would reduce any bias, he noted
that the dominance of the LDS Church in the county may favor the Deseret
News. The Tribune has a larger circulation in Salt Lake county, while the
Deseret News has a larger circulation in Utah county.
Welch expressed surprise at the lawsuit Monday, "I thought we could maybe
talk about resolving this issue. I'm just appalled." He contends that the
NAC simply followed the newspapers' joint operating agreement, which
prescribes that the News pay the costs associated with moving to morning
distribution. Welch adds that the 1997 figures were only estimates. He does
admit trying to protect the Tribune from the costs of such a move.
The Tribune sees the move as a strategic play by the News to block the Salt
Lake Tribune Publishing Company from re-purchasing the Tribune in the summer
of 2002. The publishing company sold the Tribune to Telecommunications,
Inc., in 1997, about the same time that the Deseret News wanted to move to
morning publication, as part of a tax-favored move to rid the Tribune of
cable systems it owned. Part of the agreement included an arrangement that
named the Salt Lake Tribune Publishing Company manager of the newspaper and
gave the company an option to re-purchase the Tribune. But
Telecommunications later merged into AT&T, which sold the newspaper to
Denver-based MediaNews Group earlier this year.
The Salt Lake Tribune Publishing Company has challenged the sale and
MediaNews Group's attempts to make changes at the newspaper, claiming that
the management agreement gives it the right to run the paper as it sees fit.
It has also fought the Deseret News' contention that it has veto power over
the sale of the Tribune under the newspapers' joint operating agreement.
Last month a ruling by federal Judge Tena Campbell seemed to indicate that
the Salt Lake Tribune Publishing Company had the right to manage both the
newspaper and the NAC. But since that ruling was in federal court, Welch
says "This action by the Deseret News appears to us to be an attempt by the
News to circumvent Judge Campbell's ruling."
Welch also says that the Deseret News' actions seem to violate an agreement
reached in February under which Wall said the Deseret News would "not take
any action" to prevent MediaNews from following Campbell's orders if it
weren't named in the lawsuit. But Wall claims that two things have changed
since then. He says that the Tribune served notice that it plans to amend
its lawsuit adding issues that involve the News, and he claims that Welch
told NAC employees he would terminate the joint operating agreement once his
company manages to re-acquire the Tribune.
Asked if he said that, Welch replied, "No, but it's a helluva good idea."
But he hastened to add, "There are no provisions that I see in the contract
(JOA) that would allow us to terminate."
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