Tribune sells interest in printing plant to rival
The Salt Lake Tribune is selling its interest in a West Valley City printing plant to the rival Deseret News in a deal announced Monday that also renegotiates the terms of its operating agreement with the News to sell advertising as well as print and distribute the two papers .
Both companies are private and declined to put a price on the deal or to spell out in detail how the agreement in place since 1952 will change.
But John Paton, chief executive of Digital First Media (DFM), which manages The Tribune's parent company, said the Deseret News will gain control of the board of directors of MediaOne of Utah, the company the two papers co-own under their operating agreement. In addition, the profit split between the papers, currently 58 percent for The Tribune and 42 percent for the Deseret News, will change.
"It will change to reflect the new ownership structure although we're not talking publicly about what the terms are," Paton said in an interview.
As part of the deal, which has been submitted for review by the U.S. Justice Department as required by the Newspaper Preservation Act, The Tribune will gain sole control of sltrib.com and other aspects of its digital operations and their profits.
Paton said the deal will not directly affect The Tribune newsroom, which a month ago lost about 20 percent of its staff to layoffs.
The Tribune "remains profitable and the editorial [operation] remains the same and we actually see a brighter future controlling our digital sales," he said.
Growth of online advertising revenue has started to increase faster than revenue being lost to the print edition, Paton said.
The two newspapers will remain editorially independent and under separate ownership the Deseret News by The Church of Jesus Christ of Latter-day Saints and The Tribune by Denver-based MediaNews Group, which DFM manages on behalf of Alden Global Capital, a hedge fund that controls MediaNews.
Paton said the sale is in keeping with his strategy for managing newspapers, which have seen paid subscribers and advertising revenue for print editions steadily decline. Newspapers Paton manages in other parts of the company have sold presses and real estate in order to concentrate resources on better news stories, photos and other information as well as on digital operations that don't require expensive presses, paper and distribution systems.
"This doesn't change anything other than decrease our exposure to the legacy part of the business," Paton said. "It increases our control directly where I think our future is, and that's digital."
He said proceeds from the sale would be used to retire MediaNews debt.
The move makes sense, said Martin Langeveld, a former newspaper publisher who writes about the industry for the Nieman Journalism Lab.
"I have been an advocate for years of the course that DFM is pursuing, not only in Salt Lake City, but at many other papers it manages, of either outsourcing their printing or centralizing it within clusters," Langeveld said. "If you believe that at some point daily printed editions will no longer be economically viable, then it makes sense to divest as much infrastructure as possible, including real estate, print production equipment and distribution systems. Outsourcing all of those functions allows total flexibility in pursuing a 'digital first' strategy."
Clark Gilbert, CEO of the Deseret News and Deseret Digital Media, did not return a Monday phone call seeking comment. But in an email, Gilbert called the purchase of The Tribune's interest in the printing plant "a good investment for the Deseret News, and a signal of our commitment to the state of Utah. It helps ensure two strong and independent voices, while allowing our partner to follow an investment pattern that fits what they have done in other markets."
Brent Low, CEO of MediaOne, also did not return phone calls. In a statement, he said he was pleased by the Deseret News' investment. "This allows two distinct editorial voices to continue to have maximum reach for our advertising clients," he said.
William Dean Singleton, the former owner of MediaNews who stepped down as publisher of The Tribune last month, has been chairman of the MediaOne board.
It's not clear whether Singleton will remain on the MediaOne board. He did not return a phone call seeking comment.