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Deseret News CEO: New deal protects Tribune independence

Published April 22, 2014 8:13 am

This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A top Deseret News executive sought Monday to clarify his stance on a recently negotiated deal that dramatically cut The Salt Lake Tribune's profits in the newspapers' joint partnership.

News CEO Clark Gilbert said the LDS Church-owned daily is committed to market demand for multiple editorial voices and that a controversial new business pact between The Tribune and News includes specific protections for both newspapers' independence.

Gilbert's comments, given in writing to public radio station KUER in Salt Lake City, also said The Tribune's corporate owners, Digital First Media, not the Deseret News, initiated talks that ultimately led to a new profit-sharing arrangement for the papers' joint print advertising, circulation and distribution businesses.

"The choice of how to use the proceeds from the transaction is an internal matter for the ownership and management of The Salt Lake Tribune," Gilbert said, referring to a substantial but undisclosed cash sum the News paid to Digital First Media and its hedge fund owner as part of the deal.

The revised pact has drawn scrutiny from antitrust lawyers with the U.S. Department of Justice, along with a campaign by community members and former Tribune staffers to halt the deal. The group, dubbed the Utah Newspaper Project, says the arrangement threatens to put Utah's largest newspaper out of business and further LDS Church media dominance in Utah.

In a set of revisions last October to the six-decades-old joint-operating agreement between the two newspapers, Digital First sold The Tribune's share of formerly co-owned printing facilities in West Valley City and gave the News a 3-to-2 majority on the board governing the partnership.

More crucially, the revisions gave the News 70 percent of the papers' pool of profits, compared to 30 percent for The Tribune. The previous split favored The Tribune, which has the larger print circulation, 58 percent to 42 percent.

Digital First CEO John Paton noted the new JOA represented a companywide strategy of shedding print-era assets and obligations in favor of digital investment.

"We continue to believe the recent revisions to the joint-operating agreement are important to The Salt Lake Tribune's continued success and are consistent with our strategy of controlling our digital future while limiting our exposure to legacy costs and practices," Paton wrote Monday in an email. "We are also confident that under the restructured JOA, The Tribune will continue to be a strong independent voice, which has been and remains the goal of both parties to the JOA."

Tribune Publisher and Editor Terry Orme told KUER's "RadioWest" listeners Monday the slimmed-down profit share from print operations had made the paper's financial future less certain — especially as newspapers nationwide struggle to adapt to the challenges of continued circulation and ad losses.

"It doesn't make it any better, let's put it that way," Orme said. Print revenues continue to be "the biggest single source of income."

"We've been relying on this stream of income for 60 years and to all of a sudden change it isn't a small thing; it's a big thing," Orme said. "You better know where you're going and you better have a high level of confidence in where you're going before you do that.''

Joan O'Brien, spokeswoman for the Utah Newspaper Project, said on the same radio show that the new profit split — combined with the News' veto powers of any potential sale — weakened the prospects of a prospective buyer ever making an offer for The Tribune.

"Completely one-sided, shockingly unfair,'' said O'Brien, a former Tribune staffer who is married to a reporter at the paper. "I can't imagine why they have so deliberately undercut The Tribune in this way."

In his statement to KUER, Gilbert sought to counter that impression. He noted that under the new JOA, the News was not charging The Tribune rent for use of printing facilities, which he called "a significant financial benefit to The Tribune." The News CEO also cast the new JOA in terms of both newspapers expanding investments in digital formats, "where consumer choices continue to expand."

"This digital growth creates both opportunities and challenges tied to an increasing number of competitive voices," Gilbert wrote. "It is the responsibility of news organizations to innovate and adapt to the evolving media landscape."

tsemerad@sltrib.com

Twitter: @Tony_Semerad