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(Leah Hogsten | The Salt Lake Tribune) MediaOne printing facility pressman Bruce Gallespie prints the Mormon Times on Thursday, January 27, 2011, in West Valley City. A lawsuit that gets its first court hearing Monday challenges a recent deal between Salt Lake Tribune owner Digital First Media and the Deseret News.
Question before the court: Is deal designed to save or sink The Tribune?
Lawsuit » Is the new pact an ominous blow or bold leap into brave, new digital world?
First Published Jul 20 2014 01:01 am • Last Updated Jul 21 2014 08:30 am

The awkward and messy fight over how Salt Lake City’s two daily newspapers are run gets its first courtroom airing Monday.

In what is likely to be a routine status hearing, U.S. District Judge Clark Waddoups will preside over opening exchanges in a lawsuit that loyal supporters of The Salt Lake Tribune say could determine whether the 143-year-old newspaper survives.

At a glance

Developments

U.S. District Judge Clark Waddoups has set a hearing for Monday in a lawsuit challenging a long-standing business partnership between Salt Lake City’s two largest daily newspapers, The Salt Lake Tribune and the Deseret News.

The U.S. Department of Justice is pursuing a separate investigation of whether the newspapers’ recently revised joint-operating agreement violates federal antitrust laws.

The Utah attorney general’s office is also scrutinizing the antitrust implications from the amended JOA.

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If the case goes to trial, Waddoups may well decide if a deal reached last fall between corporate owners of The Tribune and the LDS Church-owned Deseret News amounts to starving The Tribune or, instead, represents a bold move to reduce costs and vault the paper into a more profitable and sustainable digital future.

The nonprofit group Citizens for Two Voices, also known as the Utah Newspaper Project, is seeking a preliminary injunction to halt the recent business arrangement between the News and New York-based Digital First Media, which operates The Tribune on behalf of Alden Global Capital, a multibillion-dollar hedge fund with sizable U.S. media holdings.

Managers at the News and Digital First finalized the deal in October, cutting The Tribune’s share of profits in half, giving the News control of joint operations and selling The Tribune’s share in a printing plant in West Valley City.

The revised pact, agreed to in exchange for a substantial cash payment by the News to Digital First, was filed without fanfare at the U.S. Department of Justice and went unnoticed until details were leaked to Tribune reporters.

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Local action » After trying for months to get Justice Department lawyers to intervene, Citizens for Two Voices filed its federal lawsuit in Salt Lake City, claiming the changes have put The Tribune in jeopardy and that Utahns face grave consequences at the prospect of losing a key source of independent journalism.

The state’s largest newspaper "is bleeding out, more layoffs are likely, more reductions in news gathering and reporting are imminent,’’ the group of former Tribune employees and concerned residents says in its suit. "[T]he loss of a daily newspaper, and particularly the Salt Lake Valley’s only secular daily, would result in irreparable and immeasurable harm.’’

The News and Digital First, meanwhile, are asking the judge to toss out the legal challenge to their new joint-operating agreement (JOA).


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How the papers share profits and otherwise manage their affairs is up to them, they assert in their filings. The case, they contend, has unfairly subjected private matters to public review and is "an assault on the right of a business owner to decide what makes the most sense for its business."

"Far from being designed to ‘gut’ or ‘cripple’ The Tribune,’’ their court briefs say, revisions to the JOA "were designed to recognize the changed reality of the newspaper business and enable it to compete effectively as readers continue to migrate from print to digital media."

Both the preliminary-injunction request and the motion to dismiss are considered legal long shots, requiring higher-than-usual thresholds of proof. While Waddoups could rule definitively Monday, it is more probable the suit will proceed to further hearings as both sides build their cases.

The clash already has brought to light previously unknown details about how the revamped JOA came about and some of the intricate dealings behind a decades-old business arrangement that insiders sometimes refer to as "the three-headed monster.’’

While running separate, often fiercely competitive newsrooms, the News and Tribune have cooperated for 62 years on newspaper production, advertising and delivery, as well as a growing line of non-newspaper operations including real estate brokering, specialty printing, event planning and web development. Their shared operations are run by a third company, known for years as the Newspaper Agency Corp. (NAC) and now called MediaOne of Utah.

The Tribune-News cooperation amounts to a daily newspaper monopoly in Salt Lake City. But it is allowed under the federal Newspaper Preservation Act, a law passed in 1970 but applied retroactively to the Utah papers, whose deal began with congressional blessing in 1952.

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History » The JOA has carried the News and Tribune through decades of profitable print publishing and well into an era of digitally delivered information.

The papers have altered the JOA and enjoyed various shares of their joint profits through the years, with only occasional review from anti-monopoly lawyers with the DOJ. For more than a generation, The Tribune reaped 58 percent of the profits and the News, 42 percent ­­— roughly in keeping with their shares of combined readership.

New leadership came on board at the News in 2010 and the hedge fund took over ownership of The Tribune and a chain of other U.S. newspapers the following year.

Sometime in 2012, less than a year after Alden assumed control of The Tribune and nearly 75 other dailies in a series of complex bankruptcy proceedings, Digital First CEO John Paton turned his focus to Salt Lake City, he said in a sworn affidavit.

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