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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?


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Bottom line » The Tribune’s share of NAC profits, Paton said, "were a small fraction of what they had been just six years ago," a fact he said was of "great concern." An even deeper worry, he said, was whether the paper could survive on its own when the JOA expired in 2020.

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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Paton, viewed by many in the news industry as an evangelist for digital transformation, visited Utah on Nov. 27, 2012, his affidavit said.

He met with Brent Low, president and CEO of MediaOne, who told him The Tribune’s share of newspaper profits was "no longer sufficient to cover what he understood to be The Tribune’s then-current editorial budget."

Senior DFM executives, for their part, were increasingly baffled that Low seemed to resist using an online ad sales and targeting system called AdTaxi, which DFM had deployed at other newspapers to great success. As much as $250 million in digital advertising revenues were "up for grabs" in Salt Lake City and MediaOne had no "multiple-platform strategy for competing for those dollars,’’ according to a sworn statement from Kirk MacDonald, senior vice president for sales development for DFM.

MacDonald and other DFM bosses had become convinced The Tribune "would never realize its full potential so long as it remained under the dominion of the NAC and Mr. Low,’’ he said in his affidavit.

Shortly after meeting with Low, Paton went to see The Tribune’s top editor at the time, Nancy Conway, for whom he said he has "great respect."

But Paton left the meeting "concerned that she did not share my view of the kind of restructuring and repositioning that would be needed at The Tribune and at newspapers generally in order to assure their future viability.’’

Since retired, Conway, in turn, has offered her own affidavit, saying the recrafted JOA does not give The Tribune enough money to operate and sets the stage for its demise.

Paton wrapped up his day in Salt Lake City that November by meeting with Deseret News CEO and fellow Harvard University alumnus Clark Gilbert, whom he says he considers a kind of kindred spirit. Two years prior, Gilbert had laid off dozens of reporters and editors, narrowed the Mormon church-owned paper’s focus to family and faith-related issues and shifted resources toward growing digital operations.


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"Mr. Gilbert generally shares my views on the digital future of newspapers and had already taken many of the necessary steps needed to position his newspaper to succeed,’’ Paton said. Specifically, they talked about "restructuring the JOA to allow The Tribune to control its digital future.’’

Their discussion, Paton said, "ultimately led to the amendment of the JOA in October 2013.’’ DFM formed Utah Digital Services as a result, he said, with a new digital sales force he claims is generating around $500,000 a month in digital advertising revenue.

Undoing that now, Paton argues in court documents, could do untold damage to The Tribune’s operations.

But in court filings last week, Citizens for Two Voices sought to poke holes in that version of events. The Tribune already gained control of its digital side in 2011, with a prior JOA revision, the group said. That "casts doubt" on Paton’s claims the 2013 JOA was essential to saving the paper.

And while disputing that The Tribune is in fiscal trouble, DFM and the News have declined to provide detailed information to support their position, the group said.

Those numbers and other key facts could well emerge as the case unfolds in court.

tsemerad@sltrib.com

Twitter: @Tony_Semerad



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