Op-ed: Change in profit split has put Tribune on the ropes
The fact that you're reading this shows the high level of respect that The Salt Lake Tribune and its owners give to freedom of expression.
Since 1871, the Tribune has been the independent voice of Utah. The "other" voice. It has been the living affirmation of the constitutional right of freedom of speech in our state. I am very sad to say that the independent light is in great danger of being turned off. Forever. Soon.
The almost guaranteed closure of the Tribune comes from an agreement made by the Tribune's owners (a New York hedge fund) and its business partner, the Deseret News Publishing Company. Since 1952, the two newspapers have kept separate editorial departments but shared the business. That partnership split the profit of the two newspapers at 58 percent for the Tribune and 42 percent to the Deseret News. The disparity is due to the significantly larger circulation enjoyed by the Tribune. That remains true today; the Tribune circulation in the papers' core market is considerably higher than the Deseret News.
Recently, the hedge fund owners of the Tribune and the Deseret News changed the operating agreement that the newspapers use to define their business arrangement. The long and short of that change is that the Tribune owners would get a bundle of cash from the Deseret News, and the Tribune owners, in turn, would accept an ongoing, devastating decline in the split of profits from 58 percent down to 30 percent. At 30 percent, it is clear that the Tribune is doomed.
The newspaper business has not been very good over the last decade or so. Times are tough. But the Tribune, by all reports, still makes a profit. It need not be shut down. At the same 58 percent that the Trib has been getting for 61 years, there is every expectation that the paper would be around for the new incarnation of newspapers. But, with dropping revenue down to 30 percent, it is almost certain the Tribune, as we know it, will be gone in a relatively short time. The hedge fund owners, doing what hedge funds do, are taking the long-term profits now and leaving the Tribune with a dim future. Leaving our community with only one newspaper, only one point of view.
The Deseret News, while paying out millions in cash, achieves some things, intended or not. The independent voice of the Tribune will be silenced, a voice that has been the Deseret News' nemesis for generations. The News also gets to be the sole major player in the Utah newspaper business. It becomes a major one-newspaper monopoly.
This is where it gets a little complicated. In 1970, worried about the closure of some newspapers, Congress passed the Newspaper Preservation Act. That Act allows, for the public good, the U.S. Department of Justice to waive antitrust issues in order to preserve newspapers. That's the only reason the two papers have been allowed to ignore antitrust and combine their business and sales departments. No Utah advertising client could, as they can with any other Utah business, go to the Tribune and negotiate its price against its competitor, the Deseret News. These two papers were given a special privilege to act as a monopoly. That antitrust privilege not only 'saved' the newspapers, it also cost Utah business a lot of money over the years. But it gave this community two vibrant and different points of view. Now, both the Tribune and Deseret News must get approval to change their antitrust agreement. Our government in Washington must countenance this new agreement. Under the Newspaper Preservation Act, the Feds have to give approval to the new agreement that will quiet the Tribune.
That's where the people of Utah finally get a say. Our organization, Savethetribune.com, has hired the best lawyers in D.C. and we are asking the public to sign a petition to the DOJ and implore them not to allow the Deseret News to kill the Tribune. Asking the Justice Department to reject this bad agreement. That's our last hope.
You may sign the petition at http://www.savethetribune.com/
Sen. Jim Dabakis represents Utah Senate District 2.
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