Court affirms News' right to veto Trib sale

The Deseret News does have the right to veto a sale of the Salt Lake Tribune to what it views as an unfavorable business partner, a federal appeals court has ruled, dealing another apparent blow to former Tribune managers' efforts to regain ownership of the newspaper.

The 10th U.S. Circuit Court of Appeals on Monday upheld an earlier ruling from U.S. District Judge Ted Stewart that the Deseret News, under a 50-year-old joint operating agreement, can approve or disapprove of a transfer of stock in the company that oversees advertising, printing and circulation for the two newspapers.

The three-judge panel threw out Tribune managers' argument that the stock transfer restriction runs contrary to Utah law.

"In this unusual circumstance, we do not hesitate to conclude that the purpose of the share transfer restriction in the (joint operating agreement) is reasonable and that its scope is appropriately tailored to achieve that purpose," the opinion states.

However, Monday's split decision appears to offer several ways around the restriction and alternatives for Salt Lake Tribune Publishing Co. (SLTPC) to take ownership of the Tribune without also taking possession of the stock in Newspaper Agency Corp.

"We won pretty clearly," SLTPC attorney Milo Steven Marsden said. "The court went out of its way to give fairly detailed instructions on how we're going to get the newspaper back, just as we had argued.

"For people to be saying that it's not a victory for Salt Lake Tribune Publishing seems irresponsible to me."

But new Tribune owner William Dean Singleton, CEO of MediaNews Group Inc., sees things another way.

"I have a hard time seeing how anybody can lose every issue that was appealed and call it a victory," said Singleton, who paid $200 million for the newspaper in January 2001. "The court clearly upheld our right to own and manage the Tribune. It upheld the Deseret News' right to veto new ownership that they didn't approve of, (and) it upheld Judge Stewart's jurisdiction in the case."

Singleton said the idea of separating NAC stock and all other Tribune assets has been explored in court, and the findings are clear.

"To suggest that you can separate NAC from all the assets clearly shows a lack of understanding of how the JOA operates. It's like selling a car with no driver."

The ruling leaves open the possibility that the McCartheys could still regain control of the Tribune if successful at trial.