Tribune CEO: Deal with Deseret News designed to save, not hurt Tribune

Published: Tuesday, July 1 2014 4:55 a.m. MDT

Updated: Tuesday, July 1 2014 4:44 p.m. MDT

The Salt Lake Tribune building in Salt Lake City, Utah.

Scott G Winterton, Deseret News

SALT LAKE CITY — The chief executive officer of the Salt Lake Tribune said he has no intention of shutting down the newspaper as the result of a revised joint operating agreement with the rival Deseret News.

Furthermore, Digital First Media CEO John Paton said far from hurting the Tribune, the deal was designed to save it.

"There are no plans to cease publication of the Tribune today, tomorrow, next week, next month, next year or ever," he wrote in a declaration filed in U.S. District Court just before midnight Monday.

Company executives have never contemplated closing the paper, Paton wrote. "Nor would I ever have agreed to the 2013 amendments had I thought they would adversely affect the quality of our journalism or the independence of our journalists."

Paton's declaration came in conjunction with a 52-page response to a lawsuit filed in June against the owners of the Salt Lake Tribune, Kearns-Tribune and Deseret News Publishing Co.

The complaint filed by Utah Newspaper Project, or Citizens for Two Voices, contends that the joint operating agreement that was renegotiated by Kearns-Tribune, its owner, Digital First Media, and New York-based Alden Global Capital LLC and the Deseret News in October 2013 leaves the Tribune "in imminent danger of ceasing publication."

Lawyers for Kearns-Tribune and the Deseret News argue that that simply isn't true and that the plaintiffs have produced no evidence to support that notion.

"Plaintiff’s claim is based on little more than conjecture and deep suspicions of the motives of Kearns-Tribune, and its parent, MediaNews Group, Inc. (which does business as Digital First Media) and of The Church of Jesus Christ of Latter-day Saints, which controls the News," wrote Richard Burbidge, an attorney for Kearns-Tribune.

Deseret News CEO Clark Gilbert also filed a declaration late Monday that said it was never the newspaper's intent in negotiating the new deal to put the Tribune out of business.

"Deseret News Publishing believes that the Salt Lake City community is benefitted by the presence of diverse editorial voices, including the Salt Lake Tribune," he wrote.

The group filing suit, which includes former Tribune staff members, wants a judge to find that the revised JOA violates interstate trade and various antitrust laws, decree that it is illegal, stop its implementation and award relief to "restore effective competition."

Burbidge argues that unwinding the agreement would do "serious damage" to the Tribune. It would prevent the paper from competing directly with the Deseret News in the sale of digital advertising and would lead to the layoff of employees the Tribune hired to sell that advertising, he wrote.

Paton wrote that undoing the deal would cause confusion in the marketplace and damage both the Tribune and Digital First Media brands.

"This damage is not quantifiable but is potentially fatal to the Tribune," he wrote.

Joan O'Brien, founder of the Utah Newspaper Project and former Tribune staffer, said it's not surprising that Paton and Gilbert and the JOA itself would profess a commitment to the viability of the Tribune.

"But just a cursory reading of the document tells a different story," she said. "I don't know how you could say you're committed to the continued viability of the Salt Lake Tribune when you enter into a JOA that cuts its revenues in half."

The lawsuit takes issue with the sale of assets, namely the printing press and real estate, by the Tribune's owner to the Deseret News in exchange for a change in the distribution of shared revenues.

The suit delineates the Tribune's corporate, out-of-state owner from local management and claims the negotiated deal hurts the future viability of the Tribune. It states that the Tribune was profitable prior to the implementation of the new agreement on Jan. 1, but that it is now "hemorrhaging and is no longer self-sustaining."

In his declaration, Paton describes selling the Tribune's share of the assets to pay off debt, secure the pensions of newspaper employees and invest in digital operations.

O'Brien said she was previously unaware that the deal included securing the pensions of employees. She said the group is anxious to learn new details as the court case moves ahead.

"There a number of issues we're eager to untangle once discovery is underway," she said.

Paton took issue with the group's allegation that the amended JOA was intended to cause the Tribune financial losses and to stop publication or sell to the Deseret News.

"Nothing could be further from the truth," he wrote. "Our purpose was exactly the opposite: to make the Tribune a stronger, self-sustaining newspaper that could survive long-term in a world with very different newspaper economics than before, while at the same time monetizing some declining legacy assets in accordance with our company's overall strategic plan."

Paton said he recognized that profits the Tribune received under the former JOA would not be able to sustain the paper without additional cost reductions. He said he turned to digital advertising as an obvious source of revenue to cover those costs. As part of the agreement, the Tribune would manage digital advertising sales itself.

"This arrangement allowed us to maximize our digital revenue opportunities," he said.

The Tribune's new digital sales force has generated about $500,000 in advertising a month and it is expected to significantly increase going forward, Paton wrote.

"It is this growth in digital advertising revenue, made possible by the 2013 Amended JOA, that has forestalled any plans for further cost-cutting and editorial staff reductions at the Tribune," he said.

Paton also wrote that layoffs at the Tribune the past year had nothing to do with the new agreement as O'Brien and former Tribune editor Nancy Conway have claimed. He said the cuts would have still been necessary due to "ever-shrinking" revenue distribution.

"They are, to be kind, mistaken as to the intent and function of the 2013 Amended JOA," Paton wrote.

Email: romboy@deseretnews.com

Twitter: dennisromboy

Get The Deseret News Everywhere

Subscribe

Mobile

RSS