Judge refuses to dismiss newspaper lawsuit

AP News
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Posted: Sep 08, 2014 8:44 PM
Judge refuses to dismiss newspaper lawsuit

SALT LAKE CITY (AP) — A lawsuit challenging a joint-operating agreement between Salt Lake City's two daily newspapers will proceed after a federal judge on Monday refused to dismiss the case.

U.S. District Judge Clark Waddoups said the Deseret News and The Salt Lake Tribune made powerful arguments about why the lawsuit should be stopped, but Waddoups said he had to be cautious when stopping a case early in the process.

Attorneys for the two newspapers argue that a group of Tribune readers and former employees has no legal standing to challenge the agreement.

The Utah Newspaper Project, the group that filed the lawsuit, says the agreement violates federal antitrust laws and undermines the Tribune's independent voice and ability to continue publishing. As readers and subscribers of the Tribune, they say they will suffer under the deal with less choice and quality.

"It's hemorrhaging. It's no longer self-sustaining," Utah Newspaper Project attorney Karra Porter said Monday, referring to the Tribune.

Waddoups listened to arguments for about two hours Monday before allowing the lawsuit to proceed.

Newspaper attorneys declined to comment after the decision.

The controversy stems from changes made in October to the newspapers' six-decade-old joint operating agreement. Under the changes, the Deseret News purchased the Tribune's share of a printing plant and gets 70 percent of the profits from the newspapers' joint print advertising and circulation businesses.

The money from the sale of the printing plant was used to pay off debt for the Tribune's parent company.

The old profit split was 58 percent for the Tribune and 42 percent for the Deseret News.

Terms of the deal were not disclosed.

Joan O'Brien, chair of Utah Newspaper Project, said Monday's decision allows her group to now find out those specific details and how they've affected newspaper operations.

"We're going to have an opportunity get some real facts about what is happening with the Tribune's budget," O'Brien said.

The Utah Newspaper Project argues the deal gives too much power to the Deseret News, which is owned by a for-profit arm of The Church of Jesus Christ of Latter-day Saints. That hurts The Tribune and its independent voice, according to the group.

Richard Burbidge, an attorney for Tribune owner Kearns-Tribune, presented the arguments for both newspapers Monday that the lawsuit should be dismissed.

Burbidge said that the deal is a nuanced business decision that the newspapers are entitled to make.

He also said there's no merit to allegations the deal violates federal anti-trust law, and predictions that the deal will harm readers and force the Tribune to close are conjecture.

Messages seeking comment were not returned Monday by Robert Hyde, an attorney for Deseret News owner Deseret Management Corporation.

In addition to declarations from a former Tribune staffer and retired Tribune editor, a Utah car dealer and a Republican state senator are among those who filed court documents asserting the Tribune's value as a secular news outlet.

The Utah Newspaper Project has also asked the U.S. Department of Justice to investigate the agreement. Messages left with the Department of Justice were not returned Monday, but O'Brien said a Justice Department investigator has met with her group.

Antitrust lawyers with the Utah attorney general's office are also reviewing the deal. Attorney General Sean Reyes said in June that he is not interfering with the Justice Department investigation, "but the state still has an independent interest in investigating and enforcing our antitrust laws outside of the scope of that federal review."

The state investigation is ongoing, Reyes' spokeswoman Missy Larsen said Monday.

The two newspapers have had a joint-operating agreement since 1952 that combines printing, advertising and circulation operations. The editorial functions of both newspapers remain separate.

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Follow Michelle L. Price at https://twitter.com/michellelprice