Sale of the Salt Lake Tribune - Read Deseret News archive stories and see related links about the sale of the Tribune.
Federal court documents show the Deseret News sought for years to resolve its differences with the competing Salt Lake Tribune before consenting to the Tribune's pending sale to Denver-based MediaNews Group.
For the past three years, the Deseret News has become increasingly frustrated by the Tribune's control over the printing, distribution and advertising for both newspapers and particularly what the Deseret News saw as obstructions to the paper's plans to go to morning publication.
The documents are among hundreds of pages generated since Tribune management sued in federal court Dec. 1 to block the purchase of the newspaper by MediaNews Group. The first hearing in the case is scheduled for Monday before U.S. District Judge Tena Campbell.
The Tribune's owners sold their paper to Tele-Communications Inc. (TCI) in 1997. TCI in turn was acquired by AT&T, which elected to sell the paper to MediaNews. Former owners and officers of the Tribune have a contract to manage the paper and claim an option to buy the paper in 2002.
The Tribune's management company argues that the option precludes the sale of the Tribune by AT&T to MediaNews and that the Deseret News has no authority to approve or disapprove a sale. However, AT&T's response to the lawsuit notes that the Tribune's own attorneys acknowledged in an opinion written regarding the TCI purchase that any future sale of the Tribune's NAC shares would "require the consent of Deseret News Publishing."
While not a party to the lawsuit, the Deseret News has a keen interest in the ownership of the Tribune because the Tribune would remain a partner in printing, distributing and selling advertising for both newspapers. Since 1952, the Tribune and Deseret News have shared those operations and split the profits through a jointly owned company called the Newspaper Agency Corp., or NAC, while keeping independent editorial voices.
Relations between executives of both newspapers who made up NAC's board deteriorated when the Deseret News stepped up its efforts to switch from afternoon to morning publication.
The Deseret News, whose circulation is roughly half that of the morning Tribune, sees the change as a matter of survival.
"You only have to look at the fate of afternoon papers around the country to see that the Deseret News must go morning if it is to survive and flourish," said John Hughes, Deseret News editor and chief operating officer. "To remain in the afternoon field means the ultimate demise of the Deseret News, and the Tribune management company seems to relish that prospect."
The Deseret News is legally entitled to go morning under a Joint Operating Agreement or JOA, which governs the NAC. But in a February 1997 letter to L. Glen Snarr, chairman of the Deseret News Board of Directors, Tribune Publisher Dominic A. Welch dismissed the News plan to go morning as "economic folly."
Welch is president of the NAC as well, which the Deseret News sees as a conflict of loyalties that adversely affects the News.
Welch, who was unavailable for comment Saturday, warned that the Deseret News' change to morning could "trigger the optional termination of our JOA." He refused to share a carrier or distribution force and threatened to penalize the News by fining it or delivering the Tribune to Deseret News racks and subscribers if the Deseret News missed deadlines.
"The Tribune and Agency (NAC) will continue to view the morning field as primarily the Tribune's under the JOA. In the event only one paper can go out — it will be the Tribune," he wrote.
Snarr says, "We have the right to choose a partner who will support and ensure our survival. We have gone to great lengths to work with the Tribune management company. But they have given us unfair treatment and obstructed our right to go morning. MediaNews is willing to work with us, hence our business decision to go with MediaNews."
Deseret News Publisher Jim Wall said relations with the NAC deteriorated when the issues between the two became ripe, dismissing recent Tribune reports that the feud has been fueled by changes in management at the Deseret News. "It's not a difference in personalities but a change in business interests and a changing business environment."
According to court documents, the Deseret News complained of:
Insistence by NAC that additional press capacity was necessary for the Deseret News to switch to morning circulation, although independent consultants found otherwise.
Circulation for both newspapers was below industry averages, and advertising revenues were "trending downward" with no plan to fix the problems at a time when "significant growth was in full bloom locally and such growth was being experienced in other comparable markets."
Costs are divided equally between the two newspapers despite the Tribune having roughly twice the circulation of the Deseret News.
NAC refuses to provide information detailing the rationale for some capital expenditures and other costs. Of particular concern is the price the NAC pays for newsprint from a paper mill partially owned by the Tribune.
The "negligent supervision" has resulted in a loss of at least $19 million to the Deseret News.
The documents also contain a response by Welch to the Deseret News' complaints:
The NAC's consultants found additional press capacity was necessary.
Circulation is not below industry standards and advertising revenue has increased, albeit at a declining rate. Welch blames the revenue slowing to a soft retail economy and cites a "tough market" of large Mormon families distracted by church duties to allow the time to read a newspaper.
The Tribune would split costs based on circulation if the Deseret News agrees to split revenues based on that formula as well. The current revenue split is 42 percent to Deseret News and 58 percent to the Tribune.
The NAC has reported the rationale of capital expenditures to its board. The Tribune's ownership in a paper mill has cut costs for both newspapers and the Tribune never questioned the Deseret News' earlier ownership in a newsprint production company.