Sale of the Salt Lake Tribune - Read Deseret News' archive stories and see related links about the sale of the Tribune.

The management company of the Salt Lake Tribune is attempting "to have its cake and eat it too," attorneys for the newspaper's new owner said in a document filed Wednesday in the 10th Circuit Court of Appeals in Denver.

In the opening brief to its appeal of a Utah federal judge's February ruling, MediaNews Group said the Salt Lake Tribune Publishing Co. is trying to preserve a 1997 tax-free stock swap valued at $731 million and, at the same time, control non-editorial functions of the Tribune — perhaps diminishing the value of the newspaper until it can exercise an option to buy it at a lower price in 2002.

"The question in this case is whether the manager was entitled to a preliminary injunction allowing it to exercise non-editorial functions in its own interests, in defiance of the owner's directions and contrary to the owner's interests, and to prevent the owner from negotiating mutually beneficial changes to the joint operating agreement it has with another newspaper," the brief said.

MediaNews purchased the Tribune on Jan. 2 from AT&T Corp., then quickly sought to settle long-standing disputes with the Tribune's rival and partner in the JOA, the Deseret News.

The Newspaper Agency Corp. is owned 50-50 by both newspapers and carries out the shared JOA responsibilities of printing, advertising and distribution.

"Part of its business plan for increasing the value of the Tribune property involved cooperation with attempts by the Deseret News to move toward morning publication," MediaNews attorneys explained. "Because of the profit-sharing provisions of the joint operating agreement, an increase in Deseret News circulation would redound to the financial benefit of MediaNews."

MediaNews says the Tribune has "resisted efforts of the Deseret News to increase circulation."

Tribune officials deny that assertion and say the Deseret News is welcome to convert to morning publication as long as it agrees to shoulder the financial burden of the change.

MediaNews said it was only looking after its business interests in the Tribune when it removed Salt Lake Publishing's Dominic Welch and Randy Frisch from the NAC board and replaced them with MediaNews representatives.

But on Feb. 21, U.S. District Judge Tena Campbell agreed with the managers and said MediaNews' actions violated the terms of a management agreement struck in 1997 when the Tribune's managers first sold the newspaper to Tele-Communications Inc. AT&T acquired the newspaper when it acquired TCI in 1999.

But it is the original deal between the Tribune managers and TCI that lies at the heart of the Tribune's dilemma today, according to MediaNews.

"It was critical to the tax-free character of the transaction that Salt Lake Publishing's role . . . be only that of TCI's agent acting for TCI's benefit," the brief said. "Had it been able to act for its own benefit with respect to the property (for the five years until its option to buy the newspaper ripened) the entire transaction would be subject to attack as a sham because in effect ownership would not have been actually transferred."

MediaNews believes Campbell erred when she determined the management agreement gives the managers rights to control amendments to the JOA.

"MediaNews paid $200 million for (the Tribune), and the option for the Tribune assets matures in July 2002 for fair market value," the attorneys wrote. "If (the managers are) granted independent authority to manage the financial affairs of the Tribune for (their) own benefit, including delaying or preventing the Deseret News from converting to a morning newspaper, the value of the property will go down."


E-mail: mtitze@desnews.com