Barring intervention by a federal appeals court, former managers of the Salt Lake Tribune will have to pay $355.5 million to regain ownership of the newspaper.
U.S. District Judge Ted Stewart refused Monday to overturn the final appraisal in a three-part process to determine the Tribune's fair market value. When averaged with a previous appraisal, the disputed $331 million valuation sets the final purchase price at $355.5 million.
Salt Lake Tribune Publishing Co. (SLTPC) argued that Management Planning Inc. applied the wrong definition of "fair market value" when reaching its final value. In doing so, SLTPC argued, the New Jersey-based appraisal firm exceeded its authority, acted fraudulently and with manifest disregard for the law, and violated contractual terms guiding the appraisal process.
Stewart denied all of those claims Monday, saying he found no evidence of fraud and noting that federal laws prohibit him from vacating an arbitration award, which he previously determined this was, absent egregious and specific circumstances.
Also Monday, Stewart announced his intention to lift a stay on the 120-day closing period called for in the 1997 option agreement that allows SLTPC to purchase the Tribune from MediaNews Group Inc. There are eight days left in the timetable, and Stewart said the clock will begin ticking after he enters a written order reflecting Monday's ruling. That order should come by the end of the week, he said.
At a closing, SLTPC will be expected to tender the $355.5 million and MediaNews Group Inc. would have to turn over all Tribune assets except for stock in the Newspaper Agency Corp., the company that oversees advertising, printing and circulation of the Tribune and the Deseret Morning News.
After Monday's hearing, MediaNews CEO William Dean Singleton said he will absolutely sell the Tribune if SLTPC shows up with the full amount. He does not, however, expect that to happen.
"They don't have the money, they've never had the money, and they won't come to a closing," Singleton said. "It's time to put up or shut up."
SLTPC chairman Philip McCarthey did not return calls for comment. SLTPC attorney Gary Bendinger said he plans to appeal Stewart's ruling to the 10th U.S. Circuit Court of Appeals, in addition to an earlier ruling that the appraisal is an arbitration award.
Bendinger also said he will file a motion asking Stewart to again put off the closing period. If that fails, he said, he will petition the 10th Circuit to postpone the closing date.
Denver-based MediaNews bought the Tribune from AT&T for $200 million in January 2001. Bendinger argued Monday there is no way the Tribune's value could have increased by some 70 percent in the subsequent 18 months, at a time when the newspaper industry and the national economy were in a steep decline.
Trial in a related case is scheduled to begin Nov. 3. Stewart reinforced Monday his intention for that trial go forward as planned, although Bendinger said he doesn't believe that will be possible until the 10th Circuit addresses the appraisal challenge.
"In our view, your honor, until those issues are resolved there is nothing to be tried," Bendinger said.
MediaNews attorney Kevin Baine agreed that a trial cannot happen until all parties sit down and discuss remaining issues in the nearly 3-year-old case. Stewart agreed to schedule a status conference shortly after the closing date to address those questions.