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Salt Lake Tribune pursues nonprofit status, community ownership

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SALT LAKE CITY — The Salt Lake Tribune has launched an effort to keep the 148-year-old newspaper in business for the long term by turning it into a nonprofit, funded by donations to a newly created foundation.

The Tribune confirmed late Tuesday online that attorneys for current owner Paul Huntsman have "approached the IRS about changing the Tribune from a privately owned business to a community asset."

Details of the arrangement have not been fully released, but what has been reported so far is that Tribune operations would be funded through an endowed nonprofit foundation. The newspaper would also change its status to a nonprofit 501(c)(3), governed by a community board.

The Salt Lake Tribune offices, photographed on Wednesday, May 8, 2019. The Tribune, struggling like other metropolitan newspapers around the country, is seeking federal approval to become a nonprofit entity that will be governed by a community board and f

The Salt Lake Tribune offices, photographed on Wednesday, May 8, 2019. The Tribune, struggling like other metropolitan newspapers around the country, is seeking federal approval to become a nonprofit entity that will be governed by a community board and funded through donations.

Laura Seitz, Deseret News

In an interview Wednesday, Huntsman said he arrived at the nonprofit solution after examining the decline in the newspaper industry and finding a demand among foundations and other institutions eager to donate toward preserving community journalism.

"There's literally hundreds of millions of dollars out there trying to find their way into supporting nonprofit news," he said. "There's a lot of foundations and institutions and individuals that see this coming and they want to support those news organizations that qualify."

Other newspapers with a similar funding model include the Tampa Bay Times in Florida, the Philadelphia Inquirer and The Guardian in Britain, said Rick Edmonds, a business media consultant for the Poynter Institute, a nonprofit media studies institute that owns the Tampa Bay newspaper.

The Tribune's proposal is unique in that the entire enterprise would become a nonprofit entity, he said.

"In the old days that was considered a little bit risky in terms of IRS approval," Edmonds said. "I don't really think that's likely to be an issue" for the Tribune.

Huntsman, too, expects IRS approval of the foundation funding the publication to be faster than changing the Tribune's status from private to a public nonprofit. He estimated approvals could take up to a year.

During that time he will remain publisher and plans to have a role on the board that will govern the nonprofit Tribune.

The Deseret News and the Tribune share printing, distribution and advertising operations under a federally regulated joint operating agreement, which is set to expire at the end of next year. Huntsman reportedly wants to keep printing his paper as long as it's financially feasible, a position shared by the Deseret News.

Deseret News Publisher Jeff Simpson said the days of printing and delivering newspapers are numbered as subscriptions decline. That means the distribution model moves away from print to digital and other products.

"At some point that model is just unsustainable and takes money away from journalism. We won’t let that happen," he said, reiterating the Deseret News committment to strong journalism, regardless of how it is distributed.

While few newspapers have taken the route the Tribune is pursuing, the search for other revenue sources beyond advertising to fund journalism is industrywide.

"Journalism has always had to rely on other revenue sources," Simpson said. "Whether it was high profit classified ads before the days of free digital ads or other complementary businesses, journalism has always needed other supplemental sources of revenue."

In addition to changes to its business model and aggressive digital efforts, the Deseret News continues to innovate as part of a robust news organization that also includes its radio and television partners at KSL.

"We think good journalism, and more of it, is very important for the community," Simpson said.

The pursuit of community ownership would be the sixth ownership change for the Tribune since 1997, when the Kearns-Tribune Corp. merged with Tele-Communications Inc. In 1999, TCI was acquired by AT&T, which sold the newspaper property to Denver-based MediaNews Group in 2000.

The emergence of online advertising, particularly free classified ads, coupled with the recession in 2008, hammered the bottom line of what was once a highly profitable government sanctioned monopoly for both newspapers. The joint operating agreement is exempt from federal antitrust laws.

MediaNews Group responded to the decline by filing for bankruptcy in 2010 and emerged under the ownership of Alden Global Capital, a hedge fund that would become known for cutting costs at newspapers it also owned in Colorado, Minnesota, Massachusetts and California.

In late 2010, the Deseret News cut its staff, combined news gathering resources with its sister broadcast company KSL-TV and radio, and moved management of its website under a new company, Deseret Digital Media, which operated the websites of Deseret Management Corporation's for-profit entities.

In 2013, Alden Global renegotiated terms of the joint operating agreement with the Deseret News, which purchased the printing presses and offered other financial considerations in exchange for a greater percentage of generated revenue.

When Alden Global sold the Tribune to Huntsman, the son of the late billionaire philanthropist and businessman Jon Huntsman Sr., in 2016, the deal was lauded as a return to local ownership for the newspaper.

Huntsman said since purchasing the newspaper, he has spent the past three years getting up to speed on the industry, talking to thought leaders and publishers to come up with a sustainable, long-term business model that wasn't totally reliant on advertising dollars.

In the middle of that process, a sharper than expected decline in advertising revenue, which resulted in the Tribune cutting about one-third of its staff last year, further confirmed to Huntsman he needed to make a change.

"As you look at the different digital revenues coming in, combined with philanthropy, to me that is the right long-term model to sustain local, what I would call more legacy, newspapers," he said. "As we look at sort of transitioning longer term this is basically the obvious direction that we needed to look at going to."