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SALT LAKE CITY — A federal judge declined to dismiss a lawsuit Monday challenging a revised joint operating agreement between the Deseret News and the Salt Lake Tribune.
Despite what he called powerful and strong arguments from Kearns-Tribune Corp., U.S. District Judge Clark Waddoups said he is required to use caution and draw inferences that are most favorable to the plaintiffs at this stage of the case.
The Deseret News said in a statement that Waddoups' decision is simply the next step in the normal judicial process and reaffirmed its commitment to two strong newspapers in the city.
"We are confident that the court will recognize that the Salt Lake Tribune and the Deseret News amended the joint operating agreement to protect and maintain the viability of both newspapers. Moreover, the transaction allowed the Tribune the ability to reinvent its business model and invest in digital," according to the statement.
Joan O'Brien, who represents the groups suing Salt Lake City's two daily newspapers, said, "The defendants have not given any justification or explanation of this deal that poses such a threat to the Tribune, and I'm glad we're going to have an opportunity to explore some of those issues and some of that information."
Utah Newspaper Project/Citizens for Two Voices, a group of Tribune supporters and former staffers, contends in a lawsuit filed in June that revisions to the newspapers' joint operating agreement violates interstate trade and various antitrust laws, leaving the Tribune in danger of shutting down.
Kearns-Tribune and Deseret News Publishing Co., filed a joint motion to have the case thrown out, arguing the amended agreement isn't subject to anti-trust laws under the Newspaper Preservation Act.
Richard Burbidge, a lawyer for Kearns-Tribune, said the plaintiffs are asking the court to second-guess the newspaper's business strategy. The Tribune, he said, gave up a percentage of declining print revenues for complete control of its digital products.
"These folks have made the decision that that's the future," he said. "Anti-trust laws do not invite the court to question those decisions."
Utah Newspaper Project attorney Karra Porter said the Tribune is "hemorrhaging" as a result of the deal and is in "imminent" danger of closing. She said the court is obligated to step in when a business model runs afoul of anti-trust laws.
"You can't just throw the word business model out there and say leave us alone," she said.
Kearns-Tribune, via its owner Digital First Media, and the Deseret News renegotiated the decades-old agreement in October 2013 at the Tribune's request. Digital First Media is owned by New York-based Alden Global Capital LLC.
The Deseret News became the majority partner in exchange for other concessions, including the multi-million dollar sale of real estate and printing presses to the Deseret News, and guarantees about the independence of both papers. The News now receives 70 percent of the revenue to the Tribune's 30 percent.
John Paton, CEO of Digital First Media, which owns Kearns-Tribune, wrote in a court declaration that the agreement is intended to save the newspaper. He said there are no plans to close the Tribune. He said he would not have agreed to the amendments if he thought they would hurt the quality of journalism or the independence of Tribune reporters.
