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Judge won’t toss lawsuit over SL Tribune’s future

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Posted at 4:53 PM, Sep 08, 2014
and last updated 2014-09-09 11:05:30-04

SALT LAKE CITY -- A federal judge will not dismiss an antitrust lawsuit filed over the future of Utah's largest daily newspaper.

At the end of a hearing Monday afternoon, U.S. District Court Judge Clark Waddoups denied a request by lawyers for the Salt Lake Tribune and Deseret News to dismiss the lawsuit filed by the activist group Utah Newspaper Project.

"I'm relieved," said Joan O'Brien, a founder of the group.

Lawyers for the Utah Newspaper Project clashed in court on Monday with lawyers for the owners of the Salt Lake Tribune and Deseret News. The newspapers recently signed a revised "joint operating agreement" that changes how much profits from the sale of newspapers are divided. It also gives the Deseret News veto-power over any potential owner for the Tribune.

The Utah Newspaper Project alleges it's all meant to kill off the Tribune, leaving the Mormon Church-owned Deseret News the only game in town. The group is seeking an injunction from the court barring the deal from happening.

The lawyer for the Tribune's owner argued that it has merely adopted a new business model focused on digital distribution, and the activist group is "second-guessing the business strategy."

"Is it the plaintiff's allegation that reallocation of revenue stifles competition?" asked U.S. District Court Judge Clark Waddoups.

"It's a vague allegation that it's insufficient to maintain an independent editorial staff," said Richard Burbidge, an attorney for Kearns-Tribune LLC, which owns the Tribune.

"The question is, whether or not it's so substantial it will weaken the competition?" Waddoups replied.

Burbidge stated there was independence, pointing out that the News has emphasized coverage "of particular interest to members of the LDS Church," while the Tribune has sought to characterize itself as "independent of the LDS Church" with harder news coverage. He insisted the joint operating agreement did not run afoul of antitrust laws.

Kara Porter, an attorney for the Utah Newspaper Project, raised issues about the terms of the deal, including undisclosed dollar figures.

"The public has a significant interest in this," she said. "The public has an interest in what is really going on."

Porter alleged that the News did exercise its veto power over a potential buyer for the Tribune, and asked the judge to keep the lawsuit alive to find out specific details.

Porter called the deal "quite suspicious," and suggested "there is an intent to kill the competition." She claimed the Tribune is in danger of imminent closure.

"The way this JOA operates is that the Tribune's owner sold over one half of the Tribune's assets to Deseret and agreed to a 50 percent revenue cut," Porter told the judge. "We have alleged they did so for a cash payment that has not been disclosed, which has been spent -- not on the Tribune."

Judge Waddoups questioned if the newspaper's closure really was imminent, and asked what proof Porter had to bolster that claim.

"Massive layoffs, reduction of quality of output," she said.

The courtroom was packed with former Tribune employees and community activists, watching what was going on. Lawyers for the Tribune and News filled three rows in the courtroom to fight the Utah Newspaper Project's lawsuit.

Representatives for the U.S. Department of Justice and the Utah Attorney General's Office were also in the courtroom, observing the case. Both agencies have antitrust investigations underway into the Salt Lake Tribune-Deseret News deal.

The Justice Department representative declined to comment to FOX 13 outside of court.

Missy Larsen, a spokeswoman for Utah Attorney General Sean Reyes, told FOX 13 on Monday that their antitrust investigation is ongoing.

Late Monday, the Deseret News Publishing Co. released a statement about the judge's ruling:

Deseret News statementSen. Jim Dabakis, D-Salt Lake City, also released a statement on the judge's ruling:

Dabakis statement