Utah Update
Singleton
Wins? Not So Fast
BY
ARIEL HART
On
February 24, as CJR was on press with a story about the future
of the Salt Lake Tribune (see "News in Mormon Country,"
CJR, March-April; click here),
the federal appeals court considering the ownership of the newspaper
issued a key ruling. Both of Utah's major dailies subsequently
ran stories that appeared to hand victory to Dean Singleton. But
in truth, the ruling was far more ambiguous, just the most recent
volley in a match of legal wits that is destined to continue in
court for months, if not years. Both sides legitimately found
a way to declare victory.
The door to the conflict opened in 1997. In a maneuver to avoid
inheritance taxes, taxes that might have forced the McCarthey
family to sell the newspaper it had owned for a century, Tribune
executives engineered what they thought was a temporary sale of
the paper. They sold it to cable giant TCI, which subsequently
merged with AT&T. The move backfired as the Church of Jesus
Christ of Latter-Day Saints, which owns the competing Deseret
News, used its political and legal muscle to prevent the resale
of the Tribune back to the McCartheys, whom they viewed as hostile
to the church. Instead, AT&T sold the paper to Dean Singleton's
MediaNews Group in 2001.
The sharpest arrow in the church's quiver was a veto clause in
the Joint Operating Agreement between the News and The Tribune,
saying either paper can prevent the other from selling its stock
in their joint production company, NAC. In its February decision
the 10th Circuit upheld this veto power. As a result, the local
papers reported that Singleton appeared to have tightened his
grip on the paper he took over just last summer. COURT AFFIRMS
RIGHT TO VETO TRIB SALE, declared the Deseret News, the Tribune's
rival. VETO OF TRIBUNE BUYBACK UPHELD, announced the Tribune,
Singleton's own paper, edited by Jay Shelledy, a man who is expected
to lose his job if Singleton is forced to sell the paper.
While both stories covered all angles of the ruling, the authors
chose to play down a possibly earth shattering victory hidden
in the ruling for Singleton's foe, the McCarthey family, which
is battling to regain control of the paper. Much of the decision
does indeed look bad for the family. The McCartheys lost not only
on the veto question, but also on the other matters directly before
the court -- the family’s request to manage the paper while
the litigation wore on, and a protest of the earlier court's jurisdiction.
But deep in the decision, the court went out of its way to make
a rather startling point. That point? They thought the McCartheys
could very well win at trial.
Back in district court, Judge Ted Stewart had decided that the
News's veto power over the sale of the Tribune's NAC stock made
it impossible for the McCarthey family to exercise its right --
a right he acknowledged in theory -- to buy back The Tribune.
There was no "road map," he said, to legally overcome
that hurdle. But the higher court disagreed.
"Virtually every asset of the Tribune necessary for producing
the newspaper"could be retrieved by the family without touching
the NAC stock, Judge David Ebel wrote in the decision. "Indeed,
even the legal title to the assets that are managed by the NAC,
such as the printing presses, could pass to [the family] without
violating" the Joint Operating Agreement. Voila, a possible
road map. Providing, Judge Ebel added, that it withstood the test
of a trial.
There's the rub, says Singleton. The appellate judges "don't
understand how the JOA works and they didn't have that record
in front of them," he says. "If you and your husband
were getting a divorce and you have one child, you can't take
a hacksaw and you take the upper torso he takes the lower torso.
You can't separate the assets of tenants in common."
"Dean must be confusing our case with one of his other lawsuits,"
replies Randy Frisch, chief operating officer of the McCartheys'
company. "Dean lost, we won, and that's very difficult for
someone like Dean Singleton to accept."
However you look at it, the battle over the Tribune is far from
over. The circuit judges' ruling left things as they are for the
moment, so the case awaits more motions in Judge Stewart's courtroom
and may end up in trial there in November. Even if the McCartheys
do get to buy the paper back, Singleton is betting they can't
afford it. The family is indeed apparently worried enough about
that to be suing an appraiser in New Jersey who they say set the
paper's price about $100 million too high. The McCartheys are
also suing in Colorado state court to undo the Tribune's 1997
merger with TCI. Singleton, for his part, is suing the McCartheys
in federal court, saying they have no right as individuals to
the paper. No wonder that all the lawyers think they won.
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Ariel
Hart is a reporter and researcher who lives in Atlanta.
