The board of directors of the Daytona Beach News-Journal was found in contempt of court for paying about $1.4 million in dividends to its parent company and several local arts organizations, after a judge had previously ordered that the paper not spend more than half a million dollars without permission.
The court order was meant to ensure the News-Journal would have enough money to pay Cox Enterprises $129 million to buy out its 47.5 percent share. It prohibited the paper from spending more than $500,000 on any venture without permission from Cox or the court.
But by paying dividends to its parent company and several cultural entities, U.S. District Judge John Antoon II said Friday that The Daytona Beach News-Journal defied his court order. The court found the News-Journal later paid $693,000 to its parent company, PMV, and gave another $700,000 to the Seaside Music Theater, Central Florida Cultural Endeavors and Lively Arts Center.
The News-Journal’s top executive said in a statement she was worried about the future of the local arts.
“This is not good business for the company or the communities we serve,” President, CEO and Publisher Georgia Kaney said in a statement published Saturday in the Daytona Beach News-Journal.
The paper’s lawyer, Jon Kaney, said the ruling was disappointing.
“It’s odd that a judge would have actually said that the owner of a corporation cannot have a dividend,” Jon Kaney told the Orlando Sentinel.
The rift between Cox and the News-Journal stems from the paper’s decision to spend $13 million for the naming rights of a Daytona Beach performing-arts center. Antoon sided with Cox, which claimed the newspaper wasted money by supporting money on the arts and tried to hide the practice from Cox.
John DeVault III, Cox’s lawyer, said he doubted the News-Journal’s claim that it misunderstood the order.
“I thought the judge’s prior orders were very clear,” he said. “I don’t think there could be any dispute about that.”
He said he plans to ask the court to fine the newspaper company more than $1.5 million for violating the order.