From Detroit: ‘Reorganized’ JOA Gives Lion’s Share Of Profits To Gannett

By: Mark Fitzgerald

Under its new ownership by William Dean Singleton’s MediaNews Group Inc., The Detroit News is taking a big pay cut.

Under the old arrangement between the Gannett Co.-owned Detroit News and the Knight Ridder-owned Detroit Free Press, the two companies split profits 50/50. But that joint operating agreement (JOA) has now been “reorganized” to give Gannett well more than 70% of the cut.

Gannett Co. spokesperson Tara Connell declined to specify the financial arrangement, but she said Gannett would be getting the “larger share of the pie.”

“We haven’t disclosed it, but it’s being widely reported, and we haven’t disputed it, that it is more than 70%,” she said. “It’s actually significantly more than that.”

Not so widely reported is the fact that the JOA — which launched in 1989 with an expiration date in 2089 — will now expire in 2025, although it can be automatically renewed.

The corporate structure of the JOA has also changed from a five-person board of directors in which Gannett named three of the directors to a partnership in which Gannett is the “general” partner and MediaNews the “limited” one.

Gannett does not believe that these changes require a review by the U.S. Department of Justice’s antitrust division. “It’s a reorganization, it is not a start from scratch,” Connell said. “It’s still a JOA, the JOA still exists.”

But at least one antitrust expert — and noted critic of JOAs — disagrees.

Stephen R. Barnett, a professor of law at the University of California, Berkeley, said in a telephone interview Thursday afternoon that another change in the JOA — eliminating joint production of the Saturday and Sunday editions — requires “a full-blown” review by antitrust authorities.

Beginning next year, both the News and the Free Press will publish separate papers on Saturday, while a single Sunday paper will be produced by the Free Press alone. Under the current JOA, editorial is combined in one paper each weekend day, with the Free Press in charge of the Saturday paper and the News in charge on Sundays.

“I think any such change affecting the number of newspapers published would require” review, Barnett said. “It’s not the change in the profit split or the change in ownership, but the change in publications that would make this effectively a new JOA that requires antitrust approval.”

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