By: E&P Staff
Under the restructured joint operating agreement (JOA) in Detroit, Gannett Co. now controls a 95% stake in the partnership with MediaNews Groups, according to a filing with the U.S. Securities and Exchange Commission (SEC).
In its annual report filed Monday, MediaNews reveals for the first time that its share of the new limited partnership is just 5%, and that it will not be sharing in profits of the jointly produced Detroit Free Press and Detroit News until 2009 at the earliest. Instead, it will receive fixed monthly payments, MediaNews said.
The MediaNews share is far less than the 30% cut that most industry observers guessed the Denver-based company would receive.
Under the JOA agreement between Gannett and Knight Ridder Inc., profits or losses were shared 50-50.
MediaNews also revealed that it paid the relatively bargain-basement price of $25 million to acquire the market-lagging Detroit News as part of an unusual three-way deal between William Dean Singleton’s MediaNews, Gannett, and Knight Ridder.
Gannett bought the Free Press from Knight Ridder and sold the News to MediaNews in the deal, which also included swaps of papers in Florida and the Northwest between Gannett and Knight Ridder.
Under the renamed Detroit Newspaper Partnership LP arrangement, MediaNews said in its filing, “we will receive a fixed monthly preferred distribution with possible incremental distributions beginning in 2009 based on profit growth.” MediaNews said it would be reimbursed for news and editorial costs.
The News will receive $5 million for the years ending July 31, 2006 and 2007, according to the SEC filing. That will decline to $4 million for years ending July 31, 2008 and 2009; $3.0 million for years ending July 31, 2010 and 2011; $2.0 million for the year ending July 31, 2012; and $1.9 million for all remaining years. The renegotiated JOA expires in 2025, although it can be extended.