By: E&P Staff
A federal judge new to the long-running litigation over The Salt Lake Tribune has ordered a September 2007 in which the McCarthey former owners can try to make their case that an independent appraiser fraudulently set too high a price on an also-disputed option to buy the paper from current owner MediaNews Group Inc.
U.S. District Court Judge Paul Cassell Thursday granted a request from the McCarthey family group, Salt Lake Tribune Publishing Co., to amend its lawsuit against the appraisal firm, Management Planning Inc. (MPI). The decision was first reported in the Tribune Friday by Paul Beebe and in the Deseret Morning News by Geoffrey Fattah.
Cassel’s ruling has the effect of breathing new life into the McCarthey family’s five-year campaign to win back control of the newspaper, which they lost when corporate restructurings done for tax purposes combined with events outside their control.
In 1997, the family swapped ownership of the paper for stock in TCI, also known as Telecommunications Inc., in a transaction that included an option allowing the McCarthey’s to buy back the paper in five years.
Two years later, however, AT&T took over TCI, and eventually put the newspaper up for sale. In 2001, William Dean Singleton’s Denver-based MediaNews bought the paper for $200 million.
The McCarthey’s exercised the purchase option, which included an appraisal mechanism if the two sides could not agree on a price.
An appraiser hired by MediaNews valued the paper at $380 million, while the firm hired by the McCarthey’s put it at $218 million. Under the appraisal system, the widely disparate prices triggered the hiring of a third and independent appraisal.
New Jersey-based MPI was hired jointly, and came up with a value of $325 million. Since that was closer to the MediaNews appraisal, the two estimates were averaged, and the option price was set at $355.5 million.
The McCarthey group sued MPI, alleging the appraisal was flawed, and have sought to have it thrown out. The federal judge originally assigned to the case ruled the appraisal would stand. That decision was overruled last May by the 10th Circuit Court of Appeals, which said the appraisal should be evaluated for its fairness and legality.
That first sitting judge has since recused herself from the case.
At Thursday’s hearing, a McCarthey group attorney said the MPI appraisal “stinks to high heaven,” the Deseret Morning News reported. He argued the paper should be valued at no more than $200 million, and probably less. The McCarthey group contend the paper has lost value under MediaNews ownership.