By: E&P Staff
E.W. Scripps accused its Denver joint operating agreement (JOA) partner, MediaNews Group Inc., of improperly borrowing from the JOA to cover the newsroom payroll at The Denver Post, the Rocky Mountain News reported Wednesday.
In a letter dated Dec. 9 — five days after Scripps put the Rocky up for sale and said it would shutter the newspaper if no buyer came forward — Scripps said Post owner MediaNews had violated the JOA agreement by borrowing $13 million from Denver Newspaper Agency, the entity that manages all business, production and distribution functions for the two dailies.
It also alleges that the JOA is no longer able to borrow from banks, and that Scripps believes the agency hasn’t the money to repay the borrowed payroll funds.
“We continue to reserve our rights to pursue remedies for the several breaches caused by these practices or to assert them in connection with any future legal proceedings,” Scripps CEO Rich Boehne and Senior Vice President Mark Contreras wrote in the letter sent to MediaNews CEO Dean Singleton and President Jody Lodovic.
The letter was reported by Rocky business writer David Milstead, who said it was sent anonymously to the paper. Neither Scripps nor MediaNews officials would confirm the letters authenticity, which Milstead reported he was able to do independently. A copy of the letter is posted on the Rocky Web site.
The Rocky quoted Lodovic as saying the allegations in the letter, which he declined to confirm he had received, were “factually inaccurate.”
The purported letter contends MediaNews has been borrowing against future distributions to its partner Scripps to fund newsroom operations. The letter concedes the practice allowed under the JOA, but contends MediaNews has abused it.
Scripps executives said the practice “was not intended to benefit one partner (i.e. The Post) at the expense of the other or to the potential detriment of the creditors of (the agency), if, as we believe the case to be, the partner is unable to repay these amounts promptly out of its current distribution.”