Solomon Rules in Salt Lake City

By: Mark Fitzgerald A federal appeals court last week either delivered a knockout blow to the former owner's hopes of getting back The Salt Lake Tribune -- or handed it the legal keys to regaining control of Utah's largest newspaper.

The three-judge panel of the 10th U.S. Circuit Court of Appeals unanimously ruled that the joint operating agreement gives The Deseret News the right to veto the sale of the Tribune, even though the former owner, the McCarthey family's Salt Lake Tribune Publishing Co. (SLTPC), has a valid option to buy back the paper.

At the same time, two of the judges suggested in the decision that there are at least four hypothetical ways a lower court judge could order the Tribune's owner, William Dean Singleton's MediaNews Group Inc., to transfer the paper to SLTPC - despite the News' right to block the sale of the Tribune's stock in the Newspaper Agency Corp. (NAC), which handles business and production operations for the two dailies.

SLTPC Chief Operating Officer Randy Frisch said that the decision "means [Singleton] is going to have to sell it to us. The best sign of that was that he immediately began to say we can't raise the money."

For SLTPC, this is the key passage in the ruling: "Virtually every asset of the Tribune necessary for producing the newspaper could be transferred to [SLTPC] without violating Section 2 [stock-transfer veto provision] of the JOA." Frisch's interpretation: "The 10th Circuit really knocked down Dean's ability to hide behind The Deseret News veto."

But Singleton has his own favorite quotation from the same judges: "At this point, none of these potential remedies has been tested in the crucible of an adversarial hearing with evidence or full legal argument. Accordingly, we do not endorse or pre-approve any of them." He maintained the NAC agreement explicitly prohibits transfer of the jointly owned assets without the transfer of the underlying NAC stock: "The hypotheticals cannot happen legally. You can't transfer half a building. ... The decision was a big victory for us."

"That's just nonsensical," Frisch responded. "The 10th Circuit said The Deseret News and the JOA are 'no obstacle' to Dean's being forced to sell."