Sun newspaper owner makes last gasp effort to snatch cash from soon-to-be former partner

Brian Greenspun is one litigious son of a Hank.

First, he filed an anti-trust lawsuit in federal court when Stephens Media, then owner of the Las Vegas Review-Journal, persuaded his siblings to take a buyout and close down the Las Vegas Sun as an insert inside the morning paper. When that did not appear to be working, he bought out his siblings and acquired the Sun, allowing the joint operating agreement (JOA) to continue intact. That agreement with Greenspun Media Group (GMG) expires in 2040.

Now, Greenspun says he is suing in state district court because Stephens Media has been systematically underpaying him since the JOA was renegotiated in 2005. Until then, under the JOA the Sun received a percentage of whatever the R-J newsroom budget was. We called it the Sun tax, because for every dollar spent in the R-J newsroom the company had to shell out so much to the Sun for its newsroom to spend however its owners saw fit — hire reporters, buy equipment or, since Greenspun was the putative editor, pocket it.

Brian Greenspun (Sun photo)

After 2005, the Sun was contracted to receive a percentage of the profits of the R-J and both organizations would pay for their newsrooms.

“One of the important goals of the 2005 revised agreement was to ensure both the Sun and the Review-Journal independently paid for their newsrooms,” Brian Greenspun, owner of GMG, is quoted as saying in today’s Sun. “However, we have learned that contrary to the specific terms of the contract, the Review-Journal continued to pay for its newsroom from joint funds, while we paid for the Sun newsroom on our own as required by the contract.”

It is not a joint ownership agreement. It is a joint operating agreement.

Under Greenspun’s “reasoning” the R-J’s paying for its own newsroom reduced Stephens Media’s profits and reduced the amount of money he received. He estimates underpayments plus interest could top $6 million.

“The contract clearly spelled out how the newsroom costs were to be handled, and Stephens simply ignored those clauses,” Greenspun is quoted as saying. I haven’t read the contract, but why did it take 10 years for this to come up? Perhaps, because profits have slipped so far? There is scant evidence that Greenspun is expending much money for his “newsroom,” and what he does spend surely cuts his profits, if any.

I suspect Greenspun is engaging in mere creative interpretation of the contract and grasping for a sympathetic judge.

Greenspun is probably suing now because Stephens Media just sold the entire company to New Media Investment Group, who should be sure and lawyer up because they inherited the JOA and now must contend with the litigious Greenspun.

Greenspun’s attorney is still Leif Reid, one of Harry Reid’s sons, even though at one time during the federal litigation Leif Reid sought to withdraw from the case, apparently due to a conflict of interest many reasoned.

A federal judge just this past week refused to award court costs and $200,000 in attorney fees to Stephens Media due to the Greenspun anti-trust federal suit.

The Sun story said Stephens Media attorney Mark Hinueber could not be reached for comment. It will be interesting to see how this plays out since basically there will be no Stephens Media when the sale is consummated. The outcome will certainly affect New Media’s bottom line, too, since it must abide by the same contract, depending on how a judge rules, if it gets that far.

 

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16 comments on “Sun newspaper owner makes last gasp effort to snatch cash from soon-to-be former partner

  1. PaddyMcVegas says:

    But is the allegation that the RJ was paying for its newsroom with joint funds true or not? At least, was it true when you were there? And was/is Stephens’ shortchanging of the RJ newsroom done mainly to avoid paying “the Sun tax”? (And yes, IMHO there is no question that Stephens shortchanged the RJ newsroom.)

  2. Depends on the precise language of the contract. I doubt Stephens ever would have agreed to what he claims.

  3. PaddyMcVegas says:

    😉 That’s a lawyer “answer” that makes me think the real answer to my first question is yes.

  4. PaddyMcVegas says:

    But you are right: What constitutes “joint funds”?

  5. The Sun tax sunset with the renegotiation of the JOA, but it did affect newsroom spending decisions and where certain functions were placed in the organizational chart.

  6. Here is a story explaining how and why New Media Investment Group is going into debt to acquire newspapers all across the country.

    https://www.bostonglobe.com/business/2015/03/10/meet-newspaper-industry-biggest-deal-maker/vV6D7uqAo7ssLPaIPk58oL/story.html

    Keywords: Homogenization and centralization.

  7. Steve says:

    Interesting facts:
    The Herald was (and is) Boston’s conservative paper. It was a significant part of the history behind Gate House back when Rupert Murdoch owned it. He had to sell it off when he bought some TV stations in the same market, this lead to the Gate House ownership. Today the Herald is under private ownership and there are rumors Rupert Murdoch may buy it again.

    The Boston Globe was and is the largest paper in New England, I do not remember it being especially liberal, even when they printed one of my articles against the so called “Minute of Silence” in the morning at school, meant to enforce religious reflection among the students.
    (I have the pdf.) Bob Drinan helped me write it.
    It was also independent until the New York Times bought it. During that “partnership” it was widely claimed in MA that the Globe was supporting the Times. Today the Globe is, once again, an independent. Owned by the owner of the Red Sox. The Globe has significantly improved since being sold off from the NYT and going back to local ownership.
    Both papers serve the area well as far as I know.
    I think this is what is really needed in for the RJ. Local ownership.
    I vote BBM.

  8. I doubt BBM can afford it, yet.

  9. Steve says:

    I like the key word.

  10. Bruce Feher says:

    The SUN is a newspaper?

  11. Not any more. I should have written ‘Sun insert.’

  12. According to a source, today most of the people who take calls for circulation for the R-J and Sun were laid off or given notice of layoffs. Those calls are to be handled by a call center in Arizona, I’m told, even though the sale has not yet been completed.

  13. Steve says:

    Damn…this is reminding of those last 6 years at Kodak.

    Shrinkage sucks. Do they have any separation packages? I hope those people find something fast.

  14. R-J had small separation packages several years ago. Not sure about now.

    Also the R-J has no story today its being sued by Greenspun. Not news?

  15. PaddyMcVegas says:

    “Nothing to see here folks. No news here. Move along, move along.”

  16. […] local content currently is negligible and mostly limited to sports and entertainment. Greenspun has sued Stephens Media for $6 million, claiming underpayment under the […]

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