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.

 

sun sues

 

 

 

 

 

Mark your calendars, R-J staffers, and remember: What’s past is prologue

In the financial world they say that past performance is no indicator of future results, but in the newspaper business these days what’s past is prologue.

A couple of weeks ago New Media Investments purchased all of Stephens Media’s newspapers, including the Las Vegas Review-Journal. New Media, which rose from the ashes of the bankruptcy of GateHouse Media, previously purchased all of Halifax Media from Stephens Capital Partners, different company but same owners largely.

This week News & Tech and blogger Jim Romensko are reporting that New Media is laying off workers at the formerly Halifax papers.

One of the papers, the Star-News in Wilmington, N.C., reported:

“The StarNews laid off an unknown number of employees Tuesday as part of workforce reductions that took place across the group of former Halifax Media newspapers. Details have not been made public.

“The StarNews is one of 36 newspapers under the Halifax Media banner. Halifax recently was purchased by GateHouse Media’s parent, New Media Investment Group, for $280 million.”

They must have laid off the copyeditor who would have changed “unknown” to “unstated.”

Romenesko posted copies of a number of emails he received reporting layoffs at several newspapers owned by New Media. The layoffs hit across the board in the newsrooms — photogs, copyeditors, cop reporters, sports reporters, bureaus, assistant city editors, assistant managing editors, features editors, layout artists, as well as staff in IT, advertising and marketing. One paper reportedly laid off “the editorial writer.”

Stephens sold the Halifax papers in November, the layoffs come in March, so mark your calendars, R-J staffers, for four months hence. What’s past is prologue.

Front of R-J office building on Bonanza.

 

The Sun charade goes, painfully and pitifully, on

The Sun insert in the Las Vegas newspaper today carried a front page story telling readers, what few there are, that the joint operating agreement (JOA) is still in effect under the new ownership of the Review-Journal.

The R-J story on the sale said as much. Neither story noted the JOA does not expire until 2040.

The Sun story did explain, “Under the joint operating agreement, the Sun is printed and distributed by the Las Vegas Review-Journal and receives a portion of the R-J’s advertising revenue.” Actually, the Sun gets a portion of the paper’s profit.

The question is: With so little effort being put into the content of the Sun section, why would anyone, including Brian Greenspun, bother with continuing this charade.

Perhaps New Media Investment Group will make Greenspun a better offer to end the JOA. Or with a little created bookkeeping, they might figure out a way to make sure there is no profit to share.

Brian Greespun took control of the Sun from his siblings this past year. The siblings had negotiated to end the joint operating agreement with the Review-Journal.