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.

 

 

 

 

 

 

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.

 

When men in suits walk the halls of a newspaper

There have been a couple of sightings recently of men in suits being squired around the facilities of the Las Vegas newspaper by a high-ranking executive of said paper’s owner, Stephens Media.

The suits are said to be occupied by representatives of BH Media, one of the Berkshire Hathaway companies owned by billionaire Warren Buffett, one of the new people in the mood and with the wherewithal to buy newspapers these days.

This same high-ranking exec is said to be escorting the suits to two other Stephens Media newspapers this week, or so I hear.

From BH Media jobs webpage

 

Speculating on how the Sun will go down

Stephens Media, owners of the Las Vegas Review-Journal, bungled its last attempt to shut down the joint operating agreement (JOA) under which the Las Vegas Sun is published as separate advertising-free daily section that is hemorrhaging cash.

When the company tried to negotiate a deal with the Greenspun family members who owned the Sun, Brian Greenspun simply bought out his siblings and kept the JOA going, publishing an embarrassing section that is almost entirely syndicated material with a little local sports and entertainment copy.

Warren Buffett

The JOA expires in 2040.

But what if there was no R-J to publish the Sun?

Stephens Media couldn’t just close shop and will have a hard time selling the paper with the Sun albatross around its neck. But what if some media company, say Berkshire Hathaway Media, were to buy the press and the building and the equipment and the circulation list and shut down the R-J and start a new newspaper? Would there be a JOA?

Stephens Media parent Stephens Inc. acted as financial advisor to Van Tuyl Group in October when Berkshire Hathaway bought out the car dealership chain, so the executives doubtlessly are acquainted.

BH Media has been buying lately. There have been rumors about BH Media executives showing up on Stephens Media properties.

On observer noted that owner Warren Buffett, who purchased Nevada’s electricity company, may have a strategy:  “In retrospect, his targeting just the smaller papers is a big clue about his forecast for the industry. Unlike regionals or big-city papers, small-town newspapers don’t have a lot of competition or good substitutes.”

Las Vegas is a fairly small market — and getting smaller in circulation — without a lot of competition.

 

 

 

Owners of Las Vegas newspaper are buying more papers

Interim publisher James W. Hopson announces to Worcester Telegram & Gazette employees in the newsroom that Halifax Media Group has purchased the paper. (T&G staff photo)

Members of the Stephens family, who own Stephens Media which owns the Las Vegas Review-Journal which has seen drastic personnel cuts in recent years, are buying more newspapers through another company, Halifax Media Group of Florida.

The group this week purchased the Worcester (Mass.) Telegram & Gazette.

According to the 148-year-old Worcester newspaper account:

“Halifax is backed by Stephens Capital Partners, whose CEO is Arkansas billionaire Warren Stephens; JAARSSS Media; and Redding Investments, which is controlled by Mr. (Michael) Redding and which bought the Daytona Beach News-Journal in 2010 for $20 million.

“Halifax’s principal owner, the Stephens family, also owns Stephens Media, which publishes 11 daily newspapers, including the Las Vegas Review-Journal, and 64 weeklies.”

The paper estimates the deal was for between $7 million and $15 million. The New York Times purchased it in 2000 for $296 million. This past year, both the T&G and the Boston Globe, once valued at more than $1 billion, were sold to the owner of the Boston Red Sox for $70 million.

In 2011 Halifax bought a group of 16 New York Times regional papers. In 2012 it bought 19 newspapers from Freedom Communications. It owns 35 papers, mostly in the Southeast.

The employees of the Worcester paper are anxiously awaiting the close of the sale on May 30, when they will find out who still has a job.

May 30 is also the latest of many deadlines for determining the fate of the Las Vegas Sun, which under a joint operating agreement is inserted in the R-J, according to court filings since the previous May 12 deadline.

The R-J has been considerably beefier of late with more run-of-press ads and inserts. Who knows what rates are being charged. Apparently that dual date folio on the Saturday paper — showing the dates of both Saturday and Sunday — is some sort of ploy to put Sunday inserts into the paper a day earlier and increase the apparent circulation.

Yet another delay in talks between Las Vegas newspaper companies

It just seems like the negotiations are taking longer than the Paris peace talks to end the war in Vietnam, perhaps they are still arguing over the shape of the table.

Attorneys for Stephens Media, owners of the Las Vegas Review-Journal, and Greenspun Media, owners of the Las Vegas Sun, which is printed as an ad-free section inside the daily R-J, this week asked for yet another delay in a procedural matter involving Sun publisher Brian Greenspun’s futile federal lawsuit attempting to block the dissolution of the joint operating agreement (JOA) between the two papers.

At the end of February, the attorneys said a motion by Leif Reid, one of Harry’s sons, to withdraw as Greenspun’s attorney in the case would be moot in 30 days because a negotiated settlement would be reached by then. In mid-March the parties said the settlement would be reached in 14 days.

Brian Greenspun makes a futile gesture. (File photo by former R-J photog Jerry Henkel)

Now, they say it’ll all be over by April 25. The most obvious and logical conclusion would be that the parties are about to sign a deal to end the printing of the Sun. Of course, logic and the Sun seldom appear in the same sentence and there could be some other explanation.

The “talks” have been going on since August, when Greenspun filed his federal case after Stephens Media offered to terminate the JOA as of Sept. 1, 2013, in exchange for the sum of $10. Each of the Greenspun siblings — Brian and his sisters Susan Greenspun Fine and Janie Greenspun Gale, and brother Danny Greenspun — would get $70,000.

The Greenspuns would also get ownership of lasvegas.com, which they currently rent from Stephens Media. They paid $12 million to acquire the rights to the URL and, as of this past August, paid monthly fees of between $83,000 and $208,000.

At a board of directors meeting in August all of the siblings except Brian Greenspun agreed to end the JOA.

Brian Greenspun’s suit is against Stephens Media and others but does not name his sisters and brother. It seeks, on antitrust grounds, to stop the deal from going through, arguing that under the deal defendants “will be able to put the Las Vegas Sun out of business and create a monopoly in the Las Vegas newspaper market. Closure of the Las Vegas Sun will result in irreparable harm that cannot be remedied with monetary damages.” Who would be harmed was not clearly stated.

Since then, the Stephens Media management has been toppled and replaced, possibly throwing a monkey wrench in the deal.

Talk about a slow motion train wreck. This is from this week’s court filing:

“Counsel for Plaintiffs, Lewis Roca, filed their Renewed Motion to Withdraw as Counsel (‘Motion’) on January 30, 2014.

“The parties have twice previously agreed to extend the time for Plaintiffs to file and serve their response to the Motion and it is currently due to be filed on or before April 1, 2014.

“The parties are in the process of finalizing an agreement which will moot the instant Renewed Motion to Withdraw as Counsel. Although the parties previously expected an agreement to be finalized by April 1, 2014, for the reasons explained in the Sealed Affidavit of E. Leif Reid filed in support of — and contemporaneously with — this stipulation, a short period of additional time is needed before the instant Motion becomes moot. …

“In order to avoid requiring the Court to devote time and attention to a motion which will be mooted, the parties agree that Plaintiffs’ response to the Motion shall be filed and served by on or before April 25, 2014. The additional time sought for the briefing of the response is not for the purpose of delay.”

Meanwhile, the Sun continues to limp along with days- or weeks-old local “news” content and local sports and entertainment features and photo pages.

Oh, the drama! Oh, the suspense! Oh, what the hell. Hit the snooze button and wake me when it’s over.

Is there a backup for after the Sun’s demise?

I’d heard rumors that someone at the Las Vegas Sun was working on a Sunday only newspaper or magazine that supposedly would enter the market when the joint operating agreement with the Review-Journal and its parent company, Stephens Media, is eventually dissolved.

The original proffer from ousted Stephens CEO Mike Ferguson included a non-compete clause, but that reportedly has been dropped.

Andrew Kiraly at Desert Companion apparently has laid hands on a prototype of something called The Sunday that has been shopped about to potential advertisers.

Sun editor and publisher Brian Greenspun has been battling with his brother and sisters, majority stockholders of the Sun, over a deal struck with Stephens Media to end the JOA and stop publishing the Sun in exchange for $10, the transfer to the URL lasvegas.com and $70,000 for each of the Greenspun siblings.

Brian Greenspun even filed suit in federal court. The deal was supposed to take effect Dec. 31, but the Sun continues to be published, though its content is largely syndicated features.

Kiraly notes that Greenspun has vowed to continue to fight to keep the Sun operational, but he writes:

“But perhaps there’s a backup plan in the works? Pictured below is a prototype that’s been floating around media-buying circles for a product called The Sunday. Inside is a magazine-style mix of Sun news, politics, gaming, design-forward features and even Brian’s ‘Where I Stand’ column — hm, almost as though this were positioning itself as a replacement for the Sun. The Greenspuns’ business publication, VEGAS INC, also gets it own branded hunk of editorial real state.”

Kiraly asked both Brian Greenspun and the Sun’s managing editor about this via email. Greenspun declined to talk, saying he wasn’t quite ready, while the ME replied, “It’s going to be a very exciting project.” Confirmed.

As for the court case, nothing has been filed since Magistrate Judge Peggy Leen put out a schedule of deadlines for the case on Dec. 6.

There was supposed to be a meeting of the parties on Dec. 19, but there is no indication whether it took place. I saw Brian Greenspun getting on the elevator at his office building in Henderson that afternoon but did not get a chance ask him about that.

The last date to amend pleadings or add parties was Dec. 30 — nothing.

The last date to file interim status reports is Jan. 29.

Other deadlines extend into May, though I suspect, due to the lack of court filings and the abysmal effort over at the Sun, it is all over but the layoffs.

The new management at the R-J apparently is not in a big hurry to stanch the cash hemorrhage that is the Sun.

Newspaper exec talks to WSJ but not his own paper

The CEO of Stephens Media wouldn’t give his own newspaper a quote about attempts to dissolve the JOA, but he gives one to The Wall Street Journal. Riding for the brand? Not.

“To say that we are attempting to monopolize anything is utterly ridiculous considering the plethora of news and advertising sources available to Las Vegas residents and the realities of the modern media marketplace,” WSJ this afternoon quotes Mike Ferguson, CEO of Stephens Media. “We will vigorously contest the unfounded allegations in this action, and are confident that the courts will agree. We intend to seek reimbursement of our attorneys’ fees for this meritless action.”

And just what is the real circulation figure now? Do they still have that reader board in the lunchroom ticking down the numbers?

WSJ says the Sun board of directors voted for noncompete clause, but I think they may be assuming something.

WSJ quotes Leif Reid as saying, “The Supreme Court said in the Associated Press case that freedom to publish is guaranteed by the Constitution, but that freedom to combine to keep others from publishing is not. We believe that the Review Journal’s effort to eliminate its competition through this illegal and anticompetitive transaction will be stopped by the courts.”

 

 

Agreement would end the Las Vegas Sun in print and online

Perhaps the most interesting thing buried in that lawsuit filed by putative Las Vegas Sun editor Brian Greenspun in a vain attempt to halt the dissolution of the joint operating agreement with the owners’ of the Las Vegas Review-Journal that has kept the failing Sun limping along since 1989 is that non-compete clause, which would prevent Greenspun and his siblings from engaging in the local news business in print or online for five years.

The stories in the R-J and Sun on this matter are starkly different and even contradictory.

Brain Greenspun makes a futile gesture. (Jerry Henkel/Review-Journal File Photo)

According to the suit filed in federal district court seeking a restraining order, Stephens Media, owner of the R-J, offered to terminate the JOA as of Sept. 1 in exchange for the sum of $10. Each of the Greenspun siblings — Brian and his sisters Susan Greenspun Fine and Janie Greenspun Gale, and brother Danny Greenspun — would get $70,000. Additionally, each would get $25,000 for agreeing to not compete in print or online for five years in the “local news business.”

The family would also get ownership of lasvegas.com, which they currently rent from Stephens Media. They paid $12 million to acquire the rights to the URL and pay monthly fees of between $83,000 and $208,000. The Greenspuns would transfer rights to the lasvegassun.com URL to Stephens.

At a board of directors meeting two weeks ago all of the siblings except Brian Greenspun agreed to end the JOA. (Apparently, the non-compete clause was not put to a vote at the time, according to tweets by R-J reporter Howard Stutz, but the lawsuit mentions the non-compete pact a couple of times and includes a “confidential” email outlining the offer.)

Brian Greenspun’s suit is against Stephens Media and others but does not name his sisters and brother. It seeks, on antitrust grounds, to stop the deal from going through, arguing that under the deal defendants “will be able to put the Las Vegas Sun out of business and create a monopoly in the Las Vegas newspaper market. Closure of the Las Vegas Sun will result in irreparable harm that cannot be remedied with monetary damages.” Who would be harmed is not clearly stated.

Oddly, or perhaps not, the suit seems to be a bit self-contradictory about whether the lack of the Sun would leave the R-J in a monopoly position:

“In fact, given consumers’ increased reliance on technology in their everyday lives, the traditional printed newspaper has struggled in recent years and sales have dropped throughout the printed newspaper industry. Newspaper websites will be the likely successor to the traditional printed newspaper. Accordingly, print newspapers, including the Las Vegas Sun, have been focusing substantial time and effort on their websites and have become increasingly more reliant on their websites for dissemination of opinions and news.”

In fact, practically every local story in the Sun carries a disclaimer stating when it first appeared online — a mockery of the print version and the R-J, perhaps?

The lawsuit points out that a move to halt the termination of a JOA in Honolulu was enjoined by the courts. The suit doesn’t mention that the court case was made moot when one of the papers was sold and the JOA was dissolved anyway. In 2010 the two newspapers merged.

There have been nearly two dozen newspaper JOAs that have been dissolved since the Newspaper Preservation Act of 1970 basically waived antitrust law for newspapers.

One example, with which I am personally familiar, is the closing of the Miami News in 1989. The owners of the News were given a percent of the profit of the Miami Herald through 2021 in exchange for closing down. Of course, a percentage of zero is still zero. The same is probably true for the Las Vegas newspaper JOA, which was renegotiated in 2005. The Justice Department investigated the Miami deal for potential antitrust violations, but let it go through.

In 1999, an American Journalism Review article detailed the demise of a dozen or so newspaper JOAs in the previous decade and predicted more to come.

Greenspun’s suit claims “the closure of the Sun will likely result in an increase in the purchase price of the LVRJ and will put 200 Nevadans (Sun employees) out of work, further harming the public interest.” Shedding advertising-free newsprint page that contain days old local news and mostly syndicated features and columns would hardly increase the price of the R-J to subscribers, but it might make it more profitable and thus more valuable to a potential buyer.

When Harry Reid said to now R-J publisher Bob Brown, “I hope you go out of business,” I don’t think this was what he intended. At least his son Leif is getting some money out of this. He filed the suit for Greenspun. What a cozy group.

Brain Greenspun may succeed in slowing the process, but his chances of keeping the Sun alive are nil.

The suit: Greenspun v. Stephens