Las Vegas Sun

December 22, 2014

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MEDIA:

Federal judge sets hearing for Sun-Stephens Media dispute

Brian Greenspun

Brian Greenspun

A federal judge today granted Las Vegas Sun Editor and Publisher Brian Greenspun a temporary restraining order blocking an effort by Stephens Media, owner of the Las Vegas Review-Journal, to terminate a longstanding agreement in which the R-J prints and delivers the Sun.

A hearing has been set for Sept. 6, at which point attorneys for both Brian Greenspun and Stephens Media will present their arguments.

At the center of Greenspun’s suit is a joint operating agreement sanctioned by the Justice Department in 1989. The business agreement guaranteed Las Vegas would have two independent newspapers with differing editorial philosophies. Greenspun Media Group, which publishes the Sun, receives a share of the R-J’s advertising revenue under the JOA.

But in an agreement made on Aug. 7 with Stephens Media, Brian Greenspun’s three siblings voted to terminate the JOA in exchange for ownership of the URL lasvegas.com, which the Greenspun company currently leases from Stephens Media for $2.5 million a year. The negotiations between Stephens Media and Brian Greenspun’s three siblings began in June without Brian Greenspun’s knowledge, according to his lawsuit.

The severance of that agreement would unburden Stephens Media from printing and delivering the Sun, according to court papers filed in support of Brian Greenspun’s lawsuit. Brian Greenspun argues Stephens would gain a monopoly on the local media and that the termination of the JOA would violate antitrust laws.

The courts can overrule the plan to terminate the JOA, but U.S. District Judge James C. Mahan wrote in his court order today the process would not be that simple.

“Of course, the court would then be required to oversee the continuing business operations of these companies to ensure their continuing compliance with the court’s order,” Mahan wrote. “The court is not inclined to reverse their decision and order them that they must continue to publish the newspaper regardless of the board’s determination.”

Antitrust attorney Joseph Alioto, representing Brian Greenspun, said the judge seemed to be addressing the fact that the majority of the Greenspun siblings want to rid themselves of the Sun. That issue, Alioto said, is not being raised in the lawsuit. Rather, the suit targets the Review-Journal’s obligation to continue printing and distributing the Sun.

“It’s the Review-Journal that is trying to put the Sun on ice, and they’re the ones who are required to continue the JOA,” Alioto said. “We are seeking to prevent the Review-Journal from trying to put the Sun on the shelf.”

Alioto said he was “very, very gratified the court has determined that the matter is of such significance there has to be much more development of the facts at a hearing.

“It is very unusual for a court to grant a TRO… It means the court has found there’s substantial likelihood of success” that the Greenspun lawsuit will prevail.

In his order, Mahan remarked on the crumbling state of the traditional newspaper industry.

“The court takes judicial notice of the fact that newspapers around the country are ceasing publication, and the public seems to prefer the Internet as its source of information,” Mahan wrote. “Disparate cities that supported two or more newspapers (Seattle, Nashville, and Honolulu, for example) are effectively supporting only one. In many cases, the defunct newspaper is now reporting online.”

Alioto said the Federal Communications Commission has concluded that an online newspaper unsupported by a print publication is not sufficient competition.

If the courts find the agreement between the three Greenspun siblings and Stephens Media violated antitrust laws, as Brian Greenspun contends, the Justice Department or the Nevada attorney general could intervene and stop the effort, Mahan noted.

Greenspun has focused on the importance of having two newspapers of differing voices in a city like Las Vegas, a diverse market that demands more than one voice.

"The marketplace of ideas is as important to the United States as the marketplace of business," Leif Reid, one of Brian Greenspun's attorneys, told the Sun when the original complaint entered federal court Aug. 20. "This is an effort to suppress both by the Las Vegas Review-Journal. The Review-Journal is attempting to eliminate the Las Vegas Sun's alternative editorial voice — not just in print, but also on the Internet. Paying to eliminate a competitor is clearly monopolistic and illegal."

Under the current agreement, set to expire in 2040, and renew itself every 10 years, the Sun received $1.3 million in profits payments every year.

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