GMG seeks court ruling on Joint Operating Agreement; millions at stake

By Las Vegas Sun Staff (contact)

Tuesday, March 10, 2015 | 8 p.m.

In a court filing today, the Greenspun Media Group contends that Stephens Media and the Las Vegas Review-Journal have systematically miscalculated their partnership share to disadvantage the Las Vegas Sun and artificially inflate payments made to Stephens.

In the lawsuit, filed in Clark County District Court, GMG seeks a ruling on language in a revised Joint Operating Agreement between the two newspapers in 2005. Part of that agreement held that both organizations would independently pay for their newsrooms. Prior to 2005, the newsroom expenses of both newspapers were charged to the joint entity based on a formula included in the original agreement.

“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,” said Brian Greenspun, owner of GMG. “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."

Stephens’ action had several effects, Greenspun said. By charging the Review-Journal’s newsroom expenses to the joint operation, it meant that GMG effectively paid a portion of its competitor’s newsroom costs. Meanwhile, because the Review-Journal’s newsroom was paid for entirely out of the joint operation, this reduced profit payments to GMG and starved the Sun’s newsroom.

“The contract clearly spelled out how the newsroom costs were to be handled, and Stephens simply ignored those clauses,” Greenspun said.

GMG’s attorney, Leif Reid, said the suit filed today requests that the court issue a declaratory judgment on the meaning of the contract’s language about how newsroom costs should be handled.

Greenspun said the amount of the underpayments plus interest could be more than $6 million.

The original version of the JOA was sanctioned by the Justice Department in 1989 to ensure that Las Vegas would have two independent newspapers with different editorial points of view.

In February, it was announced that Stephens would be sold to New Media Investment Group of New York for $102.5 million in cash. The deal, which included eight daily newspapers and 65 weekly publications in seven states, was expected to be finalized by the end of this month.

Greenspun said the agreement to purchase the company would have no effect on the Las Vegas Sun or GMG, which publishes a suite of print and digital titles that includes The Sunday, Las Vegas Weekly and Las Vegas Magazine.

Stephens attorney Mark Hinueber could not be reached for comment this evening.