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By Kent Larsen
Tribune Co. Delt Setbacks in Sale Lawsuit
SALT LAKE CITY, UTAH -- The Salt Lake Tribune Publishing Company was
delt a couple of setbacks this week in its attempt to reverse the
newspaper's sale to Denver-based MediaNews Group. On Tuesday the
company's lawyers gave up their attempt to add the Deseret News to
the lawsuit, saying they had received assurances that the Deseret
News would follow any judgement made in the suit even though it isn't
a party to the lawsuit. Meanwhile, AT&T Corp., which sold the
newspaper to MediaNews, asked the court to withdraw an affidavit
supporting the Tribune company, saying that the affidavit was wrong.
The Salt Lake Tribune Publishing Company manages the newspaper under
contract with its owner, and claims to have an option to purchase the
newspaper that the recent sale will thwart.
In dropping the attempt to add the Deseret News to the case, the Salt
Lake Tribune Publishing Company gives up its attempt to get a ruling
against the News, which, the company says, colluded with MediaNews on
the sale. Since the sale was completed, MediaNews has given the
Deseret News, as part of the two paper's joint operating agreement, a
right to veto any sale of the Tribune, a move that could allow the
Deseret News to keep the Salt Lake Tribune Publishing Company from
exercising its option to purchase the newspaper. The company
maintains, however, that MediaNews Group doesn't have the legal right
to give the Deseret News approval over sales.
Meanwhile, former TCI president John C. Malone, who is a current
board member of AT&T Corp., claims that a January 10th affidavit he
signed for the Tribune company was drafted by someone else and that
he did not review it before he signed it. Malone, as president of
TCI, negotiated the original sale of the newspaper by the owners of
the Salt Lake Tribune Publishing Company to TCI, which subsequently
merged into AT&T.
Since Malone now says that the affidavit is wrong, and since AT&T
Corp. has challenged the affidavit, saying that the Tribune obtained
it "without prior notice to AT&T or its counsel" as required by legal
procedures, the affidavit is in question. To fill that hole, lawyers
for the Salt Lake Tribune Publishing Company introduced an affidavit
from former TCI Chief Financial Officer Donne F. Fisher, who also
worked on the original agreement to sell the newspaper to TCI. Fisher
claims in his affidavit that the sale agreements were "designed to
work in unison to allow the Kearns family uninterrupted management
and protection of all the assets related to the operation of the
Tribune." But his affidavid is weaker than Malones because he left
TCI in 1995, two years before the sale was completed. Fisher claims
to have worked as a consultant to TCI on the deal after he left.
These affidavits deal with one of the core issues that the court will
face in interpreting the situation: what was the intention of TCI
when it purchased the newspaper in 1997. But they also expose a
potential problem for the owners of the Salt Lake Tribune Publishing
Company. The original sale of the newspaper, made in an attempt to
transfer the newspaper's cable assets to TCI, was carefully
constructed as a tax-free stock swap. But the swap remains tax free
only if the purchaser (TCI) gets effective control over the
newspaper. Now, however, the Salt Lake Tribune Publishing Company is
arguing that the deal was meant to keep it in control of the
newspaper. If it pushes that point too far, the company could face a
significant tax bill.
Source:
Tribune drops efforts to add News to suit
Deseret News 8Feb01 B4
Witness in Trib lawsuit recants
Deseret News 8Feb01 B4
By Maria Titze: Deseret News staff writer
Ex-TCI executive admits he didn't write statement
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