For two newspapers to form a joint operating agreement, something the Rocky Mountain News and The Denver Post did in 2001, is difficult.
Even more complicated can be trying to dissolve one.
“There is no real standard. It has varied from city to city,” said Stephen Lacy, a professor in the School of Journalism at Michigan State University and one of the country’s top experts on media competition.
E.W. Scripps’ announcement Thursday that it was looking to sell the News by mid-January casts a big cloud over the future of the Denver JOA.
Scripps and ap, publisher of The Post, won U.S. Department of Justice approval nearly eight years ago to share circulation and advertising revenues in Denver.
“What a JOA does is exempt the companies that own the newspapers from the anti-trust laws,” said Hugh J. Martin, an associate professor of journalism at the University of Georgia’s Grady College.
JOAs, regulated under the Newspaper Preservation Act of 1970, allow competitors to become collaborators while preserving two independent news voices.
The Denver JOA was supposed to last 50 years, with proceeds from a joint venture, the Denver Newspaper Agency, split evenly between the two publishers to cover newsroom expenses and then some.
Richard Boehne, president and chief executive of Scripps, said he was surprised that the JOA turned from profitability to losses so quickly.
Attempting to sell the News “was just unthinkable up to a couple of months ago,” he said. “We had never thought about anything except 50 years of success.”
A buyer of the News could step into the JOA, but Media News has the right of first refusal and can reject a buyer it considers unsuitable.
If MediaNews bought the News, an unlikely scenario, that would eliminate the rationale for the Denver JOA.
Another out in the contract is if the Denver Newspaper Agency loses money for three consecutive years.
Although Scripps cited an $11 million loss after covering News newsroom expenses this year as a key reason for trying to sell the paper, the JOA has passed on profits in recent years.
Also, the contract requires another three years after three years of losses, unless the two sides agree to a divorce sooner.
The JOA also could dissolve if either partner seriously breaches its contractual obligations. That could happen if Scripps stops publishing the News.
Should Scripps fail to find a buyer that MediaNews can live with, the two companies will most likely negotiate an exit strategy with The Post as the surviving newspaper, experts predict.
In past years that might have raised the ire of the Justice Department, but Lacy said the government will probably stay on the sidelines given the tough economic climate. “The reality is that the Rocky is losing money. You can’t force somebody to keep a paper open and lose money,” Lacy said.
Scripps has shown itself more than willing to shut down weaker papers in JOAs.
In 2007, Scripps shut down the Cincinnati Post, an afternoon paper with dwindling circulation, after Gannett, owner of The Cincinnati Enquirer, warned three years earlier it wouldn’t renew its JOA agreement.
In February, Scripps shut down the Albuquerque Tribune after failing to find a buyer for the struggling afternoon paper. The Tribune’s agreement with the Albuquerque Journal was the nation’s oldest JOA.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
