Congratulations to the Rocky Mountain News for being the first of the two dailies to publish anything on specific actions that the Justice Department might take if the Rocky were sold.

The Rocky asserted as fact that Justice would review any sale of the Rocky, and it offered two views on whether Justice might force MediaNews to accept a new partner in the JOA.

Here’s what today’s Rocky story had to say: 

“The Justice Department, which approved the 2001 JOA between The Post and News, would have to review any sale transaction. Tracy Simmons, administrative officer of the Denver Newspaper Guild, said Wednesday, “I’m no attorney, but my understanding is that you can’t separate the newsroom from the (Denver Newspaper Agency) without being in violation of the JOA. “The rationale for the JOA was to preserve two independent editorial voices, and any move to compromise that raises questions for the Justice Department.” Mark Fitzgerald, editor-at- large of newspaper industry trade publication Editor & Publisher, had a different take. “I don’t think Justice would have much to say about it,” he said. “It approved the agreement that allows MediaNews right of first refusal. I don’t see any standing (by Justice) to say that you’ve got to be a partner with somebody you don’t want to.” Fitzgerald cited the case of the St. Louis Globe-Democrat, which wanted to shut down in the mid-1980s. Although Justice told the newspaper’s owners that they had to look for a buyer, regulators didn’t force the St. Louis Post-Dispatch to accept that buyer as a joint operating partner.”

But the St. Louis Globe-Democrat could operate as an independent daily without the St. Louis Post-Dispatch.

In Denver, the new owner of the Rocky probably wouldn’t be able to print the newspaper, unless it’s part of the JOA. So Justice, whose goal would be to preserve two newspapers, might take a different approach here and force MediaNews to accept the new buyer.

SquareState.net accurately summarizes previous references in the Post and the Rocky to possible actions by the Justice Department here.

I’ve been trying to convince journalists to post comments on the discussion boards under their articles online.

If more journalists would comment, we’d probably see more people opining there, with different points of view. This could raise the level of the debates on these discussion boards, and help educate people about journalism and the issues. It would also educate journalists, who need to hear more from citizens and interact with them more.

But journalists seem to have a snotty attitude toward the folks who use the discussion boards. I don’t blame them, to a degreee, but they should comment anyway. I know some journalists read them, but they don’t comment.

I also know a lot of people who read the discussion boards–but never leave a comment.

So I was surprised to find someone claiming to be Gunny Bob, a talk radio host on KOA, commenting on the discussion board under a recent Rocky column of mine. I’ve never seen a mainstream journalist’s name the discussion boards of the daiies? Have you?

I don’t mean to imply that Gunny is a journalist, but here’s what he had to say:

“Jason, during the campaigns you called into my show to express how gleeful you were that so many liberals “hate Bush.” You did this as you rode around in a farcically pedantic and sophomoric truck hauling statues of Bush and McCain embracing. You were giddy with intolerance, venom and loathing. That same embarrassing attitude comes across in your columns, as it does in Littwin’s, Campos’ and so on, as well as the paper’s frequently laughable editorials. When hate becomes the life blood of a media outlet, like Air America that outlet will fail. And you were a part of it. Your own bigotry, arrogance and hate has cost you your job and now you are blaming Scripps rather than yourself in any way. The truth hurts, Jason, but pain builds character.”

Now, it’s possible this wasn’t really Gunny, so I emailed him. He confirmed that he was the author. He seems to be a bit of a regular on the Rocky site. See his online comments in response to a blog by Rocky Editor John Temple.

I respect Gunny for commenting, even if his remarks don’t raise the quality of the online debate and even if his comment is ridiculous because he doesn’t explain why I’m a bigot.

In fact, if you’ll allow me to digress, Gunny appears to be a bigot himself, or completely clueless, judging from his recent comment spotlighted by Colorado Media Matters. Gunny said that if gays serve in the military, then more soldiers will be exposed to the HIV virus. CMM points out that HIV-positive military applicants are rejected and those who become HIV-positive during their service cannot serve overseas. Gunny’s comment sparked a national campaign asking KOA to reprimand Newman.

Oh well. My point is that it’s pretty pathetic that Gunny might be the only representative of the mainstream media who’s commenting on online articles.

There are a few theories on why E.W. Scripps is racing to dump the Rocky, putting it up for sale for just one month. One is, Scripps can afford to lose a bit of money for a month to see of a buyer comes along and offers a lot of money, even if the Rocky is sold at a bargain price. 

Another theory is that Scripps’ lawyers advised the company to put the newspaper up for sale for a month to show the Justice Department that it tried to sell the newspaper. (See my rejected Rocky column below.)

Another theory was that Scripps wanted to get rid of the Rocky before the Obama Administration took office, because Bush’s Justice Department would be less likely to intervene to save the Rocky than Obama’s new team at Justice. In my rejected Rocky column below, I quoted two experts who agreed that Obama’s Justice Department would be more likely to intervene that Bush’s.

That was probably wrong, because the Rocky is still with us and the new Administration has taken power. You could still make the argument that the new Administration is less likely to intervene soon than it would be six months from now, after it’s had time to get its act together. So there still could be an incentive for Scripps to act quickly, before Obama’s Justice Department is fully organized.

In any case, and this is the more important point, JOA legal expert Stephen Barnett says the Rocky does not need the approval of the Justice Department to shut the Rocky, if it simply shutters the newspaper and walks away from its investment in the Denver Newspaper Agency, the company that publishes the Denver Post and the Rocky and is joinly owned by Scripps and Dean Singleton’s MediaNews Group. 

This is unlikely, though, given the value of the Denver Newspaper Agency.

As former Post and Rocky business editor Don Knox told Westword, the jointly-owned company has $300 million in revenue. Yes, it’s got lots of debt, too, but Scripps would have to be reeeeely desparate to just leave the DNA to co-owner MediaNews and skip town. And Scripps isn’t so desparate yet, you’d think.

So this means that the most likely scenario, as reported by the Denver Post, is for MediaNews and Scripps to make a deal to close the Rocky–to “negotiate an exit strategy,” as the Post put it. And, if you believe Barnett, this would require approval of the Justice Department BEFORE the Rocky is closed.

And that’s when Justice could intervene to require, for example, a longer sales period, as explained in my rejected Rocky column below.

A contract to close the Rocky between Scripps and MediaNews could involve many unknown elements, but one option would be for Scripps to retain its position as 50-50 owner of the DNA. Or it could sell its share to Singleton, leaving Denver to MediaNews and the Post. The difficulty with the latter option would be determine what kind of payment the Rocky would get from Singleton for its share of the DNA.

In the past, when a newspaper has jumped out of a JOA, it has been given a share of future profit. (Read a bit about this here, for example.) But in the current economic environment, especially given Scripps professed views on the dismal future of big-city newspapers, you wouldn’t think Scripps would want any part of such an arrangment, given the (at least) short-term losses that the DNA is expecting.

So, perhaps the DNA would declare bankruptcy and, at the same time, close the Rocky. Singleton has opposed a bankruptcy delcaration, but maybe he’d go along with it to shed the Rocky.

Knox told Westword he thought bankruptcy made sense, though he suggested it as a way to save the Rocky, not kill it: “Just do a bankruptcy for the DNA. Change the equity and extend the lease payments. After all, it’s got $300 million in revenue. That doesn’t sound like a broken company to me. That sounds like a company with challenges …- but in 2008, there are a lot of companies with challenges.”

The bottom line is that the most likely scenarios to close the Rocky involve some sort of agreement between Scripps and Media News to do so. Such an agreement would most likely have to be approved by Obama’s Justice Department.

As executives from E.W. Scripps (possibly in conjunction with their joint-operating partner at MediaNews) decide the fate of the Rocky, it’s worth taking another look at what company executives said around the time that the Rocky and Post merged in 2001, under the terms of their Joint Operating Agreement.

Then, Scripps and MediaNews executives emphasized that their decision to form a government-sanctioned monopoly was about more than money but also about serving the community.

Obviously, the economic situation has changed, but there’s no question that, despite the fact that the newspaper industry is being transformed, these newspaper owners should fulfill their promise to Denver by doing everything possible to preserve the Rocky. Maybe they’ll fail in the end, but they should give the Rocky its best shot, even if it means losing some money in the short term. 

“The bottom line is, if the battle had gone on, ultimately there might have been one newspaper left here. But I think two companies that are both very responsible companies, who really care for this community, have put the past behind and said there will be two newspapers here because we will see that there are two newspapers here. And that is the intent.” — William Dean Singleton, MediaNews Group (May 2000).

“I live here, I read the Rocky Mountain News every morning. Not everything is just business; not everything is just money. We believe it was the right thing to do for Colorado.”  — Kenneth Lowe, Scripps president and chief operating officer (May 2000)

In their application to form the JOA, Scripps and MediaNews pledged to “use all reasonable efforts to maintain the status of their respective publications as leading newspapers in the Denver area and throughout the state of Colorado.”

One “reasonable effort” is to keep the Rocky on the sales block long enough to exhaust all efforts to find a buyer. Another “reasonable effort” is to prevent MediaNews from rejecting a capable buyer. And there are other reasonable actions that can be taken by Scripps, MediaNews, or the U.S. Justice Department.

Rocky Mountain News Editor and Publisher John Temple described on Friday a scenario under which the government might intervene to save the Rocky Mountain News.

During Friday’s 5 p.m. hour of the Caplis and Silverman show on KHOW, co-host Dan Caplis asked Temple whether The Denver Post’s owner, Dean Singleton, “would have the right of first refusal on any offer on the [the Rocky]?”

Temple responded, “First, you know I’m not a lawyer, but my understanding is that Dean Singleton of MediaNews Group, the company that owns The Post, would have the right not only to match the offer but also to say that the proposed partner is not a viable partner. But then, as you can imagine, both the Justice Department and Scripps lawyers might argue otherwise. And so that’s one complicated scenario, if there were a buyer.”

This is the first time, as far as I know, that a journalist from either newspaper has identified a specific action that the Justice Department might take to save the Rocky.

Stephen Barnett, a law professor emeritus at the University of California at Berkeley, told me in a recent interview that if a “capable buyer” emerges for the Rocky, it would be illegal for Dean Singleton to reject the buyer, based on the intent of the Newspaper Preservation Act of 1970. He says the Justice Department could intervene to force Singleton to accept the buyer. He believes, however, that Singleton’s right to match the offer of a buyer, the so-called right of first refusal, is in fact legal.

It’s been widely reported (as it turns out, probably erroneously) that Singleton can reject any buyer for the Rocky. For example, The Post reported categorically Dec. 5 that Singleton “can reject a buyer it considers unsuitable.” 

Dan Caplis deserves credit for asking Temple about this “fact,” because if it were true, it makes the Rocky’s plight look completely hopeless, given that Singleton has said he wants the Rocky to fold. But it’s likely not true, which is good news for the Rocky. And the Rocky needs any good news it can get at this point.

Transcript of a portion of John Temple’s interview on the Caplis and Sliverman Show Jan. 16, 2009

Dan Caplis: Can we ask you about some of the eye-glazing technical stuff because it may tie in to some things. First of all, obviously there’s a joint operating agreement here. And, if I remember, I may have read this in your paper, Dean Singleton would have the right of first refusal on any offer on the paper? And beyond that don’t the feds have to step in and approve? Would the feds have to approve Scripps folding up the Rocky or just a sale of the Rocky? How does all that intersect?

John Temple: First, you know I’m not a lawyer, but my understanding is that Dean Singleton of MediaNews Group, the company that owns the Post, would have the right not only to match the offer but also to say that the proposed partner is not a viable partner. But then, as you can imagine, both the Justice Department and Scripps lawyers might argue otherwise. And so that’s one complicated scenario, if there were a buyer. As it relates to your other question, regarding the Justice Department, again, I don’t want to pretend I’m an expert because, as you know, with matters of legal issues, there are often differing views on the same question. But I would say that Scripps said when they came here on Dec. 4 that they could have closed the paper that day, if they had wanted but that they didn’t’ want to. They wanted to find a way for the Rocky to survive, but they felt it needed to survive with new ownership with new ideas and, frankly, with a different capital structure, you know, with more money.  So, I think what they said on Dec. 4 is the best answer to your question, Dan. I think they were saying, yes, they could close the paper.
 

I wrote below in my last post that I’d write more about the column situation later. I think these two recent blog posts cover the issue well enough.

Posts on Westword’s The Latest Word and SquareState.net cover the essentials.

If you have any questions, feel free to email me at jason@effectcommunications.com.

Here’s Rocky Editor and Publisher John Temple’s response to my blog post below. I’ll respond to some of his arguments later.

I know I’ve written some bad columns for the Rocky Mountain News over the years. But I didn’t think the column I submitted Thursday was so bad that it would be rejected.

In fact, I thought the column was one of my better efforts, pointing out a serious omission in local media coverage of a major story.

But Rocky Editor and Publisher John Temple thought otherwise, and he rejected the piece. It was the only time that’s happened since November 2004 when I started writing the “On the Media” column every other week. My editors at the Rocky have been fair during my years of freelance service. I respect them, and Temple did not fire me.

After much thought, I decided I should publish the rejected column on my own blog. That’s what any self-respecting independent media critic would do.

Also, I want to air the ideas I wrote about in my column. These ideas, from credible sources, should not be ignored at a time when any strategy to prolong the life of the Rocky, no matter how far-fetched, should be explored.
Below is the column I submitted. Its headline might have been: “Dailies Ignore Long-Shot Government Role in Saving Rocky.”
 

When a 149-year-old institution looks like it might die, you want to know what can be done about it. You count on journalists to provide this information.

But in the case of the Rocky Mountain News, which is up for sale and facing possible closure, we’ve seen no reporting about what the government could do to help the daily. It turns out that even though the Rocky is owned by a private company, the federal government can conceivably play a role in saving the newspaper.