A role for feds in saving the Rocky

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.
 

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