LAS VEGAS, NV – A Nevada judge has upheld an arbitrator’s finding in an ongoing legal battle over one of the few remaining U.S. newspaper joint-operating agreements, ruling that the dominant Las Vegas Review-Journal has to submit to an audit and pay profits and expenses that its crosstown rival Las Vegas Sun claims have been improperly deducted in recent years.
Clark County District Court Judge Timothy Williams acknowledged during a Wednesday hearing that, with appeals expected and a separate federal lawsuit pending, his decision won’t settle an increasingly bitter fight over an operations pact entered in 1989 with an end date of 2040.
The judge put a hold on the state breach-of-contract case to allow a separate federal antitrust and unfair trade practices action filed by the Sun against the Review-Journal to be heard. He allowed the arbitration finding to remain sealed.
Williams' written decision did not specify a dollar amount at stake, and attorneys and executives on both sides declined to disclose the amount. It is expected to be in the millions of dollars.
“The court will not reassess and weigh the evidence that the arbitrator relied on to make his decision,” the judge wrote. “The arbitrator noted that while the Review-Journal has done just about everything possible to blunt, avoid, deter and postpone an audit ... the arbitrator simply ordered that an audit be conducted and this decision is affirmed.”
Sun publisher and chief executive Brian Greenspun on Thursday called the ruling a victory in what he and Sun lawyers say is an attempt by the Review-Journal to kill the Sun.
“One of the ways they do that is through vexatious litigation,” Sun attorney James Pisanelli told Williams on Wednesday. “Another way they have done it ... is to starve the Las Vegas Sun.”
Benjamin Lipman, Review-Journal legal counsel, focused on the stay that Williams put on the state case. Lipman denied Review-Journal owners want to eliminate the Sun.
“Nothing has been resolved,” he said. “The state court action is on hold. The federal case could have a significant effect. We’re not seeking to shut the Sun down. We’re saying they should stand on their own two feet.”
The Sun, formerly an afternoon daily, is printed and delivered as one section within the morning Review-Journal, which owns the printing presses. Their joint-operating agreement was amended in 2005 to require each newspaper to bear its own editorial costs and the Review-Journal to share an agreed-upon percentage of profits with the Sun.
The Sun argued in 2016 that it was due at least $6 million amassed during 10 years of business with former Review-Journal owner Stephens Media. That matter was settled after arbitration for an amount that was not made public.
The Review-Journal is now owned by the family of billionaire casino mogul and conservative Republican political donor Sheldon Adelson. He's the 86-year-old founder, chairman and chief executive of Las Vegas Sands Corp., which owns the Venetian and Palazzo resorts on the Las Vegas Strip and casino-hotels in the Chinese gambling enclave of Macau.
Adelson’s family bought the Review-Journal in December 2015 and owns it through a limited liability corporation called News + Media Capital Group. The Review-Journal was one of few U.S. newspapers to endorse Donald Trump for president in 2016.
Greenspun's newspaper characterizes itself as “a left-leaning editorial voice” and maintains a robust internet presence.
Pisanelli suggested in court Wednesday that the Review-Journal has violated federal antitrust law and declared that collecting the arbitrator’s judgment was a matter of survival for the Sun.
“The weaker party, the Las Vegas Sun ... has been at the mercy of the good faith of the R-J for all these decades,” the attorney said. “It’s only since Sheldon Adelson bought the paper that the good faith came to an end and the new strategy of starvation came into play.”
Newspaper joint operating agreements stem from the Newspaper Preservation Act of 1970, passed by Congress to exempt newspapers from some antitrust laws to allow them to combine business functions while remaining editorially independent.
Las Vegas is one of a handful of U.S. cities with newspapers still operating under such an agreement, according to the News Media Alliance trade association. Others include York, Pennsylvania, Fort Wayne, Indiana, and Detroit. A joint-operating agreement between the Salt Lake Tribune and Deseret News could expire next year.
Williams observed that the agreement in Las Vegas has not quieted what he termed “rolling disputes” between the two papers. The two sides have sued each other several times over the years in state and federal courts. The Review-Journal on Aug. 30 published a front-page editorial titled, "Why we want to stop printing the Sun."
It called the joint-operating agreement a "relic" and argued the Sun doesn't meet contractual obligations to produce a “high-quality metropolitan print newspaper."
The Sun in September filed the separate federal civil antitrust and unfair trade practices complaint.
Review-Journal attorney Randall Jones on Wednesday urged Williams to delay his decision, keep the arbitration findings sealed, and stop state court proceedings until the federal case is heard.
Hearings before U.S. District Judge Richard Boulware have not yet been scheduled.
“It is practically creating a quagmire,” Jones told Williams, “because we don’t know what the federal court is going to do.”