Scripps and MediaNews Group to Form Jointly Owned Company to Produce Denver Newspapers
Posted on May 17, 2000The E.W. Scripps Company and MediaNews Group Inc. have agreed to form a jointly owned company to produce and market Denver's two Pulitzer Prize winning newspapers and secure both newspapers' future well into the 21st Century. The 50-year agreement calls for the creation of a new entity called the Denver Newspaper Agency L.L.C., owned 50 percent by MediaNews and 50 percent by Scripps. The agency will be responsible for all business functions for the Denver Rocky Mountain News and The Denver Post, including advertising and circulation sales, production and distribution. The News and The Post will maintain separate and competitive news operations.
Scripps, the parent company of the News, and MediaNews, the parent company of The Post, will contribute most of the assets of the News and The Post to create the agency. Scripps also will make a one-time cash payment of $60 million to MediaNews to reach its 50 percent share. The agency will be governed by a four-person board of directors, with Scripps and MediaNews each appointing two members. The board will select a chief executive officer to run the agency.
Scripps and MediaNews are seeking to create the Denver Newspaper Agency under the provisions of the Newspaper Preservation Act of 1970, which allows for the combination of business functions if at least one newspaper in a market is in probable danger of financial failure. Such an agreement is known as a joint operating agreement, or JOA, and requires the U.S. Attorney General's approval.
The Newspaper Preservation Act was created to preserve editorially independent and competitive newspapers in the United States. There are 13 cities in the country with joint operating agreements, which allow two newspapers to combine business, production and advertising functions as long as they maintain separate and competitive news and editorial operations.
Scripps and MediaNews plan to file an application for the Denver JOA with the U.S. Department of Justice, declaring that the News is in probable danger of financial failure. Since 1990, the News has accumulated operating losses of $123 million. The Post has been consistently profitable over the same period of time.
``The substantial investment by Scripps in the News over the years has rewarded the Denver community with one of the finest and fastest growing newspapers in the country,'' said William R. Burleigh, chairman and CEO of Scripps. ``But that growth has come at tremendous cost to Scripps and its shareholders. Unfortunately, the simple reality of newspaper economics makes it clear that the hard fought battle for market share cannot be sustained for the long-term. We believe the joint operating agreement proposed here today is Denver's best hope for preserving its rich newspaper heritage, of which the News has been an integral part for more than 140 years.''
William Dean Singleton, vice chairman, president and CEO of MediaNews, said, ``Our employees, our readers and the entire Denver community will benefit from this agreement, and we are confident that it will be approved quickly as meeting the letter and spirit of the Act. These agreements have proven a successful means in other major markets of positioning outstanding newspapers to remain strong and editorially independent in a time of intensifying competition from other media.''
After the JOA is approved, the News and The Post will continue to publish separately on weekday mornings. Both newspapers will be published in their current formats Monday through Friday, The Post as a broadsheet and the News in tabloid format. On weekends, the newspapers will publish a combined edition in broadsheet format under a joint masthead and containing editorial pages and content from both The Post and the News. The News will be responsible for the preparation of the Saturday editions and The Post will be responsible for preparation of the Sunday editions. Until the JOA is approved, the News and The Post will continue to operate as entirely separate and competitive entities.