Ruling in Tucson Citizen case
U.S. District Judge Raner C. Collins on Tuesday rejected the Arizona attorney general’s request for a temporary restraining order that would force Gannett Co. Inc. to resume publishing the Tucson Citizen. Here’s the ruling: http://bit.ly/C2slu.
The judge said the AG’s office failed to show that it stood a good chance of prevailing in its anti-trust complaint.
“While regrettable that the Citizen’s illustrious legacy must come to end, it cannot be said at this time, the decision to close the Citizen involves an anti-trust violation,” the order read (I kept the ruling’s unfortunate comma use).
The ruling didn’t involve deciding the “failing company” test vital to the defense’s case, but Collins said he thinks the Citizen qualifies as a failing company (that is, it couldn’t survive outside of the JOA). Can’t help but think this is a nudge to the AG to walk away, as the failing company issue is so vital. The AG contended the Citizen couldn’t qualify as a failing company if someone was willing to buy it.
The judge also said the evidence at this time doesn’t show a buyer ready and willing to pay a fair and reasonable price for the Citizen’s assets, which mostly included its name, URL, subscriber list. This rejects claims of bad faith from a firm that said it offered $250k immediately and $400k over time for the assets.
Gannett said the Citizen’s assets were worth $760k.
More than 60 Citizen staff members were laid off last week and the outlet ceased publication after Gannett said it wasn’t able to sell its assets and after the U.S. Department of Justice said it had closed a review without finding anything awry.
The head of the AG’s anti-trust division told The Associated Press that her office would decide later whether to press the case.
TucsonCitizen.com lives on with two staffers as a site devoted to commentary, and a Citizen editorial will run weekly in the Arizona Daily Star, the Citizen’s partner in Tucson Newspapers Inc. The Joint Operating Agreement creating TNI was to run through 2015, and Gannett and Lee Enterprises, the Star’s owner, have agreed to split profits or losses from TNI post-JOA.
Here are the case documents:
- The Ruling: http://bit.ly/C2slu
- The Complaint: http://is.gd/AvYT
- Memo Supporting TRO Request: http://is.gd/AvZC
- Motion for TRO: http://is.gd/Aw0k
- News Release http://is.gd/Aw0U
- AG’s Exhibit A: memo provided to potential buyers on assets, staffing, competition, etc.
- AG’s Exhibit B: original JOA agreement. Not much interesting here.
- AG’s Exhibits C-F: includes depositions in anti-trust investigation and TNI operating statements. Daniel S. Ehrman Jr., Gannett VP planning & development, says Carl G. Schmidt, Lee’s VP and CFO, suggested closing Citizen in May or June 2008. Also, parties discussed one partner acquiring greater ownership stake in TNI but nothing came of it. Schmidt says Gannett wasn’t interested in buying Lee’s share of TNI.
- AG’s Exhibits G-L: post-JOA agreement letter, rejected buyer’s affidavit.
- Defense Response on TRO: Argues among other things that Citizen was failing, government shouldn’t be able to force a newspaper to publish, public interest isn’t served by watching a company bleed to death.
- Defense Exhibits: including statements from TNI, Gannett, Lee execs, advertisers, defense experts including Harvard professor.
- AG Follow-up Exhibit A: Buyer explains how it offered evidence of ability to pay. Includes e-mail exchange with Gannett exec leading to end of negotiations.
- AG Follow-up Exhibit B: Documents on Honolulu Star-Bulletin sale — similar case.