Federal Court enters final consent decree in Charleston JOA
On July 19, 2010, the federal district court in Charleston, West Virginia entered its Final Judgment approving the parties’ settlement in U.S. v. Daily Gazette Company and MediaNews Group. The Judgment gives the parties five business days to execute new agreements that supersede and void the May 2004 transactions that were the subject of the federal government’s complaint, filed on May 22, 2007. The agreements, incorporated in the Final Judgment, modify the limited partnership agreement between the newspapers, amend the Daily Gazette Holding Company’s operating agreement, amend the joint operating agreement between the parties; and clarify the Class B Limited Partner’s ownership of its Class B Limited Partner Units, including put rights and call rights.
The Final Judgment prohibits the parties from modifying or terminating the agreements without the prior written approval of the United States. In addition, it prohibits the newspapers from offering as security or collateral the Intellectual Property assets of the Daily Mail for credit or other consideration, to a greater extent than such assets were pledged or offered as security or collateral as of December 11, 2009. IP assets include the masthead, subscriber, and advertiser lists, print and electronic archives, and associated websites, in addition to trademarks, copyrights, trade names, and service names. If the Daily Mail ceases publication (only if it is a “failing firm” under Justice Department and Federal Trade Commission guidelines and upon prior written approval of the federal government), then the IP assets shall transfer immediately to MediaNews Group (now known as Affiliated Media Inc.) at no cost. The new arrangement is intended to provide financial incentives that will encourage greater competition between the Daily Gazette and the Charleston Daily Mail.
Highlights of the court-sanctioned arrangement follow:
- Daily Gazette Holding Company is sole General Partner, with complete and exclusive control and management of the partnership’s business affairs; MediaNews Group becomes a Class A Limited Partner.
- MediaNews Group solely determines editorial content of the Daily Mail, while Daily Gazette Company solely determined editorial content of Charleston Gazette.
- General Partner delegates its management to a board of managers of the General Partner (GP Board) consisting of five individual managers.
- General Partner must delegate its right to appoint two managers to the GP Board to MediaNews Group until MediaNews exercises its rights to purchase any Class B Limited Partner Units.
- The Board governs by simple majority vote, except on editorial matters, which require a 75% majority.
- The Limited Partnership pays MediaNews an initial management fee of $225,000, which will be adjusted to reflect aggregate changes in the Consumer Price Index and in accordance with changes to the Daily Mail’s average daily paid print circulation for the most recent 12-month audited period.
- Partners are prohibited from engaging in other ventures in the Charleston, West Virginia market that compete with the Limited Partnership.
- The Partnership expires on June 30, 2024 unless terminated sooner as provided in the Agreement
The court retains jurisdiction to enter further orders or to modify, or enforce the Final Judgment. The Final Judgment expires in five years, unless extended by the Court. After expiration of the Final Judgment, the new agreements will be governed by their own terms.
First Published: July 27, 2010