U.S. District Court Judge James Mahan today granted Las Vegas Sun Editor and Publisher Brian Greenspun‘s motion for a temporary restraining order to prevent the dissolution of the joint-operating agreement that keeps the Sun alive. But Mahan raised serious questions about the merits of Greenspun’s lawsuit against Stephens Media LLC.
(Disclosure: Stephens Media owns and publishes the Review-Journal, and this blog.)
Greenspun sued Stephens Media last week, contending that an offer to the Greenspun family to dissolve the 24-year-old JOA was a violation of anti-trust laws and an attempt to silence the editorial voice of the Sun and obtain a monopoly over news reporting in Las Vegas.
The JOA, a creation of the Newspaper Preservation Act, allows the Review-Journal and Sun to share printing, distribution and advertising costs while maintaining separate, competitive newsrooms. The JOA went into effect in 1989, and originally allowed the Review-Journal to be published in the morning and the Sun to be published in the afternoon. But a 2005 amendment allowed the Sun to be inserted into the morning Review-Journal as a section of the larger paper.
But earlier this summer, Stephens Media made the Greenspun family an offer: Dissolve the JOA in exchange for obtaining rights to the Internet domain lasvegas.com. That URL is currently owned by Stephens but leased to the Greenspun family, which in turn has subleased it to the Las Vegas Convention and Visitors Authority. The Greenspun family pays Stephens leasing fees of about $2.5 million per year for the URL.
On Aug. 7, at a Greenspun family business meeting, three Greenspun siblings including Danny Greenspun voted to accept the Stephens Media offer, with Brian Greenspun the sole dissenting vote. He filed his lawsuit to prevent the deal from going through.
Greenspun admitted in his court papers that the Sun could not survive on its own, without the $1.3 million subsidy provided by Stephens Media under the JOA, and that the end of the JOA would spell the end of the Sun. He maintains the deal would rob Las Vegas of the Sun‘s editorial voice and news coverage, although his lawsuit railed against an earlier version of the proposal and not the final agreement outlined in a letter of intent attached to the lawsuit.
But Mahan today appeared to cast doubt on the merits of Greenspun’s lawsuit.
“Of particular interest to the court are the following issues,” Mahan wrote. “1. The plaintiff, Brian Greenspun, is a dissident minority board member who disagrees with the business decision of the majority of the board of the Greenspun Corporation and Las Vegas Sun, Inc. 2. The majority of the board of the Greenspun Corporation and Las Vegas Sun, Inc. has voted in favor of the contract with the defendants and to terminate the publication of the Las Vegas Sun newspaper. … The court is not inclined to reverse their decision and order them that they must continue to publish the newspaper regardless of the board’s determination.”
The court also questioned whether the Greenspun family members are “indispensable parties” to the lawsuit, and whether the case should be dismissed because Brian Greenspun failed to sue his family members along with Stephens Media. (Asked about that last week, Greenspun attorney Leif Reid told the Review-Journal‘s Howard Stutz, “That has no bearing on this matter.” Apparently, it does.)
Furthermore, Mahan noted that the death of newspapers is a sad fact of modern life. “The court takes judicial notice of the fact that newspapers around the country are ceasing publication, and the public seems to prefer the Internet as its source of information,” he wrote. “Disparate cities that supported two or more newspapers (Seattle, Nashville, and Honolulu, for example) are effectively supporting only one.”
Finally, Mahan noted that if Greenspun’s contention that the dissolution of the JOA is correct, then the Nevada attorney general or the U.S. Justice Department can intervene to prevent it from happening.
Taken together, the judge’s order betrays a skepticism of Brian Greenspun’s arguments that may doom his efforts to prevent the JOA from being dissolved. Last week, an anti-trust expert interviewed by Stutz also expressed doubt that Brian Greenspun’s lawsuit would be successful.
The judge set a hearing for 10 a.m. Sept. 6 on a motion to impose a preliminary injunction. If the injunction is granted, the deal will be on hold. If not, the temporary restraining order could be dissolved and the deal could proceed, pending an appeal by Greenspun.
The case is Brian Greenspun, et. al. v. Stephens Media LLC, et al. (2:13-CV-1494). You can read Mahan’s ruling for yourself here: Greenspun-TRO ORDER.