by James W. Ure
The McCarthey family fought on, appealing the earlier court's jurisdiction. The contentious case over the buy-back option went to trial before federal judge Tena Campbell in the US District Court for Utah. There was an especially telling point in a filing by the family's company that cited a legal precedent: “Delaware law [the place of incorporation for the family management company] recognizes that every contract contains an implied covenant of good faith and fair dealing that requires parties to a contract to preserve the spirit and the bargain rather than the letter, and adhere to the substance of the contract rather than its form…. A party violates the implied covenant when ‘without violating an express term of the agreement, one side uses oppressive or underhanded tactics to deny the other side the fruits of the parties’ bargain.’”6
The LDS Church didn't like the way the case was now heading. It made a crafty move. Judge Campbell's lawyer husband, Gordon, was working for a Salt Lake law firm. The church hired the firm, thus requiring that Judge Campbell remove herself from the case.7
The new federal judge hearing the case was Ted Stewart, former chief of staff to Governor Leavitt and an active Mormon. He'd been involved in the Mountain Meadows dispute in 1999 that was covered by the three Tribune articles in 2000. He had been in communication with Senator Orrin Hatch at that time. He was appointed to the bench at the behest of the senator. In spite of protests, Stewart refused to recuse himself in the Tribune case.8
Joan O'Brien of Citizens for Two Voices is blunt: “If Tena Campbell had stayed on the case it would have changed the outcome.”9
During the trial, Tom and Philip McCarthey watched Judge Stewart taking frequent recesses. “You just knew he was going into his chambers to call the LDS Church authorities,” said Philip.10
An observing lawyer (not involved in the case) explained that Judge Stewart had been appointed to the bench with very little lawyering experience: “He came directly from government. Ted had been political and was used to seeking advice. In the judicial world individual judgment is essential.”11
Said another well-placed lawyer who observed the case, “There was a concerted, orchestrated effort by the church to make this case go its way.”12
Philip McCarthey remembers one of the court sessions in which John Malone bumped into Dean Singleton as they were leaving the chambers.
“I'm Dean Singleton,” said the MediaNews Group mogul, extending his hand.13
Malone, refusing to take his hand and looking Singleton in the eye, said, “When are you going to sell the paper back to the family?”
“I don't think I can,” responded Singleton.
Malone brushed by him to a waiting car. He was never allowed to testify.14
It was a bitter eighteen-month court battle, but in the end Judge Stewart ruled that the Deseret News's consent was required for any sale of the Tribune. In dueling conclusions, Stewart also ruled that the McCarthey family held a valid option to buy the newspaper back. The LDS Church had decided its best gambit was to let church-friendly publisher Singleton buy the Tribune and work to veto the McCartheys’ option.15
Judge Stewart insisted on removing portions of the public court record that might have embarrassed the Mormon Church, and ordered that certain documents be sealed. It is unknown if these redacted sections have gone missing forever. Whatever legal documents remain are in a Tenth District Court repository in Denver. The judge's blackout can be removed only by filing suit with the court. Meanwhile, lawyers who worked on the case back in 2000–2002 are forbidden to comment on the locked documents.16 “All the missing court records sound like tinfoil hat stuff, but it's true—there's page after page about the church and the Deseret News that have been scrubbed,” said Joan O'Brien.17
In its entirety, the McCarthey–LDS Church litigation came to an estimated $40 million, the largest amount ever spent on legal fees and costs in Utah.18
In the spring of 2001, Brigham Young University had invited Tribune publisher emeritus Jack Gallivan to be a commencement speaker, even as church president Gordon B. Hinckley refused to meet or speak with Gallivan as the church pursued control of the Tribune.19
Thomas Monson, who had been a close friend of Gallivan's through his years of working for the JOA, was now second counselor to Hinckley. At a reception prior to the event Monson sought out Gallivan and with tears in his eyes said, “Jack, I am so very sorry. I cannot help in the Tribune matter. My hands have been tied.” Mickey Gallivan was a witness to the exchange.20
“Monson was friendly to the Gallivans, the Kearns, and the McCarthey families during the forty years he had been a board member of the JOA,” said Philip McCarthey. “He understood the business and how important the JOA was. He realized that people with differences came to work together under the JOA. He understood that it was good for the community, and that it allowed for different points of view. We became aware of differences between President Monson and other high authorities in the church. The other apostles were at odds with Monson because of this.”21
Monson became president of the Church of Jesus Christ of Latter-day Saints on February 3, 2008, six days after Gordon Hinckley's death at age ninety-seven.
And Singleton firmly controlled the Salt Lake Tribune.
A man who fights you as he does
is no better than an opportunist and no worse than a thug.
—Kristin Cashore
Dean Singleton assured Tribune staffers that nothing would change and that he would put more money into the paper.
“Singleton was a wannabe and a contemptible person,” said Tom McCarthey. “Singleton wrecked this community in concert with the church.”1
In 2003, Jay Shelledy resigned in the fallout after it was revealed that two of his reporters had sold false information to the National Enquirer during the sensational kidnapping of fourteen-year-old Elizabeth Smart from her home in Salt Lake City.2
Singleton replaced him with the first woman editor to lead the paper's newsroom, Nancy Conway. A former Peace Corps volunteer who worked on newspapers in Massachusetts, Pennsylvania, and at Singleton's Denver Post, she brought a calm competence to the paper.
Ad lineage dropped significantly at the Tribune during Conway's tenure due to digital inroads. Beginning in 2007, the paper reduced its page numbers. What once was a fifteen-pound Sunday paper was down to two pounds and shrinking. Staff was laid off in round after round of cuts. The classified ads were particularly hard-hit.
The digital Tribune was late entering the market, already being preempted by church-owned ksl.com (named for its flagship radio station KSL founded in 1922, originally an arm of the Deseret News), and by craigslist. The website of the paper was messy and difficult to access. It continued to create major problems for web searchers and failed to keep pace with the rapid changes in the digital world.3 In 2016, former editor Shelledy judged the Tribune's website to be “awful.”4
Dean Singleton was focused on the big picture of building his MediaNews empire. This was at a time when digital fragmentation was on the rise and print media revenues were in a downward spiral. Singleton, who had a debilitating illness, had over-leveraged his empire.5 By 2009 it was a house of cards. The financial squeeze on MediaNews hit the Tribune's newsroom and the rest of Singleton's papers.6
“Dinky Swindleton,” as he was called by some of the Tribune staff, was seldom seen in Salt Lake City,7 and left his Tribune property in the hands of Conway with the support of some long-time Tribune staffers, including Terry Orme, who would be a well-liked publisher during the paper's most difficult times, 2013–2016. Tim Fitzpatrick (grandson of former publisher John F. Fitzpatrick and today the executive vice president of the Tribune) shaped the editorial voice along with writer George Pyle.
Peggy Fletcher Stack, an active Mormon and the paper's award-winning religion editor, reported on the church's stand against gay marriage and its emphasis on the traditional family, while also covering its conflicts with the LGBT community.8 She evenhandedly reported on the expansion of Mormonism und
er its new president, Thomas Monson, and on its greater emphasis on being a Christian church. She covered the church's conflicts with breakaway women Mormons like Kate Kelly and her group, Ordain Women. She covered the church's support of compassionate laws to allow illegal immigrants to gain citizenship.
Shelledy claimed that while most church officials appreciated Stack's reporting, Russell M. Nelson, president of the Quorum of Twelve Apostles (and possibly the next president of the church), did not like her reporting on church matters, since she sometimes wrote about subjects controversial within the church.9 A couple of non-Mormon observers think she favors the church. Most Tribune people feel Stack does a good job in her tight high-wire act of reporting about the church and also of being one of its active members.10
In 2010 MediaNews had announced the bankruptcy of its holding company, Affiliated Media, Inc., with some 89 percent of its assets going to its major creditor, Bank of America. The bankruptcy deal was structured so that when the bankruptcy ended after two months, Singleton received 20 percent of its stock plus $994,000 a year in salary with bonuses of up to $500,000 if the company met its profit targets. But his empire-building days were over.11
“In the beginning Singleton's mantra was ‘the church is our friend, the church is our friend.’ It didn't take too long to change [to] ‘the church is the enemy, the church is the enemy,’” said one Tribune insider who asked for anonymity.12
Control of MediaNews and Affiliated Media had passed into the hands of Alden Global Capital, the hedge fund. They had acquired, for an unknown sum or trade of stock, a significant share of Singleton's holdings. The new entity was called Digital First Media.13
It was at this time that the balance of the JOA changed, with the church's Deseret News representatives achieving a majority of its management. Hedge funds do not run newspapers. In this case Alden specialized in taking stressed properties and turning their assets into cash before bankrupting them.
They “hedge their risky investments by selling the assets of some companies…to make up the deficiencies of other companies,” is how Utah blogger Arvid Keeson described Alden.14
“Alden managed a declining resource by making sure the newspaper's costs were always lower than revenue. When it finally reaches the point of no return, they close it. Pioneer Press in St. Paul is an Alden/Digital First property. That's what they are doing to them,” said a Tribune editor in 2017 who requested anonymity.15
Disruption is, at its core, a really powerful idea.
—Clayton M. Christensen
Fig. 27.1. The “Note,” arrived in the Salt Lake Tribune newsroom anonymously.
On Monday, October 21, 2013, Tom Harvey, Tribune business reporter, arrived at work and saw an envelope on his desk. In the envelope was the “Note.” But what did it mean, exactly?
Said Harvey, “So I read the note on Monday when I got back from vacation. I showed it to Lisa Carricaburu, who was managing editor at that time. She took it to publisher Terry Orme. He called Paton and said we were getting these anonymous notes in the office and asked him what was up. Paton told him they would issue a press release later in the day. So I wrote that first story based on the press release and two short interviews with Paton.”1 Paul Rolly, the Tribune's political columnist, as well as reporter Robert Gehrke, received the same cryptic note.
The negotiations the year before between the LDS Church and the New York owners of the Tribune had been conducted in secrecy. Tribune reporters started digging and obtained the secretly negotiated and executed contract from the Department of Justice. Later that day Harvey revealed for readers an article explaining the possible implications for the public: Paton was John Paton, who ran Digital First Media for its owners, Alden Global Capital. They had struck a deal with the LDS Church, owners of the Deseret News.2
The church, under pressure, made a statement.
Clark Gilbert, president of the Deseret News, was quoted as saying that selling the Tribune's interest in the printing plant was “a good investment for the Deseret News, and a signal of our commitment to the state of Utah. It helps ensure two strong and independent voices, while allowing our partner to follow an investment pattern that fits what they have done in other markets.” In an act of noblesse oblige, Gilbert said the “Tribune will gain sole control of sltrib.com and other aspects of its digital operations and their profits.”3
Alden/Digital First had sold the Tribune's presses in the jointly owned printing plant and other assets, “which involved an undisclosed but sizable cash payment by the News.”4 In fact, it was sold for $23 million.5 The sale negotiations also resulted in reducing the Tribune's share of the joint operating agreement from 58 percent to 30 percent. The News would get 70 percent of the profits.6
“It was a death warrant for the Tribune, which for sixty five years had shared business operations with the News,” said Joan O'Brien of the Utah Newspaper Project/Citizens for Two Voices.7
With the selling of the printing plant, the only assets the Tribune had left were its masthead and its poorly performing digital operation.
Gilbert, the devout Mormon president of the Deseret News, had engineered the deal for the church. Gilbert wanted the money from the profit points acquired from the Tribune through the JOA in order to achieve his dreams of expansion. It would kill the Tribune, but that was part of the plan.8
Gilbert was a former professor at Harvard. While there he studied under Clayton Christensen, a Mormon and creator of a popular management theory called “innovative disruption.” Christensen's theories have been disparaged by a number of critics, including a devastating article in the New Yorker by Jill Lepore, and by the M.I.T. Sloan Management Review. Lepore calls many of Christensen's cases “murky.” She says “Christensen's sources are often dubious and his logic questionable.”9
What Christensen really did was turn the word disruption into a brand he could call his own. Until Christensen came along, business had called it “competitive challenges,” or simply, “change.” Christensen put lipstick on it.
When Gilbert took over the Deseret News for the church in 2010, he came with accolades. Wrote Netnewscheck.com, “No one has yet tagged Clark Gilbert as the ‘oracle of Salt Lake,’ but to some local media, the nickname might be coming.”10
Gilbert had a strategy of what he called “dual transformation.”11 It consisted of “disrupting” his flagship product, the print version of the Deseret News, while at the same time using the name to expand the brand and the church's internet presence. He started “hundreds of websites,” said one insider, “until he realized the money was in classifieds at ksl.com.”12 (The source was referencing the popular local website that was a magnet—along with craigslist—that drew virtually all classified advertising from the printed Salt Lake newspapers.)
Gilbert's innovative disruption in 2010 included laying off almost half of the Deseret News's staff and combining staffs of the newspaper and KSL Television.13 The television station's news audience went into decline. It dropped from a powerhouse first place in the ratings when Gilbert took over to second or third place in a four-station news market in 2016.14 Said one highly placed former church executive, “Gilbert was the real mastermind behind the layoffs, utilizing Christensen's ‘disruptive innovation’ theories. It was brutal, and morale hit rock bottom.”15
Gilbert's mission statement was “Trusted voices of light and knowledge reaching hundreds of millions of people worldwide.” The vision of the Deseret News was to be the nation's largest news publication focused on faith- and family-oriented audiences. His announced vision included making the Deseret News a top twenty-five newspaper publication and a top ten newspaper website by 2015.16
“We want to own faith like the Washington Post owns politics,” he said.17
The LDS Church, ever conscious of its public image, was already media heavy; its subsidiary, Bonneville International Corp., owned at least eleven radio stations in different markets. They owned a television station in Salt Lake City, a publishing and
distribution arm (through the JOA), and the successful digital media company—ksl.com.18
Back in 2008 the church had launched the Sunday Mormon Times, alleging it would appeal to all denominations with its emphasis on the family, financial responsibility, excellence in education, care for the needy, values in the media, and faith in the community. It gave an artificial bump to Sunday circulation, but Gilbert was later quoted as saying that “Mormons read Mormon content, Catholics read Catholic content, Baptists read Baptist content.”19
Gilbert rebranded the Sunday Mormon Times newspaper as the Deseret News National Edition and reset it to target Mormons living outside of Utah. The News claimed the Sunday print circulation jumped in 2011 from about 69,000 to 129,000. The National Edition included the insert, “Church News.”20
While the National Edition may have increased the Sunday print circulation of the News, it came at a steep price. Observers say it cannot possibly be profitable. Out-of-area circulation for either of the Salt Lake newspapers was tagged at $175 per subscription by John W. Gallivan, publisher emeritus of the Tribune, who wrote an analysis of the circulation of the two papers in 2000.21 In 2016 a subscriber to the church's Sunday National Edition could get it mailed out of state once a week for thirty-three dollars a year. A subscriber to the Salt Lake Tribune would have to pay $308 a year for each Sunday's paper to be mailed out of state.22 In a recent copy of the National Edition, there was very little advertising, and what there is consists largely of house ads for the Deseret News.23
The Deseret News had been comparable to the Christian Science Monitor for many years. Reporting could reliably be considered unbiased. Gilbert's actions, however, took the paper into the realm of “church newspaper,” with an agenda appearing to advance the LDS Church.24