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(CN) — The Ninth Circuit Court of Appeals on Monday sided with the Las Vegas Review-Journal in its long-running antitrust fight with its rival paper, the Las Vegas Sun. The three-judge panel found that a partnership between the two papers is “unlawful and unenforceable,” because it was never approved by the attorney general.
The Newspaper Preservation Act of 1970 allows failing newspapers to be granted certain exemptions from antitrust laws, so long as the U.S. attorney general signs off first. In 1989, the Sun and the Review-Journal, then owned by Arkansas businessman Jack Stephens, signed a joint operations agreement to combine advertising and production departments. The two papers remained separate editorially, with different reporters and editors. In 2005, the agreement was amended: The Sun would cease publication as a stand-alone tabloid and instead be inserted into the Review-Journal as a special section, albeit with a separate website.
Then in 2015, Stephens sold his media company, including the Review-Journal, to billionaire casino magnate Sheldon Adelson. Before he died in 2021, Adelson was a major political donor to Donald Trump and Israeli Prime Minister Benjamin Netanyahu. In the years after he bought the Review-Journal, several journalists exited the paper, accusing the new editors of killing or heavily editing stories that were critical of Adelson or his business interests.
The Sun, meanwhile, maintained its editorial independence and was free to write about Adelson, even though it appeared, in print, with the pages of the Review-Journal. But, according to a lawsuit filed by the Sun in 2019, Adelson “began a calculated scheme to monopolize the local newspaper industry by strangling the sole remaining competitor and dissenting voice.”
“He virtually eliminated the required profit sharing under the [joint agreement] by predatorily adding improper expenses to reduce any share amount to zero,” the Sun wrote in its federal complaint. “At Adelson’s direction, the Review-Journal’s publisher omitted the Sun from promotional advertising and covered up the Sun’s required ’noticeable mention’ on the front page of the Review-Journal.”
The Review-Journal filed a claim in state court to terminate the joint operating agreement, arguing that it was defunct because the attorney general never approved the amended version. If it succeeded, the Sun said, it would effectively kill the smaller paper — which is now operationally and economically dependent on the Review-Journal — and give Adelson a monopoly on local daily newspapers in Las Vegas. That’s when the Sun filed its federal claim.
Initially, the two papers agreed to continue to abide by the 2005 agreement, pending a resolution of the litigation. But the Review-Journal later filed a motion to dissolve the agreement — a motion that was denied by a federal judge, who found that the attorney general’s approval was not required for an amendment of the agreement.
The Ninth Circuit disagreed, finding the language of the Newspaper Preservation Act, or NPA, to be “clear and unequivocal. It declares an unapproved agreement to be unlawful to enter and unenforceable.”
“The NPA states that, in addressing whether the weaker newspaper is a ‘failing newspaper,’ the attorney general must determine whether that newspaper ‘is in probable danger of financial failure’ regardless of its ownership or affiliations,” wrote U.S. Circuit Judge Daniel Collins, a Trump appointee. That analysis, Collins wrote, should have been done again with regard to the amended joint operating agreement, or JOA. “If nothing has changed to suggest that the weaker paper could now survive as a freestanding entity, then this requirement will easily be met and the question will be simply whether the amended JOA ‘would effectuate the policy and purpose’ of the NPA.”
The ruling paves the way for the agreement between the two papers to be dissolved, placing the Sun’s future in jeopardy. Its antitrust lawsuit against the Review-Journal, however, remains active.
Sun attorney E. Leif Reid, a partner at Womble Bond Dickinson, expressed disappointment at the ruling, writing in an email: “We believe that the panel overlooked and misapprehended critical points of law and the factual record, and that this case involves questions of exceptional importance. We intend to petition for rehearing.”
Review-Journal attorneys did not respond to an email requesting a comment.
The panel was rounded out by U.S. Circuit Judges Lawrence VanDyke, a Trump appointee, and Salvador Mendoza Jr., a Joe Biden appointee.
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