A federal appeals court on Monday dealt an apparent setback to the hopes of the former owners to regain control of the Salt Lake Tribune from MediaNews Group Inc.
The appeals court said that the Mormon Church-owned Deseret News had the right under a joint operating agreement to veto the transfer of stock in the Tribune to the McCarthey family,
Dean Singleton -- whose MediaNews Group bought the paper in January 2001 from AT&T Corp., which had inherited the newspaper through a series of corporate mergers -- said he was confident he would retain control of the paper because of the appeals court ruling, even though it had some criticisms of the original lower court ruling.
The decision to let Singleton buy the paper caused an uproar among members of the McCarthey family, which once owned the newspaper. The McCarthey family sued, saying they had an "iron clad" option signed in 1997 to buy the publication from AT&T in August 2002 and operate it in the meantime.
A lower court judge declined to grant the family an injunction, and Singleton's company took over management in August with approval from the Deseret News. The McCarthey family appealed to the 10th Circuit Court of Appeals in Denver.
The appeals court in a 59-page decision said the lower court judge did not abuse his discretion in refusing to grant an injunction. But it said the lower court erred when it said the McCartheys were not likely to win at a trial.
"We conclude that there is a substantial likelihood that Tribune Publishing (McCarthey family) will prevail at trial on the merits of its claim of the right to acquire the assets of the Tribune," the appeals court said.
Nevertheless, MediaNews Group's Singleton said he is confident he will maintain control of the Utah newspaper.
He said the newspaper is now worth at least $325 million, according to an outside appraiser, or as much as $380 million, MediaNews' asking price and that the McCarthey family has said it doesn't have that much money.
Neither Phil McCarthey nor his attorneys returned telephone calls.
The Salt Lake Tribune has been in a joint operating agreement for about 50 years with the Deseret News, a daily owned by the Church of Jesus Christ of Latter-day Saints.
The McCarthey family, who are Catholics, said the Mormon Church wanted Singleton as a partner in the joint agreement because he had agreed to take a less harsh look at the activities of the church, a powerful institution in Utah, where 70 percent of the residents are Mormon. Singleton has strongly denied the accusation.
The McCartheys said their family sold the newspaper in 1997 in exchange for shares in the then-big cable company Tele-Communications Inc. in a tax-free transaction, but with an option to buy back the publication. TCI was later acquired by AT&T.