Las Vegas Sun

March 28, 2024

Sun asks judge to uphold arbitration ruling against R-J

The Las Vegas Sun on Tuesday asked a Clark County district judge to uphold a recent arbitration ruling that the Las Vegas Review-Journal owed the Sun millions of dollars in back payments under a joint operating agreement between the two newspapers.

In a hearing before Judge Timothy Williams, attorneys for the Sun said the arbitrator came to the correct conclusion last spring in deciding that the R-J had come up short on profit-sharing payments it owed to the Sun under the JOA, which originated in 1989 and was amended in 2005.

“We had a seven-day evidentiary hearing with 12 live witnesses,” Sun attorney Leif Reid said during the three-plus-hour hearing. “There was a mountain of evidence presented and thousands of pages of exhibits. The findings are solid.”

Reid told Williams that although neither side was completely satisfied with the arbitrator’s ruling, the process was conducted properly. He said both newspapers agreed on the selection of the arbitrator, a certified public accountant and lawyer who was chosen from a panel of professional peers.

“We’re asking you to confirm and correct an arbitration award,” Reid told Williams. “That’s the business of this department and I’m sure it happens all the time."

Reid said the Sun's profit share payments had disappeared in recent years in what he described as an orchestrated plan by the R-J to drive the Sun out of business.

“It’s pretty clear that the Review-Journal wants to be the only voice (in Las Vegas),” Reid said. “Our arbitration revealed that the Review-Journal has essentially shredded (the JOA) for all practical purposes in its accounting and other business practices.”

The JOA was created under the Newspaper Preservation Act, approved by Congress in the 1970s. That legislation provides limited antitrust protection for newspapers to combine business functions while remaining editorially independent.

Offering a sample of the Sun's accusations in the suit, Reid said the R-J gave $750,000 worth of newspaper advertising in exchange for a billboard ad at Las Vegas Motor Speedway, VIP tickets to a race, and meet-and-greet opportunities with drivers.

“That is a trade agreement,” Reid said. “The R-J entered into hundreds of agreements like this. The R-J got $100,000 to get a box at Thomas & Mack (Center) and floor seats to Rebel games in exchange for advertisement in the R-J that UNLV got to place. The JOA requires the R-J to promote the newspapers, which means the Review-Journal and the Sun.”

Reid also argued that the Sun is entitled, under the JOA, to have the R-J submit to an audit.

R-J attorney Randall Jones countered that the newspaper believes its formula to determine profit sharing totals is correct.

Jones said much of what the arbitrator decided was incorrect, and asked that Williams take a fresh look at the issues.

“The deference afforded an arbitrator is not limitless,” Jones said. “We believe the language (of the JOA) is clear. The arbitrator clearly went off the rails. The Sun’s contention that promotional expenses are not supposed to be a part of the EBITDA is incorrect.”

EBITDA — earnings before interest, taxes, depreciation and amortization — is a common way to measure a company’s financial performance.

The hearing did not conclude on Tuesday and is scheduled to resume on Oct. 31.