Las Vegas Sun

March 28, 2024

Sun files lawsuit against Adelson, R-J owners over pact

Adelson

Andrew Harnik / AP

Las Vegas Sands CEO and Republican megadonor Sheldon Adelson stands as he is recognized by President Donald Trump during a Medal of Freedom ceremony in the White House, Nov. 16, 2018.

The Las Vegas Sun filed a federal lawsuit against Sheldon Adelson and the ownership group of the Las Vegas Review-Journal, alleging Adelson is trying to stop the Sun from publishing in an effort to silence an alternative voice in Las Vegas.

In a complaint filed Tuesday, the Sun contends that the R-J’s owners violated a longstanding Joint Operating Agreement under which both newspapers publish, virtually eliminating profit sharing and omitting the Sun from advertising and promotional materials. The goal, as alleged by the Sun, is for Adelson — a billionaire casino magnate and a megadonor to the Republican Party — to muffle his local media critics, monopolize the local newspaper industry and squelch dissent to his right-leaning editorial views.

“This guy (Adelson) wants to be in charge of what is said in the daily newspapers during the Nevada elections in 2020,” said Joseph Alioto, a California-based attorney representing the Sun. “There’s no question about that. It’s going to be an election year and (Adelson) wants to show his buddy, (President Donald) Trump, that he’s in charge in Nevada.”

The Sun claims that the R-J’s attack includes a “baseless and unlawful” effort in Clark County District Court to dissolve the JOA. A hearing on that matter is scheduled for Wednesday before Judge Timothy Williams.

“Unable to financially blot out the Sun, and tired of publishing his only rival, Adelson and the Review-Journal have recently filed a baseless and unlawful claim in Nevada state court seeking to terminate the JOA — the same agreement that grants antitrust protection to the Review-Journal,” the complaint alleges.

Adelson and the R-J’s other owners, who include his son-in-law, Patrick Dumont, purchased the publication in 2015. At that time, the R-J and Sun had been operating for 26 years under the JOA, a mechanism created by Congress in the 1970s to provide limited antitrust protection for newspapers to combine business functions while remaining independent editorially. The intent of the JOA structure was to preserve publication of competing newspapers and continue to provide communities with diverse editorial voices. The JOA between the Sun and R-J was renegotiated in 2005 and is scheduled to remain in effect until 2040.

The Sun contends that after buying the R-J, Adelson immediately weaponized the JOA against the Sun.

In meetings at that time, the Sun alleges, Adelson pondered ways to silence the competing publication by discontinuing to print it. “During one such meeting, Adelson asked what would happen to the Sun if, under the JOA, there was no profit, and in other meetings continued to hypothesize about what would happen to the Sun if the R-J squeezed the Sun out of the market by eliminating its profit payments,” according to the complaint.

In a meeting during 2016, Jason Taylor, then-publisher of the R-J, reported the newspapers would have a strong close in fiscal year 2016, and that based on that trend, the Sun’s profit payment could increase by more than 18% in 2017, the complaint details. But Taylor was soon moved out of his position in favor of Craig Moon, and the R-J’s financial performance tanked.

“Moon executed on Defendants’ strategy to financially starve the Sun and to force it out of business,” the complaint says.

The Sun said its annual profit share, which ranged from $1.3 million to $12 million between 2005 and 2015, vanished in 2017. The paper has received no profit payments since.

The Sun contends that Adelson, who contributed $30 million to Trump’s 2016 presidential campaign, believed the Sun’s left-leaning views have no place packaged inside his publication.

“What they want to do is take away the voice of the Sun so that (the Review-Journal) will be the only local major newspaper with opinions,” Alioto said. “There’s a commercial element and a First Amendment element, and they want to control both.”

The lawsuit also detailed ways the Sun claimed the R-J schemed to destroy it. Among them:

• When the R-J redesigned its print publication, it scaled down a front-page promo spot for the Sun and placed it in a position where it would be partially covered by wrap-around advertisements.

• The R-J omitted the Sun on billboards, television ads and other forms of external advertising. “Virtually none of the RJ’s promotional efforts comply with the demands of the 2005 JOA,” the complaint read.

• Blocked the Sun from exercising its audit rights under the JOA.

The Sun seeks an injunction to force the R-J to cease its “abusive, unlawful and anticompetitive practices,” and a judgment ordering the R-J’s owners to either divest themselves of the newspaper or to at least turn over the newspaper’s non-editorial business operations to an independent agency or trustee.

“This is a baseless lawsuit,” said Benjamin Lipman, in-house general counsel for the Review-Journal. “We think this is a commercial dispute. It’s our belief that the Sun’s federal court action is nothing more than an attempt to prevent the courts from ruling on our allegations that the Sun has breached the (JOA).”