Tribune files for nonprofit status in 'survival' bid

Citing “years of heavy financial losses,” The Salt Lake Tribune has filed the necessary application with the IRS to become a nonprofit entity supported by donations. Executives of the Salt Lake City daily newspaper told employees in an email that owner Paul Huntsman, who bought the Tribune in 2016, had instructed his lawyers over a month ago to pursue nonprofit status with the IRS.{mprestriction ids="1,3"}

A front-page article last Wednesday, authored by long-time staffer Tony Semerad, said that the move was designed to transition the Tribune from a privately owned newspaper to a community asset. Semerad quoted Huntsman as saying that the change was “the best way to sustain the Pulitzer Prize-winning newspaper and maintain its independence.”

UtahPolicy.com first reported the move by the Tribune on Tuesday, which the paper confirmed in the Wednesday story. UtahPolicy said it had obtained a copy of the email sent to Tribune employees and quoted the missive concerning the Huntsman’s intent.

“The plan is two-fold: [Huntsman] is creating a nonprofit organization to support independent journalism in Utah; and he is converting The Salt Lake Tribune to a nonprofit organization, a first for a legacy newspaper in the U.S.,” the email said.

UtahPolicy quoted sources as saying that the Tribune is rumored to have plans to become an online-only news organization next year, severing ties with its longtime publishing partner — and rival — the Deseret News. The two newspapers have operated under a joint operating agreement (JOA) since 1970 when Congress passed the Newspaper Preservation Act, allowing competing newspapers to consolidate operations in an effort to stay in business. The Tribune and Deseret News currently share the costs of production, printing, advertising and distribution and split profits through a formula based on circulation. The JOA has been renewed several times since 1970, but expires in 2020.

The Tribune’s nonprofit plan will transpire in two phases, according to the paper. The Tribune will first create a charitable foundation to “support independent journalism” in the state and the Tribune will be its major benefactor. The paper will then obtain nonprofit status and transfer ownership from Huntsman to a public board. Last week’s announcement said that legal details were still being worked out.

Semerad quoted Tribune Editor Jennifer Napier-Pearce as saying the move to a nonprofit is vital, in light of the ongoing erosion of the Tribune’s bottom line as readers continue to shift to a wide variety of digital sources for news. Napier-Pearce said that though Tribune online revenues continue to grow as readers subscribe to the digital version, that revenue remains a fraction of the paper’s past earnings on print advertising. The paper put up a paywall for access to the content on its website early last year, charging online subscribers $1.99 per month.

“We have to survive,” Napier-Pearce said. “Our community would be so much worse off without this publication, let alone independent journalism.”

For most of the existence of its operating agreement with the Deseret News, the Tribune has commanded the majority of the revenue because of its larger circulation. However, the profit-sharing formula has reversed to favor the Deseret News in recent years. During that time, the Tribune has undergone a series of ownership changes, landing in the hands of a New York hedge fund about a decade ago. 

The hedge fund managers sold the Tribune’s share of the JOA’s physical assets, including ownership in Media One, to the Deseret News. Media One owns and controls the facilities, presses, other production assets and distribution systems used to produce both papers. The hedge fund also sold all of the real estate owned by the paper, including the Tribune Building in downtown Salt Lake City.

Last week’s article in the Tribune said Huntsman is considering a system that would “treat print and digital subscriptions as gifts to readers, in exchange for donations — akin to the keepsakes given to donors of public radio.” The move to nonprofit would also likely force the Tribune to give up its long-standing practice of endorsing political candidates, the article said.

Finalizing the move to nonprofit could take as long as a year, pending review by the IRS, the paper said. Current negotiations over the JOA may also complicate matters. 

Once nonprofit status is achieved, the Tribune would rely heavily on donations to keep going. “I’m not going to be accepting any donations to this foundation from those who want to influence editorial,” Huntsman was quoted as saying. “Not only is that nonnegotiable, that just goes to the heart of why you have a newspaper.”

Huntsman went on to say that the nonprofit model was “the only way” to restore the Tribune’s financial stability. He said the paper “continues to lose millions of dollars yearly ….”

“But morally,” he said, “it’s the right thing to do as well.”{/mprestriction}