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Billionaire Adelson Ordered to Face Newspaper Antitrust Lawsuit

Dec. 1, 2020, 8:37 PM

Billionaire Sheldon Adelson—the casino magnate, media mogul, and GOP megadonor—must face claims that he tried to drive a rival newspaper out of business by “weaponizing” its decades-old “joint operating agreement” with his Las Vegas Review-Journal, a federal judge ruled.

Judge Gloria M. Navarro let most of the Las Vegas Sun’s antitrust lawsuit move forward, rejecting Adelson’s argument that the cooperative arrangement between the two papers, and their sale as a “single product,” made the idea of competition between them implausible.

In “assuming” there’s “no actual economic competition,” Adelson and the Review-Journal overlooked the Sun’s “incentives to pursue editorial and news-gathering efforts that attract readers,” both to increase its potential sale value and to improve its leverage in future negotiations between them, Navarro wrote Monday.

The Newspaper Preservation Act, which contains certain antitrust exemptions, specifically encourages “editorial competition” between papers sold together, the judge noted.

In addition to Adelson and the Review-Journal, the suit targets the newspaper’s parent company and Adelson’s son-in-law, a part-owner and executive there. It was filed last year in the U.S. District Court for the District of Nevada, seeking—among other remedies—divestiture by Adelson, who bought the paper for $140 million in 2015.

The suit accuses the Adelson affiliates of breaching their agreement with the Sun in an effort to “starve” it, “kill” it, and buy it at a “fire sale” price.

The tactics allegedly included using advertising stickers to “strategically obscure” the Review-Journal’s front-page teaser to the lead story run by the Sun—which is distributed as an insert—and block its political endorsements.

Letting the suit’s core allegations advance, Navarro rejected the argument that the joint agreement was void under the Newspaper Preservation Act because the Justice Department never signed off on changes made to it in 2005. That’s an affirmative defense not established by the complaint itself, the judge said.

Nor is it implausible that local newspapers form a separate market from substitutes like TV and the internet, she found. Adelson and his paper will have to press that line of reasoning at a later stage of the case, when they can also seek to justify breaking off the agreement under the antitrust “duty to deal” doctrine, Navarro said.

She also rejected the argument that divestiture is only a potential remedy in cases challenging mergers. The antitrust laws aren’t so restrictive, the judge said.

Navarro did dismiss several claims against Adelson and his son-in-law, citing the rule that corporate officers can’t conspire with a corporation unless they have an “independent personal stake apart from the interests of the firm.”

The Sun is represented by Pisanelli Bice PLLC, the Alioto Law Firm, and Lewis Roca Rothgerber Christie LLP. Adelson and his affiliates are represented by Jenner & Block LLP and Kemp, Jones & Coulthard LLP.

The case is Las Vegas Sun v. Adelson, D. Nev., No. 19-cv-1667, 11/30/20.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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