owners craft new
If the Star-Bulletin is notBy Rod Ohira
sold by Dec. 31, the deal
will be off
Gannett Pacific Corp., owner of the Honolulu Advertiser, and Liberty Newspapers, owner of the Honolulu Star-Bulletin, have agreed to terminate their joint operating agreement as partners in the Hawaii Newspaper Agency on or before Dec. 31 if the Star-Bulletin is sold.
Depending on when the JOA is terminated, the settlement could be worth nearly $26 million to Liberty Newspapers.
Under a failed termination agreement last year between the two companies, Gannett was to pay Liberty a lump sum of $26.5 million.
The new agreement announced yesterday calls for a decreasing schedule of payments from Gannett Pacific to Liberty to satisfy all its obligations under the existing JOA agreement, which called for payments of up to $2.5 million a year through the year 2012.
Liberty would get slightly more than $25.8 million if the existing joint operating agreement ends by May 31. The payment would decrease each subsequent month the agreement remains in effect until December, when the payment to Liberty would be $24.8 million.
The termination agreement will expire if the Star-Bulletin is not sold by Dec. 31.
Terminating the agreement would relieve Gannett of its obligations to print, distribute and perform other business functions related to the Star-Bulletin, according to the agreement.
"Liberty and Gannett have put together an impressive package of assets for someone who would want to buy the Honolulu Star-Bulletin and operate it as a newspaper," Mike Fisch, president of Gannett Pacific, said in a written statement.
"We hope someone will want to do so. This agreement simply provides for an orderly winding up of affairs between Liberty and Gannett Pacific after a sale."
Wayne Cahill, administrative officer of the Hawaii Newspaper Guild, and Save Our Star-Bulletin spokesman Richard Port have not read the termination agreement but are puzzled by the timing of the announcement.
"I'm baffled and shocked that they would publicize it," said Cahill, who is involved in negotiations for a new contract affecting both Star-Bulletin and Advertiser employees. "I don't see where it helps anything."
Port added: "Any agreement between the two newspapers will not work if there are not sufficient assets for the new buyer of the Star-Bulletin to purchase and print a daily newspaper.
"The purchaser will first determine whether the assets being offered in the sale are sufficient; then the court will evaluate the qualifications of the purchasing company.
"Obviously, continuation of the current JOA would make it easier for the purchaser to run a successful newspaper."
Gannett and Liberty were permitted to negotiate a new agreement to end the JOA under terms of the court-approved stipulation to put the Star-Bulletin up for sale as a stand-alone newspaper separate from the Advertiser.
Under the termination agreement, Gannett Pacific will pay the $150,000 retainer fee for Dirks, Van Essen & Murray, the broker for the Star-Bulletin sale. Liberty Newspapers is responsible for all other fees, commissions, expenses and costs related to the sale.
Bulletin closing archive