Joint Operating Agreements

History

The JOA is often perceived as a relatively new development in the American newspaper industry, though it is more than 70 years old. The Depression led several newspapers to consider reducing their production costs by combining business operations with their competitors. In 1933, the Albuquerque Journal and the Albuquerque Tribune in New Mexico entered into a joint operation except in their editorial functions—this was the first JOA in the United States. Into the 1960s, newspapers in about 20 cities had agreed to operate as partners, though many critics argued this was a violation of U.S. antitrust laws.

In 1964, the U.S. Justice Department challenged the JOA between two Tucson, Arizona, newspapers as a private contract in restraint of trade. The JOA between the Tucson Daily Citizen and the Arizona Daily Star mandated price fixing, profit pooling, and market allocation. At the same time, the agreement required that the papers maintain separate news and editorial departments. The Supreme Court in Citizen Publishing v. United States (1969) found that the JOA of the Citizen and the Star violated the Sherman Act, the key federal antitrust law passed in 1890. The Supreme Court deemed the JOA of the Tucson newspapers a business cartel to foreclose publishing competition in their newspaper market. The Court stated that operating such a JOA enjoyed no support from the First Amendment, for it did not concern news gathering or news dissemination, but rather restraints on the newspapers' monopoly of business practices. Nonetheless, the Court did not ban the Tucson JOA altogether. Instead, it asked the JOA to be revised in such a way as to avoid violating the antitrust laws.

In defense of their JOA, the Tucson newspapers unsuccessfully invoked the “failing company” doctrine, a judicially created exemption to the Sherman Act. The doctrine authorizes an otherwise illegal merger when one of the two companies is on the verge of bankruptcy and no one is willing to acquire the failing company. The Supreme Court in Citizen Publishing rejected the failing company defense as there was little evidence that, when the JOA was contemplated, the Citizen was on the brink of collapse and that no effort had been made to sell the newspaper to any purchaser other than its sole competitor, the Star.

Newspaper Preservation Act

The Citizen Publishing decision placed all the existing 22 JOAs in jeopardy. The newspaper industry lobbied Congress for a special legislative exemption from federal antitrust regulations. To overcome the Court's holding, Congress passed the Newspaper Preservation Act (NPA) in 1970. It “grandfathered” the JOAs then in existence and authorized the creation of new ones. “In the public interest of maintaining a newspaper press editorially and reportorially independent and competitive in all parts of the United States,” the NPA aimed “to preserve the publication of newspapers in any city … where a joint operating [Page 816]arrangement has been heretofore entered into because of economic distress or is hereafter effected” under the law (15 U.S.C. § 1801).

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