CHARLESTON, W.Va. — A federal judge has upheld a $3.8 million arbitration ruling against The Charleston Gazette-Mail.

The ruling was filed Friday by U.S. District Judge Thomas Johnston.

MORE: Read the federal court ruling in the newspaper arbitration case.

“We are disappointed in the judge’s rulings and will evaluate what this means to Charleston Newspapers with our counsel,” said Trip Shumate, Charleston Newspapers president and chief financial officer, stated in a story posted on the newspaper’s website.

“Know that the operations of Charleston Newspapers will continue under the normal course of business.”

The Gazette-Mail filed a motion in September, asking the federal judge to vacate the arbitration ruling.

The conflict — and the arbitrator’s ruling — were over the combination of Charleston’s two daily newspapers in summer 2015 and the sale of www.dailymail.com.

MediaNews, the former owner of The Charleston Daily Mail, said it did not consent to the combination and should be entitled to back payments plus payments of an annual management fee until the year 2024.

MediaNews, which now does business as Digital First Media, also claimed dailymail.com was its intellectual property that was sold without its consent.

In early September, arbitrator Edd McDevitt of Charleston ruled in MediaNews’ favor. Lawyers for MediaNews, which now does business as the newspaper chain Digital First Media, then asked the federal judge to confirm the arbitration ruling.

The Gazette-Mail had contended the domain name sale and the combination of two newspapers were a financial necessity — that default on its loan with United Bank was at hand and that bankruptcy would have been necessary if two newspapers had continued operating into the next year.

“It is, and would have been, impossible to pushblish two entirely separate papers for even one more year without filing for bankruptcy, as exhibits showing the decline in advertising revenue, circulation revenue and total EBITA (earnings before interest, taxes and amortization expenses) clearly show,” wrote Richard Neely, the lawyer for Charleston Newspapers and a former state Supreme Court Justice.

This month, filings in the federal case revealed that Charleston Newspapers has been prepping to be sold while likely also going through a concurrent bankruptcy.

MediaNews filed a motion for an expedited decision on the $3.8 million because of the impending change of hands.

“According to counsel for Respondents, as of the end of December 2017, a successful bidder has been identified for the purchase of the Gazette-Mail, negotiations are ‘proceeding apace’ with regard to the terms of the transaction, and as soon as the sale of the Gazette-Mail or its assets is complete, the Gazette-Mail and/or Respondents are expected to file for bankruptcy,” stated Marshall W. Anstandig, senior vice president for MediaNews Group.

That filing contended a newspaper sale would significantly impair MediaNews’ ability to collect its judgement.

Trip Shumate, president of the Charleston Newspapers, wrote a memo to department heads at the newspaper responding to the MediaNews filing and its contentions.

“Regarding the issues of bankruptcy and sale, Charleston Newspapers is facing financial difficulties, just as many newspapers across the country are currently,” Shumate stated in a portion of the memo. “We continue to look for a viable solution and all options remain on the table.”

 

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