Contract Dispute Over Indy Ownership

The Santa Barbara Independent’s editor-in-chief Marianne Partridge sued Independent publisher Randy Campbell in Santa Barbara County Superior Court last week for breach of contract in a legal dispute that could have major ramifications for the ownership structure of Santa Barbara’s oldest weekly newspaper.

Specifically, Partridge, a minority shareholder who’s been the paper’s top editor since its inception in 1986, claimed that Campbell — who owns 51 percent of The Independent — was in violation of contract language that that would require Campbell to offer to sell his stock to Partridge or any of the other two Independent minority owners before selling to anyone else.

The dispute was precipitated when Campbell notified Partridge on November 10 that he intended to sell his shares to The Independent’s printer, Valley Printers, for nearly $1.4 million. Valley Printer, which is based out of Sylmar in the Santa Clarita Valley, also owns a small chain of weekly papers.

According to the contract signed by all four Independent owners when the paper incorporated in 1986, minority share-holders must be allowed to match any purchase offers coming from outside the paper. If such a match is forthcoming, the minority share-holders must be given first dibs in making the purchase. In this case, Partridge and co-owner Richard Parker ponied up the $1.37 million needed to match Valley Printers’ offer as of November 23. But Campbell, according to legal documents, failed to proffer his stock as required by the contract.

Instead, on December 2, he sought to introduce a second — and more lucrative — offer from Valley Printers onto the table. Under the terms of the second proposal, Campbell would be paid $110,000 a year in salary for three years in addition to the $1.37 million for the sale of his stock. In legal pleadings, Partridge’s attorney Gary Hill dismissed the second offer as “grossly excessive,” and “not in the best interest of the company and all its shareholders.” Partridge insisted in court documents that the owners’ contract bars The Independent board from even considering the second offer. Instead, her attorneys have argued, Campbell has no option but to turn over his stock and accept his check. On December 29, Hill claimed, Campbell sent an email asserting his rights to have the second proposal considered. Meanwhile, Partridge and Parker secured the $1.37 million and had a check ready for Campbell to pick up, but the publisher did not show. Subsequent efforts to resolve the matter since have proven fruitless.

Campbell and Partridge have been co-owners since 1986. Campbell has worked off-and-on as publisher in that time as well. Before the formation of The Independent, Partridge owned and edited the Santa Barbara News & Review; Campbell owned The Weekly, a dueling publication. In 1986, the two competing papers agreed to go out of business and form The Independent out of their ashes. In addition to Partridge and Campbell, The Independent’s other owners are Richard Parker — one of the original founders of the News-& Review — and Richard Grandjean, a New York investment banker and a personal friend of Partridge’s.

Valley Printer’s parent company Southland Publishing also submitted an offer to buy out all the partners, not just Campbell, for a total of $2.7 million. Of The Independent owners, only Campbell wanted to sell. Parker, who now resides in Cambridge, Massachusetts, explained his reasoning in a letter dated December 11, 2009: “I deeply believe that the sale of a majority interest in the paper to its principal outside supplier, who has no local residence or involvement other than his vendor relation with the paper, could significantly and adversely affect the paper’s important role in the community.”

In a prepared statement, Campbell declared, “Marianne and I have worked together since 1986 to our mutual benefit, and toward the success of The Independent. It’s safe to say that this is not the first time we have had a disagreement. I’m sure this can be resolved once she returns to discussion rather than attempting to force a resolution through litigation.” Partridge said she has always been willing to talk. “I’m very sad it’s come to this,” she said. “I hope we can talk as soon as possible.”