Scoop: AP threatens Lee over potential contract breach
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The Associated Press is warning Lee Enterprises, one of the largest independent local newspaper companies, that its attempt to break a news licensing contract is "not valid."
- AP warned it may start charging interest or cut off its services if Lee stops payments before their deal ends on Dec. 31.
Why it matters: The spat appears to stem from Lee's dissatisfaction with AP's shift in coverage strategy.
- AP told Axios on Monday it planned to cut dozens of U.S. staff as part of a broader restructuring away from hyperlocal news and more toward video and national topics.
- The outlet's News Guild said later that more than 120 staffers were presented with a buyout offer.
State of play: Lee contacted AP last month about ending its contract on April 26. Its chief content officer Jason Adrians told Axios that the disagreement was over AP's coverage changes.
- "We appreciate the partnership Lee Enterprises and The Associated Press have enjoyed for decades," he said.
- "As we have advised the AP for some time, Lee will continue to focus its investments on its core commitment as a community news company, and that's to serve its readers with best-in-class local, statewide and regional news. Our partners must either provide that type of content or help us build a stronger pathway toward it."
- Lee owns dozens of daily newspapers and hundreds of weekly and specialty publications across more than 70 markets nationwide.
The other side: In a letter sent Monday to Adrians, AP senior vice president and general counsel Karen Kaiser said their agreement provides "a clear and limited framework for early termination," and Lee's letter "does not identify any provision of the Agreement that AP has breached, nor does it constitute a notice of breach triggering the contractual cure period."
- "The Agreement expressly provides that AP retains complete editorial discretion over the substance and form of its services and content and does not guarantee any particular volume or mix," the letter reads, according to a copy obtained by Axios.
- She argues that AP continues to provide substantial content across Lee's markets, and its data shows that Lee has made "consistent and extensive use of AP content across its digital and print platforms."
Zoom out: Over the past few years, AP's business has evolved to become less reliant on local newspapers and more reliant on a broader set of customers, including digital outlets, broadcasters and non-news companies.
- Two years ago, two of the largest newspaper groups in the country, USA Today (formerly Gannett) and McClatchy, said they would stop licensing AP's news content, citing costs.
By the numbers: Major newspaper companies today account for less than 10% of AP's overall revenue, AP's global chief revenue officer Kristin Heitmann told Axios on Monday.
- Revenue from U.S. newspaper groups has declined 25% over the past few years, while revenue from tech companies has grown roughly 200%.
What's next: AP said it could charge Lee interest on overdue payments at the rate of 1% per month, if it doesn't pay for its content under the terms of their deal.
- Their agreement also grants AP the right to terminate providing services to Lee's newspapers, while still collecting payment from Lee for the amount due under the agreement.
- For now, AP says it will continue to provide its content to support Lee's publications, and it's open to further discussing Lee's concerns.
- If Lee does not respond by April 13, AP said it would consider the company in breach of its contract and would "proceed on that basis."
