Next Nonproft News Paper Target: U-T San Diego

Preliminary planning is underway for a group of donors to form a nonprofit organization that would own the U-T San Diego, according to the U-T itself.  It looks like the newspaper would stay as a for-profit organizaton, and the nonprofit would own the equity of the for profit.   Random thoughts:

• I’m not sure that such a structure would insulate the for profit from political and lobbying concerns.  It’s an interesting question, however – one they recognize as they state that the editorial policy would be “as inclusive and community-focused as possible. ‘Almost by definition, if not be law, a nonprofit has to be nonpartisan.'”  Hmmm. 
• Could they make the media company an L3C?  That would automatically read in the prohibition on lobbying and political activity.
• It looks like a handful of donors would fund the nonprofit.   Query whether that means that they would be a private foundation or whether they tried to form as a supporting organization).   Either way, they would have to deal with the excess business holdings rules – I would presume they would try to say that it is a functionally related business under Section 4943(d)(3)(A), and therefore, not a “business enterprise” covered by the rules.
• If a private foundation – presumably operating foundation status would be necessary to avoid mandatory distributions under Section 4942.
• Looks like they went ahead and started the Form 1023 process to get approval for the nonprofit, even though the actual transaction to purchase the media company hasn’t been consummated.

Anyone have any details?

EWW