From right, Warren Stephens, CEO of Stephens Inc. and owner of Stephens Media, Sherman R. Frederick, president and CEO of Stephens Media, and Rusty Turner, editor of The Morning News, speak to employees of the Morning News Thursday, September 3, 2009, about a proposed joint venture between Stephens Media LLC and Arkansas Democrat-Gazette, Inc. (owned by WEHCO Media) in the Morning News newsroom in Springdale. (Photo by Zac Lehr, The Morning News)

SPRINGDALE — Stephens Media LLC, owner of The Morning News of Northwest Arkansas, and WEHCO Media Inc., owner of the Arkansas Democrat-Gazette, announced Thursday plans to combine their newspaper operations in Northwest Arkansas and operate as a single company.

The proposed joint venture between the two companies is under review by the U.S. Department of Justice and comes on the heels of significant financial losses in Northwest Arkansas in recent years reported by both organizations, according to a press release issued Thursday by the two.

Each company has scaled back pages, reduced employee benefits and required staff to take furloughs as cost-cutting measures during the lengthy recession. Despite their efforts, their operations in Northwest Arkansas continue to operate at deficits, according to the release.

If approved, a new company will be formed with both parties owning a 50 percent stake and contributing their Northwest Arkansas assets to the venture. Those assets include: Benton Daily Record, Northwest Arkansas Times, the northwest edition of the Democrat-Gazette, The Morning News, Hawgs Illustrated as well as weekly newspapers, real property, plants and equipment owned in this region.

Stephens Media will control the editorial content of the local daily and weekly papers owned by the new company.

The Democrat-Gazette will control the advertising, business, production and circulation functions of the new venture and the editorial content of the Democrat-Gazette’s Northwest Arkansas edition, which began 10 years ago.

At the request of the Justice Department, Stephens Media has agreed to pursue a sale of The Morning News separately as a daily newspaper in competition with the Arkansas Democrat-Gazette and other media outlets.

The press release issued Thursday reads:

FAYETTEVILLE, SPRINGDALE, ROGERS, BENTONVILLE — Stephens Media LLC and Arkansas Democrat-Gazette, Inc. (owned by WEHCO Media) have requested the United States Department of Justice to review a joint venture between the firms in Northwest Arkansas.

Stephens Media publishes the Morning News, Rogers and Springdale, and various weekly publications in Benton and Washington County, Arkansas, and McDonald County, Missouri. Arkansas Democrat-Gazette, Inc. publishes the Benton County Daily Record (Bentonville), the Northwest Arkansas Times (Fayetteville), and a zoned edition of the Arkansas Democrat-Gazette and various weeklies in the area.

The Morning News and the Arkansas Democrat-Gazette’s Northwest Edition have suffered significant financial losses during the current economic recession. Both companies have employed various cost-cutting strategies, but despite these measures, the newspapers continue to have significant operating losses.

Under the proposed joint venture, a new Arkansas limited liability company (LLC) will be formed, which will be equally owned by the parties. The parties will contribute the assets of their Northwest Arkansas daily newspapers (Benton County Daily Record, the Morning News, Rogers and Springdale, the Northwest Arkansas Times, and the Northwest Edition of the Democrat-Gazette) and weekly newspapers, real property, plants, and equipment to the new LLC.

Stephens Media will be responsible for editorial control of the local newspapers in Northwest Arkansas. Arkansas Democrat-Gazette Inc. will control advertising, business, production and circulation functions of the new LLC and will be in charge of the editorial functions of the Northwest Arkansas Edition of the Democrat-Gazette.

At the request of the Department of Justice, Stephens Media has agreed to pursue a sale of the Morning News to a qualified buyer who would agree to continue publishing the Morning News separately as a daily newspaper in competition with the Arkansas Democrat-Gazette newspapers and other media. Stephens Media has retained Cribb Greene and Associates, Charlottesville, Va., as its broker.