The Church University referred to was neither the Brigham Young Academy (now University,) which the L.D.S. Church had established in 1875 in Provo, nor the Latter-day Saints College which the Church had established in Salt Lake City but a projected Church University which it was planned should become "the head of our Church School system." Evidently this Church University, according to this announcement had a short life of one academic year after which this announcement marked its demise. The L.D.S. First Presidency thereupon announced their support of the University of Utah, a "State" institution which had been funded by the "Mormons" less than three years after their arrival in Utah under the title of the University of Deseret.
The Latter-day Saint's College, then located adjacent to a "downtown" location of the University of Utah, was by this announcement to serve the students of the University of Utah and others with a religious education which they could not receive in the "State" institution. By this assigned function the Latter-day Saint's College thus became the forerunner of the present system of LDS Institutes of Religion adjacent to numerous State University campuses throughout North America.
[James E. Talmage noted in his diary, "Long interview with the Presidency, in which I asked them to consider the wisdom of issuing a letter to the Church announcing the closing of the Church University, and bespeaking the support of the people for the University of Utah."]
[Clark, James R., Messages of the First Presidency (6 volumes)]