April Hearing Could Rewrite Troubled Seattle JOA

By: E&P Staff

The King County (Wash.) judge overseeing the litigation between the feuding partners in the Seattle joint operating agreement (JOA) has set an April 9 hearing date for a citizens committee that maintains a 1999 amendment to the pact is unconstitutional.

Lawyers for both newspapers in the JOA will ask the judge to delay the hearing, arguing it would interfere with the private arbitration process that is to settle the fate of the partnership by the end of May, the Seattle Times reported.

The motion, made last week by the Committee for a Two-Newspaper Town (CTNT), is the first public development in months in the dispute between the Seattle Times Co., principal owner of The Seattle Times, and Hearst Corp., owner of the Seattle Post-Intelligencer. In 2003, Hearst sued the Times Co. to block it from triggering a clause that could dissolve the JOA or force the P-I to close if the partnership lost money for three consecutive years. The P-I challenged the Times’ calculation of the alleged loss, and maintains that without the JOA it would be forced to fold. The Times argued that it has been bled financially by the expense of operating the P-I.

Both companies agreed to put their case to binding arbitration by a retired judge, who by the end of May is supposed to make a decision neither side can appeal.

Judge Canova allowed the arbitration to proceed, but also said the CTNT, an intervener in the lawsuit, could also proceed with its case. The committee had recently been fairly inactive after losing the financial backing of the Seattle Newspaper Guild, whose members decided in a vote last year that their interests would be better served by letting the arbitration process play out.

In its latest motion, the CTNT attacks as unconstitutional and as a restraint of trade a 1999 change in the JOA that would allow Hearst to close the P-I, but still receive a percentage of the Times’ profits until the agreement terminates in 2083.

The scheduled April 6 hearing date is just three days before the two papers go before the arbitrator in a closed-door hearings. Lawyers for both sides will ask Judge Canova to delay his hearing so they can concentrate on preparing for the arbitration, the Times reported in an article by Eric Pryne.

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