By: Peggy Andersen, Associated Press Writer
(AP) The future of an agreement that has kept Seattle a two-newspaper town since 1981 is facing considerable speculation as another difficult financial year for the newspaper industry draws to a close.
Seattle Times Publisher Frank Blethen said he expected a third year of red ink at the city’s family-owned larger newspaper, which publishes and handles advertising for its cross-town rival, the Hearst Corp.-owned Seattle Post-Intelligencer. A third straight year of losses could trigger the end of the pact, Blethen told the staff at an August meeting.
The Times has reported deficits the past two years, due largely to a 49-day newspaper strike at the end of 2000 and to the nation’s general economic slump. Nationwide, ad spending in newspapers declined by nearly 9% in 2001, and the decline continued for the first two quarters of this year, according to the Newspaper Association of America.
Against that backdrop is a clause in the papers’ joint operating agreement (JOA) that, according to the Times, allows either newspaper suffering three consecutive years of losses to call for 18 months of negotiation toward an agreement to halt publication of one of the newspapers.
“If the P-I doesn’t invoke it, we will,” Blethen was quoted as saying at the staff meeting.
But Times spokeswoman Kerry Coughlin cautioned that the newspaper does not yet know whether it will lose money for a third consecutive year.
“We don’t know if we’ll trigger the clause or not,” Coughlin said. Invoking the clause does not necessarily signal the agreement’s end, she added.
In a memo to P-I staff, Publisher Roger Oglesby said Hearst has no interest in dissolving the JOA “and believes neither party to the agreement has a basis for terminating it.” Hearst spokesman Paul Luthringer declined to discuss the profitability of the Post-Intelligencer.
Veteran observers say it’s unclear which side might prevail if the Times sought to terminate the agreement.
“It would take a team of lawyers to really dissect this thing and determine who can do what,” said Conrad Fink, a professor at the University of Georgia’s Grady School of Journalism.
Despite the poor economy, the Times has been aggressive about bolstering its newsroom staff. So far this year, the newspaper has hired at least 63 news people.
The newspaper calls it rebuilding after the 49-day walkout, when layoffs, buyouts, and early retirement offers were used to pare down the staff roster. The newspaper is not losing money on purpose, Coughlin said.
But the new hires have prompted questions about their effect on the Times‘ bottom line.
The JOA requires both parties to “take all corporate action necessary” to carry out the agreement, and to cooperate “in every reasonable way that will promote successful and lawful operation … for both parties.”
Under the Newspaper Preservation Act, the Justice Department must approve any change in or termination of the agreement.
If the JOA is dissolved, the P-I would be back where it was when the agreement was signed, but without a printing plant or advertising department, said industry analyst John Morton of Morton Research in Silver Spring, Md. “It would have to start all over with a huge capital investment,” he said, unless P-I officials could persuade the Times to print their paper under contract, or find another printer.
According to the Audit Bureau of Circulation, the Times weekday circulation for the six months ended Sept. 30 is 224,140 copies, up 1.9% from the same period a year ago. P-I circulation was 157,588 — down 6.8%. The Times held about 60% of the total circulation for the joint operation and the P-I 40%. Circulation of the combined Sunday paper dropped 1.2% to 473,010.