Is Hearst Being Melodramatic in Seattle?

By: Lucia Moses

If Hearst Communications Inc. makes good on its pledge to try to sell the Seattle Post-Intelligencer, it would start down a familiar path with one likely outcome. Conventional wisdom holds that it would be easier to upset Starbucks’ dominance than to find a buyer for the P-I, the declining paper in the Seattle JOA, without the presses, delivery trucks, business office, and other assets.

“The reality remains that with the exception of New York and Chicago, metropolitan areas will not support two dailies in the long run,” said Stephen Lacy, a JOA expert who teaches journalism at Michigan State University. “There’s got to be somebody who takes an interest in this area. It’s a risky thing to do. People who do it are not really doing it for the money.”

Hearst said last week it would have to hurry up and start the process of seeking a buyer for the paper. In order to shut it down and collect a share of the JOA profits for the next 80 years, Hearst has to prove the business is failing by showing it can’t find a buyer willing to publish it outside the JOA with The Seattle Times.

The latest Hearst move came after a judge denied its request to speed up its lawsuit to stop an effort by its JOA partner to end the 22-year-old partnership. Frank A. Blethen, whose family owns the Times, said last year his paper has lost money the past three years, starting the clock on an 18-month period in which both sides must negotiate to fold one of the papers or let the JOA expire.

The Justice Department has had varied involvement in JOA dissolutions, points out Stephen Barnett, who teaches antitrust law at the University of California at Berkeley and follows JOAs. In the recent examples of Honolulu and San Francisco, the government took an active interest and the trailing papers ended up being sold. In San Francisco, of course, it was Hearst selling the San Francisco Examiner to the Fang publishing family in 2000 so it could break up the city’s JOA and keep its partner’s San Francisco Chronicle. In Honolulu, political leaders, citizen’s groups, and newspaper union members mobilized to stop plans to end the JOA and close the Honolulu Star-Bulletin, and a federal appeals court in 1999 blocked those plans; Canadian publisher David Black ended up buying the paper.

Could recent history repeat in Seattle? The Committee for a Two-Newspaper Town, a group comprised largely of union members, journalists, and citizens that intervened in the lawsuit over the fate of the two dailies, hasn’t decided if it will try to find a buyer for the P-I, said Phil Talmadge, a lawyer and committee co-chairman. Modeled after the Honolulu group, the Seattle committee is urging the state and federal government to intervene in the case, however. The two recent situations played out under a different administration, and it’s anyone’s guess how much interest the 2003 Justice Department will take in Seattle.

Some also hold out hope that Hearst is just trying to persuade the judge to speed up the court process. Hearst, which hired an investment bank to shop the Examiner, wouldn’t say if it’s taken any steps to seek a buyer for the P-I.

“I think Hearst is being melodramatic,” said Liz Brown, administrative officer for the Pacific Northwest Newspaper Guild, which represents employees at both dailies and is underwriting the committee’s legal efforts. “It’s about time that Hearst put up or shut up. Do they really want to stay in the Seattle market?”

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