Seattle JOA Dispute Faces Another Turning Point Friday

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By: E&P Staff

Seattle?s disputatious dailies, locked in an unhappy partnership, face another crucial court ruling Friday about their joint operating agreement (JOA).

King County (Wash.) Superior Court Judge Greg Canova is set to rule on several motions and counter-motions before him, including one from The Seattle Times Co. and Seattle Post-Intelligencer publisher Hearst Corp. that would take the JOA dispute out of his courtroom and into binding–and private–arbitration.

Canova will also consider a motion from the Committee for a Two-Newspaper Town (CTNT), an organization backed by the union representing the newspapers? journalists. In a court filing Wednesday, CTNT argues that the judge should either refuse to let the Times and Hearst go to private arbitration–or he should let CTNT attend the arbitration meetings in some capacity.

The newspapers, which strongly oppose what they say would be unprecedented third-party interference in arbitration, were expected to file their arguments against CTTN participation Thursday.

Since 2003, the Times Co., owned 50.5% by Times Publisher Frank Blethen and his family, and 49.5% by Knight Ridder Inc., has squared off with Hearst over a provision in the JOA that would force a sale of the P-I or dissolution of the JOA if its suffers three consecutive years of losses, as defined by the contract.

Blethen maintains the cost of publishing the P-I threatens the health of his newspaper company. Hearst says ending the JOA is an effective death sentence for the market-lagging P-I, which owns none of the JOA?s production, distribution or administrative operations.

Hearst, which gets 40% of revenues remaining after deduction of shared non-newsroom expenses, is suing the Times Co. to prevent triggering of the JOA?s loss provision. In general, it contends the annual losses were either beyond control of the JOA or were the result of lavish spending by the Times Co.

Last week, the two agreed to submit to their cases to a retired Washington state judge for binding arbitration with no possibility of appeal. Under their plan, a decision would be rendered in May of 2007.

In its motion opposing arbitration, the CTNT argues that while halting litigation while two parties arbitrate might be acceptable, it is wrong to delay litigation of a third party. CTNT ?should not be ordered to… wait in line for Hearst and The Seattle Times to resolve their own internecine conflict.”

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