'2-Paper' Group Drops Suit Against Seattle JOA

By: E&P Staff Stymied by a court ruling that it could not subpoena the publishers of Seattle's daily newspapers about a supposed "secret deal," The Committee for a Two-Newspaper Town decided Wednesday to declare victory, and drop its litigation against the joint operating agreement (JOA).

The citizen's group, originally funded by The Newspaper Guild local to stop the possible break up of the JOA, said it had essentially succeeded in its goal of keeping alive both the Seattle Times, principally owned by the Blethen family, and Hearst Corp.'s Seattle Post-Intelligencer.

The squabbling JOA partners had sued each other over the Times' attempt to trigger a clause in the agreement that would have folded the P-I, ended the JOA, or both. The Times, which runs the business operations and the production and distribution equipment of the JOA, said the arrangement was bleeding it financially. The P-I argued that without the JOA it could not continue publishing.

In April, on the eve of hearings for a private binding arbitration, the papers agreed to a settlement that, among other things, significantly alters terms of the JOA.

Hearst agreed to drop all litigation, and to pay the Times Co. $25 million for its agreement not to trigger the clause ending the JOA until at least 2016. Hearst also agreed to drop all claims against The Times Co.

For its part, the Times Co. is paying Hearst $49 million in exchange for Hearst's agreement to give up its right, if it ceases publishing, to a 32% stake of the Seattle Times' profits or losses until 2083.

While the companies disclosed those terms of the settlement, some of the exact terms were not made public, and the Committee for a Two-Newspaper Town were seeking to force disclosure of all details of the agreement.

On June 6, the judge overseeing the JOA litigation rejected the committee's request to subpoena documents and force the testimony of some newspaper executives.

The committee said it feared the payments were part of a secret deal to close one of the papers at some point in the future. Both papers vehemently denied there was any secret deal.

"If it turns out that the newspapers, who have withheld information about their recent settlement, do not intend to maintain the separate editorial voices that have served Seattle well, (the committee) stands ready to represent the interests of readers as needed," the committee said in a statement.

The committee's decision to drop litigation was reported Thursday by Eric Pryne in the Seattle Times, and Dan Richman in the Post-Intelligencer.


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