Blethen: 'Seattle Times' Won't Make 'Knee-Jerk' Reaction

By: Joe Strupp Seattle Times Publisher Frank Blethen says he will carefully review all options before going forward with efforts to end his paper's 19-year joint operating agreement (JOA) with the Seattle Post-Intelligencer -- a move that became more likely this week with revelations that the Times had lost money for a third-straight year. A provision in the JOA gives either newspaper the right to pull out of the agreement if either of them remains profitless for three consecutive years.

"This is a huge issue for our family and our shareholders and we have to pull back and take a look and decide what to do," Blethen told E&P late Wednesday. "It will not be a knee-jerk reaction."

Blethen, who has reportedly voiced his preference several times in recent months for ending the JOA, admitted that killing the agreement is tempting, but said he remained undecided. "On the surface, it looks like an easy call, but it would be irresponsible not to be careful," he said. "Anytime you go through a major change, you have to think about the consequences."

When asked what the drawbacks might be, Blethen declined to elaborate or indicate when he would decide what to do. "I just don't know the timeline," he said. "We are pretty disciplined and strategic when it comes to decision-making." Sources in Seattle say March is the likely deadline for Blethen to go forward.

The original JOA, a 100-year contract that went into effect in 1983, placed all business operations of the two papers under control of The Seattle Times Co., with profit split between the two JOA partners. Currently, the Times receives 60% of the net income and the P-I takes 40%. If one of the papers suffers losses for three straight years, it has nine months to trigger a provision requiring the partners to negotiate to either dissolve the JOA or shut down one of the publications. If the papers cannot come to an agreement, the JOA would automatically dissolve 18 months after the date the provision is triggered.

Any change in the JOA would require U.S. Justice Department approval. The Hearst Corp., which owns the P-I, could agree to shutdown the paper, but would continue to collect 32% of the profits until the JOA ends in 2083.

A statement from Hearst Corp. officials in New York questioned whether the Times' losses could be substantiated. "We do not believe either party has a basis for terminating the Seattle joint operating agreement," the statement said.

Blethen would not respond to the Hearst comment, other than to say, "If I were them, that is what I would have said." He also declined to discuss how the Times would go about proving its three-year loss or how detailed any review of its finances might have to be.