By: Mark Fitzgerald In the end, the best witness for The Hearst Corp. in Thursday's first-round victory in the legal fight to keep alive its
Seattle Post-Intelligencer and a joint operating agreement (JOA) proved to be its most ardent foe: Seattle Times Co. CEO Frank Blethen.
In granting Hearst a limited summary judgment in its lawsuit to prevent the
Times from forcing an end to the JOA, King County (Wash.) Superior Court Judge Greg Canova said, in effect, that Blethen and
Times officials could not have it both ways -- claiming two years ago that the JOA's force majeure clause applied to the 49-day Christmas season strike in 2000, then saying in court this year that it did not. The interpretation of the clause is important because the
Times argues that the JOA's financial loss in 2000 was the first of three consecutive years of losses, and thus triggered a "stop-loss" clause forcing the two papers within 18 months to negotiate the closure of one or break the 20-year-old JOA apart. Hearst's
P-I said the strike was an exceptional incident covered by the force majeure clause, while the
Times argued this year that the clause applied only to production issues.
But in explaining his ruling, Canova noted that Blethen himself, in a letter to Hearst, wrote that the force majeure clause relieved the
Times -- which runs all business, production and circulation operations for both papers -- of any obligation to publish the
P-I during the strike.
Times officials, he said, also used the clause to get around a cap on charitable deductions for 2000, and called losses from the strike "an anomaly" in a 2001 presentation to bankers.
The judge's ruling threw out only the 2000 losses, but Hearst could be back in court as early as this week to throw out the other years as well. "We will be asking the court for a similar ruling for 2001 since the
Times' own documents show that its strike-related losses exceeded its JOA loss for that year. We also intend to pursue our claims with respect to 2002," a company statement said.
The
Times has 30 days to appeal the Sept. 25 ruling, and a spokesperson said last week it was still looking at its options.
Times Executive Editor Mike Fancher reassured newsroom employees in a memo that "nothing has changed" and that the paper would "continue to do great journalism, because that's who we are."
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