Publishers At Odds Over Seattle JOA's Right To Die

By: Joe Strupp If The Seattle Times tries to end its joint operating agreement with the rival Seattle Post-Intelligencer, as Times executives say they are considering, the Times might find itself in a battle with the P-I's owner, which contends there is no basis to kill the JOA.

A provision in the agreement gives either newspaper the right to seek an end to the 19-year-old contract if one of the papers goes three consecutive years without a profit. The Times, reeling from the poor economy, fallout from a bitter strike two years ago, and a decline in advertising revenue, suffered losses in 2000 and 2001, according to Publisher Frank A. Blethen.

If this year ends on another profitless note, which seems entirely possible, the paper may seek to end the JOA. "We are still hopeful of making a profit, but it looks harder and harder," Blethen told E&P. "It's a very iffy year because of the economy."

Times spokeswoman Kerry Coughlin said the possibility of a JOA change grows as the economic weather darkens. "It looks like there is a potential for it," she told E&P. "It is increasingly likely that our market will not continue to support two newspapers. We are looking at a lot of different aspects."

The Seattle Times Co., owned by the Blethen family, controls a majority interest in the Times, with the minority stake held by Knight Ridder. The Post-Intelligencer is owned by the Hearst Corp.

P-I Publisher Roger Oglesby said he had no interest in ending the JOA, while a statement from Hearst headquarters in New York questioned whether the Times' finances are as bad as Blethen claims. "We do not believe either party has a basis for terminating the Seattle joint operating agreement," it read. Coughlin countered, saying, "I can verify we have lost money for two years."

Meanwhile, an alternative weekly, The Stranger, reported that Times editors last month spiked a story by reporter Alwyn Scott on Blethen possibly seeking to terminate the JOA. Scott declined to comment on the report, referring all inquiries to Coughlin, who said no story ran because most of the comments attributed to Blethen were made during an off-the-record meeting with staff.

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 gets 40%. If one of the papers suffers losses for three straight years, it may trigger a provision requiring the papers to enter into negotiations to either dissolve the JOA or shut down one of the papers. 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. could agree to shut down the Post-Intelligencer, but continue to collect its 40% take until the JOA ends. Because the Times is the dominant paper, with 228,372 copies in weekday circulation, compared with the P-I's 164,190, ending the JOA would hurt the P-I more, making its survival more difficult.