Seattle JOA Divorce Could Be Messy

By: Joe Strupp As The Seattle Times ponders whether to seek an end to its joint operating agreement (JOA) with the rival Seattle Post-Intelligencer -- and possibly leave the city with only one daily newspaper -- those close to the situation are gearing up for what could be a messy divorce.

Although Times CEO and Publisher Frank A. Blethen and executives at the Hearst Corp., parent of the P-I, remain mum on what may happen if the Times seeks to invoke a provision in the 19-year-old JOA to end the agreement prematurely, initial opposition from Hearst indicates a tough fight is expected.

"Hearst is not going to be chased out of Seattle," said one Hearst source who requested anonymity. "I think there could be a prolonged struggle if there is an effort to dissolve the JOA."

Liz Brown, an administrative officer for the Pacific Northwest Newspaper Guild/CWA Local 37082, which represents 875 employees at the two papers, agreed. "I think opposition is going to come from the community," she told E&P. "Both of these employers may be surprised by that."

The Seattle JOA has sparked new interest since Times executives announced several weeks ago that the newspaper failed to make a profit in 2002, marking its third straight money-losing year. The JOA, set to end in 2083, stipulates that either side may seek to dissolve the agreement if its newspaper is profitless for three years.

Blethen, who has said in recent months that he would like to end the JOA, claimed he has not made a decision yet. Hearst's only official comment came in a statement indicating it did not believe either party had the basis to terminate the deal. Even with those limited comments, it's obvious Hearst is not ready to go along with a dissolution.

"You can almost certainly expect a contract lawsuit between the two newspapers," said W. Todd Miller, a Washington, D.C., attorney who has represented citizens' groups opposing JOA terminations in Detroit and Honolulu. Stephen Lacy, director of Michigan State University's School of Journalism, echoed those views: "It will be difficult to end it in a friendly manner."

The actions of Knight Ridder, which owns a 49.5% minority stake in The Seattle Times, also may affect the outcome. Knight Ridder Chairman and CEO Tony Ridder, who sits on the board of the Seattle Times Co., said last week that no decision on the JOA had been made at a recent board meeting.

Along with the battle between the two papers is expected scrutiny by the U.S. Justice Department's antitrust division, which must approve any JOA dissolution. "It will come down to how hard the Justice Department wants to come down on it," said John J. Flynn, a law professor at the University of Utah and an antitrust expert.

That scrutiny could include the Times' claim that it actually suffered three years of losses, which some are already questioning. "We have no proof," said the Guild's Brown. "I don't think it's a done deal."