Announced on the day the two companies were to begin a week-long, closed-door hearing before an arbiter whose decision would have been non-appealable, the agreement settles all the litigation, and terminates Hearst's 32% contingent interest in the JOA. That stake is what Hearst would have received under the so-called "loss-notice" clause if the P-I were to fold while the JOA continued.
The agreement essentially keeps the P-I alive for at least the next nine years. Had the arbiter ruled that the JOA was losing money under terms of the loss-notice clause, the P-I would have faced the prospect of creating a newspaper almost from scratch. The Seattle Times owns the JOA's printing presses, production equipment and delivery trucks, and runs its business operations.
"We are happy to have found common ground," Frank Blethen, Seattle Times CEO and publisher, said in a statement. "Both newspapers were at risk due to the dramatic erosion of the newspaper revenue model in this decade. Now we can each focus on publishing newspapers that are relevant to our community while we work at adjusting the old business model to the new realities."
Under the agreement, the Blethen family-controlled Seattle Times Co. will pay Hearst $49 million.
Hearst will pay $25 million to effectively keep the JOA going until at least 2016. In exchange for the payment, the Times agreed not to trigger a loss-notice for the next nine years. The JOA provision requires the P-I to fold, or the JOA to terminate, or both if the partnership has three consecutive loss-making years.
There is a provision in the agreement to name a senior circulation director dedicated to monitoring the P-I's efforts and to help staunch the decline of copies. For the September reporting period, the Times daily circulation reached 212,691 copies Monday through Friday while the P-I's was at 126,225.
The settlement also calls for all current litigation and claims to be dropped and specifies that any future grievances go to binding arbitration.
"This is a good deal for the P-I. It's a good deal for all newspaper readers of Seattle. It's good for our employees. I'm glad it's worked out this way," P-I Publisher Roger Oglesby said in a statement.
Hearst Newspapers President George Irish echoed that sentiment in his own prepared statement: "We are very happy to reach an agreement that allows for the continued publication of the P-I, providing the Seattle area with the benefit of competing editorial voices and giving readers a choice."
By: E&P Staff In a swift agreement Monday after four acrimonious years that threatened to blow apart their joint operating agreement (JOA), the Seattle Times Co. and Hearst Corp. agreed that the Seattle Post-Intelligencer will continue to be published under a much-changed partnership.