UPDATED: 'Seattle P-I' Up for Sale -- Hearst Breaks News This Afternoon -- Defunct or Digital?

By: E&P Staff The Seattle Post-Intelligencer confimed Friday afternoon that it is being put up for sale by parent company Hearst, and will either close or possibly become a Web-only product if a sale is not completed.

"One thing is clear: at the end of the sale process, we do not see ourselves publishing in print," Steven Swartz, president of the Hearst Corp.'s newspaper division, said in a Web story.

Swartz addressed the P-I's newsroom at about noon Friday, flanked by P-I editor and publisher Roger Oglesby and Lincoln Millstein, Hearst's senior vice president for digital media, the P-I reported.

Hearst said in a statement that if the P-I is not sold within 60 days, it will "pursue other options" for the property. These include a move to a digital-only operation with a greatly reduced staff or a complete shutdown.

Hearst has retained newspaper industry investment bankers Broadwater & Associates of New York to search for a buyer for the P-I.

Responding to speculation about the company's possible interest in acquiring The Seattle Times, Hearst said such an acquisition is not under consideration.

The P-I, which Hearst has owned since 1921, has suffered operating losses since 2000. It lost approximately $14 million in 2008 and its forecast anticipates a greater loss in 2009.

?Our journalists continue to do a spectacular job of serving the people of Seattle, which has been our great privilege for the past 88 years,? Steven R. Swartz, president of Hearst Newspapers, said in a statement. ?But our losses have reached an unacceptable level, so with great regret we are seeking a new owner for the P-I.?

The P-I and the Times have operated under a JOA since 1983, maintaining separate news operations and with the Seattle Times Co. handling production, circulation, advertising sales and all other non-news operations for both newspapers. The agreement provides that the revenue taken in by the Times? business operation, after deducting operating costs, is shared 60% to the Times newspaper and 40% to the P-I. The newspapers must then pay for their editorial operations from their shares of these funds.

The P-I, founded in 1863 as the Seattle Gazette, has daily circulation of 114,000, according to the most recent report from the Audit Bureau of Circulations. The Sunday newspaper, which is a joint enterprise of the Times and P-I, has circulation of 382,000, according to the same report. Its site, Seattlepi.com, had page views of approximately 500 million in 2008, and has an average of 4 million unique monthly visitors, according to the Web site?s internal logs.

Here is an excerpt from the P-I's online article.
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In an interview Friday, managing director Bob Broadwater said of the assignment, "It's clear that right now the overall marketplace for media is very challenging. The financing climate is very bad, and there have not been a lot of transactions recently."

When asked if he is optimistic about selling the P-I, Broadwater declined to comment.

But he added, "We've been hired to sell it, and that's what we're going to do. We intend to do the very best job we can."

P-I employees were silent as they listened to the announcement, which lasted about 10 minutes. Some of them shed tears. Others held up cell phones or voice recorders in press-conference fashion.

Editorial Cartoonist David Horsey was nearly speechless.
"This is awful, awful, awful," he said afterward. "I was just standing there looking around at all these people I love to work with. I don't want this to happen to me or them."

P-I online reporter and blogger Monica Guzman cried at her desk with her head in her hands. She had just sent a Twitter post to the Web, saying, "Please, let us be O.K."

"It doesn't feel real," she said. "You hear about the problems in the industry all over the country and you start to think, 'Well, nothing that bad has happened to us yet, so maybe it won't.' You know it's na?ve. You know it's stupid. And then it happens."

The company's decision to put the P-I up for sale surprised some onlookers, because Hearst spent millions of dollars fighting a four-year court battle to keep The Seattle Times Co. from withdrawing from the JOA.

In their e-mailed letter, Bennack and Swartz explained the decision by tracking the history of the P-I's efforts to remain financially solvent.