Magazine article Editor & Publisher

Pugilism Sound: Gloves off in Seattle JOA Fight

Magazine article Editor & Publisher

Pugilism Sound: Gloves off in Seattle JOA Fight

Article excerpt

'P-I' in the sky? One newspaper may go as charges (and legal moves) fly, with Blethen seeking divorce from Hearst

The lawsuit Hearst Communications Inc. filed in Seattle last week gets to the point in its very first sentence: "This case is about an attempt by the Seattle Times Company ("Times" or "Defendant"), owner of The Seattle Times newspaper ("Seattle Times"), to eliminate one of the two daily newspapers in Seattle."

That's pretty much how The Seattle Times sees things -- only in reverse. "I've got a $5-billion-a-year conglomerate trying to put us out of business," Times Publisher Frank A. Blethen said about his family's paper when reporters cornered him for a comment during the Newspaper Association of America (NAA) convention here last week.

It had been obvious for a while that the unhappy parties to the joint operating agreement (JOA) between Hearst's Seattle Post-Intelligencer and The Seattle Times -- owned 50.5% by Blethen family members and 49.5% by Knight Ridder -- were headed for a collision. Last week, the smash-up took place.

This is a high-stakes fight for both sides: The Times owns all the printing presses, production equipment, and circulation trucks, and its circulation has been pulling ahead of the P-I since it went to the morning cycle in 2000. But Hearst has the far deeper pockets -- and experience emerging from JOA wrecks unscathed. In San Francisco, it ended up taking over the bigger paper, and in San Antonio, it bested Rupert Murdoch and wound up with his paper, too.

The events of the week were swift and dramatic: Blethen told Hearst the Times board had decided to trigger a clause that would kill the JOA, and perhaps the P-I as well, in 18 months; Hearst quickly responded with a pre-emptive lawsuit; and Blethen issued the formal "loss notice" the following day.

Yet, the litigation, which promises only to become more bitter if it continues, also offered a rarely opened window into the operations of the two privately held newspaper companies. Here are some of the claims from Hearst Communications v. Seattle Times Company, Case No. 03-2- 23950 (obtained by E&P), in King County Superior Court in Seattle:

The Seattle JOA was a gold mine for its first 16 years. Hearst says it estimates the JOA generated more than $500 million in pretax cash flow between 1983, its first year, and 1999. …

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