On Thursday, September 4, Seattle Times publisher Frank Blethen issued a lengthy internal memo to staffers in which he described the company's finances as "precarious and uncertain" and reiterated his contention that the Times was being victimized by the owners of the Post-Intelligencer, who he says intend to "bleed" the Blethen family into selling their controlling stake in the Times. The following day, the Times abruptly rejected an ad from a citizens' group advocating for the preservation of two dailies in Seattle. Then on Tuesday the Times' public line--and possibly its legal argument--was undercut with the surfacing of a second memo revealing that the Blethens have been explicitly dedicated to the goals of ending the JOA and eliminating the P-I since 1985.
These developments came as the future of the JOA--and with it the continued existence of the P-I--is slated for debate before King County Superior Court Judge Greg Canova on Friday morning.
In that hearing, Canova will hear arguments on a motion by the Hearst Corporation, the P-I's New York-based owner, questioning the legality of the Times' April decision to start an 18-month countdown to ending the JOA. If the motion is denied, the P-I, in existence since 1864, may begin moves to cease publication.
The future of the P-I is clearly at stake in this courtroom showdown. While the Times' survival is not at issue, the Blethen family's control of the paper may well be.
In last week's memo, Blethen wrote that economic realities precluded the survival of two newspapers in Seattle over the long term, and stated that financial difficulties pushed the family to consider selling its 50.5 percent stake in the company in the midst of the 49-day newspaper strike that ran from late 2000 into 2001. Under the JOA the Times had no hope of making a profit before 2010, he asserted, adding that "such a status quo situation would put tremendous pressure on the family." If the JOA survives unchanged, layoffs and cutbacks at the Times cannot be ruled out, and over time the Blethen family will face mounting pressure to sell to an outside media conglomerate indifferent to the Times' journalistic standards, Blethen asserted.
The day before the Blethen memo was issued, the Committee for a Two-Newspaper Town (C2NT)--a union-backed citizens' group that is dedicated to the preservation of two newspapers in Seattle and has intervened the Hearst lawsuit--announced that it would run an ad in both dailies to marshal public support for saving the P-I. At a City Hall press conference, co-chair Phil Talmadge stated that both papers had agreed to run the ad.
But in an indication of the Blethens' mounting concern over the impact of a defeat, on Friday the Times informed C2NT that it had decided not to run the ad. "The Committee for a Two-Newspaper Town is now a party to a pending lawsuit against the Times," and the Times is "not under any obligation" to run the group's ad under such circumstances, Times spokesperson Kerry Coughlin said in explaining the decision. The ad will still run in the P-I.
Coughlin added that while C2NT may be sincere in its desire to preserve both papers, the actual effect of the group's actions was to bolster Hearst's effort to wrest control of the Times from the Blethen family. Hearst has publicly denied that it is trying to force the Blethens to sell out, but in 1999 it agreed to pay $10 million over 10 years for right of first refusal to purchase the Times should the Blethens ever sell.
Talmadge expressed consternation at the Times' refusal, arguing it was a clear warning of the danger of having only one daily. The decision "boggles my mind," Talmadge said, describing it as "proof in the pudding" that "a one-paper town would be a real problem for Seattle."
P-I staffers have long derided the Blethen claim that the Times was forced into acting to end the JOA due to Hearst's predatory intentions, asserting instead that the Blethens have been subverting the P-I for years in an effort to consolidate their control of the Seattle market. That argument was bolstered last Tuesday when Hearst lawyers made public a Blethen Corporation memo, penned in January, which stipulated that since 1985--when Frank Blethen became publisher of the Times--the family has been committed to the long-term goals of ending the JOA and closing the P-I.
Beyond the court case, there is a possibility that federal or state regulators could intervene to halt the shutdown of the P-I. U.S. Department of Justice lawyers and state regulators have spoken with C2NT representatives, Dmitri Iglitzin, the group's lawyer, confirmed.
Iglitzin cautioned that it was impossible to predict whether such an intervention might occur. Talmadge, though, said he was encouraged by the response he has received from the DOJ. "It seemed like not so much a question of if they would intervene--it was when," he said.
The JOA requires the Times to handle business and printing functions for the P-I, with the Times receiving 60 percent of the two papers' pooled revenues, and the P-I 40 percent, after the Times' administrative expenses are deducted. Though the JOA runs through 2083, either paper can move to end the agreement after three consecutive years of losses, a condition the Times announced it had met last January. Hearst's lawsuit contests that claim.
Lacking printing facilities and business operations, the P-I could not continue to publish outside the agreement, Hearst has indicated.
The JOA also stipulates that if Hearst voluntarily shutters the P-I during the 18-month window, it will receive 32 percent of the Times' profits until 2083.
Hearst has resisted invoking that option. Should it not prevail in court, though, it has announced that it will offer the P-I for sale. Such a sale attempt is unlikely to be successful, and is widely considered a necessary step in winning regulators' agreement to allow the paper to cease publication.
