One-Paper Town?

As far as Frank Blethen is concerned, the hundred years’ war is almost
over. For the fourth-generation scion of the family dynasty that owns
a controlling stake in the Seattle Times, it’s been a long
battle, but total victory is finally in his sights. Blethen is contemplating
a move that would effectively shut down his crosstown rival, the Post-Intelligencer,
adding Seattle to the list of American cities that have only one daily
newspaper.

According to word seeping out of Fairview Fanny, as the Times is colloquially known, at a mid-September editorial staff meeting Blethen
announced he was seriously considering breaking the Joint Operating
Agreement (JOA) between the Times and the Post-Intelligencer.

The JOA requires the dominant Times to handle the printing,
circulation, advertising, and business functions of its smaller daily
rival, and the revenues collected by the Times’ business
operation for both papers are divided according to a set formula.

Sources say Blethen spoke of invoking clauses added to the agreement
in 1999 that could kill the P-I. The revised JOA, a copy of which
was obtained by The Stranger, stipulates that if either paper’s
share of the pooled revenues (the Times gets 60 percent, the
P-I 40) fails to cover its own editorial expenses for three consecutive
years, its owners could demand that one of the papers be shut down.
Though it’s the Times that is losing money, given its much
larger editorial staff, higher circulation, and established business
operations, it is clearly the dominant paper—and therefore, insiders
believe, only the P-I is at risk of closing if the JOA is ended.

The Hearst Corporation, which owns the P-I, has a huge incentive
to play ball; if it agrees and shuts down its paper, it will receive
32 percent of the Times’ profits through 2083, all without
lifting a finger. Conversely, if Hearst refuses to shutter the P-I,
the JOA would still end after 18 months, at which point the P-I would have to survive independently—arguably an unlikely prospect,
given the Herculean task and huge expense of establishing its own business
operation from scratch. The P-I would have to find a printer
(or build a printer), hire sales and distribution staffs, and create
an entire administrative operation from the ground up.

Blethen revealed his plans in the midst of a mundane staff meeting,
attendees say, when a Times reporter asked about the paper’s
financial health. Blethen reportedly stated that come next January,
the Times will have lost money for a third straight year, and
added that, given the terms of the JOA, this would allow the Times to initiate procedures to end the agreement. (Despite having lost money
for nearly three years in a row, the Times has been on a hiring
binge of late, adding more than 63 people to its staff in the last few
months.) At the meeting Blethen went on to explain that the Times had not considered breaking the JOA until the Justice Department recently
called to inquire about the JOA’s future; that call, Blethen told
his staff, planted the seed for the idea. Though he did not describe
his plan in detail, staffers say they left the gathering with little
doubt of the paper’s intent to end the long-standing deal with
its editorial competitor.

“We are certainly thinking about that possibility,” said
Kerry Coughlin, director of corporate communications for the Seattle
Times Company. “It’s only prudent [to consider all our
options],” Coughlin said. She went on to insist that the Times is not currently planning to scrap the JOA. “Nothing has changed,
nothing has happened, nothing is imminent,” Coughlin said.

Nevertheless, Blethen’s statements at the September editorial
meeting were so clear—and newsworthy—that Times business
reporter Alwyn Scott drafted a story about them that also explained
how the Times is likely to end the agreement, according to Times sources. Scott’s story never ran; it was spiked, in part because
editors said Blethen’s comments at the internal staff meeting were
officially off-the-record. Reached shortly before presstime, Scott declined
to immediately comment.

JOAs are a common, if much maligned, feature of daily newspaper operations;
including the one in Seattle, there are 15-odd JOAs currently operating
between rival papers around the country. Made legal in 1970 by Congress,
during a period when many cities’ dominant papers were crushing
weaker rivals and cementing monopoly status, they are justified as a
means of preserving media diversity. Over time, however, most experts
have come to the conclusion that JOAs only delay the inevitable; almost
half the JOAs attempted nationally have ultimately failed, usually resulting
in the closure of the weaker paper.

The Seattle JOA was first signed in 1983, when the P-I was
losing over $125,000 a week. The agreement allowed the Times to take over all the noneditorial functions of its rival, and the two
papers agreed to pool revenues (minus the Times’ expenses
accrued in running the business side of both papers), with 68 percent
going to the Times and 32 percent to the P-I. Each paper
would then pay for its own editorial operations out of its share; the
Times employs more than 250 editorial staffers (compared to roughly
160 at the P-I), and has been adding new ones at a rapid clip
recently.

After years of relative stability, the JOA was substantially modified
in February 1999 to enable the Times to switch from afternoon
to morning publication, allowing the paper to go head-to-head with the
morning P-I. In exchange for agreeing to the switch, Hearst got
its share of the pooled revenues boosted to 40 percent, and the JOA
was extended 50 years to 2083. The P-I’s circulation has
been dropping since the Times began its morning publication.
As of March 30, 2002, the P-I’s circulation stood at 164,190
(compared to 191,169 before the new agreement took effect); the Times’
circulation had risen modestly, from 219,698 in 1991 to 228,372.

The new, modified JOA contains the clause that Blethen reportedly
announced he will likely invoke early next year if the Times suffers its third consecutive year of loss. Still, questions remain
as to whether the JOA will actually be voided, particularly if it would
involve the closure of the P-I.

First, the Justice Department would have to agree to the deal, or
at least fail to intervene. Also, Blethen is an impulsive, colorful
figure (he reputedly once shot his neighbor’s dog, and at the September
meeting he reportedly called Tony Ridder, the head of Knight Ridder—the
Times’ minority owner—“an asshole”) who may
yet change his mind. And national newspaper analyst John Morton says
he finds it hard to believe that the Times is actually losing
money.

Nonetheless, the Pacific Northwest Newspaper Guild, the union for
editorial staffers and other workers at both papers, confirmed, when
contacted by the Stranger, having heard of Blethen’s comments,
and says it is taking them very seriously. Liz Brown, the Guild’s
administrative officer, says the Guild is writing to both papers requesting
recent annual financial statements, and has formed a “task force”
to plan for the Times’ possible announcement that it intends
to end the JOA—a move she expects might come any time after January
1, 2003.

“We’re very concerned about the possible loss of editorial
voices,” Brown says.

Reached late Tuesday afternoon, P-I Publisher Roger Oglesby
claimed that he had not heard about Blethen’s comments. “Hearst
does not have any interest in anything other than the current contractual
arrangement,” Oglesby said.

sandeep@thestranger.com