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 Timesâ 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 paperâs 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 itâs the Times that is losing money, given its much larger editorial staff, higher circulation, and established business operations, it is clearly the dominant paperâand 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 Timesâ 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 independentlyâarguably 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 paperâs 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 JOAâs 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 paperâs intent to end the long-standing deal with its editorial competitor.
âWe are certainly thinking about that possibility,â said Kerry Coughlin, director of corporate communications for the Seattle Times Company. âItâs only prudent [to consider all our options],â Coughlin said. She went on to insist that the Times is not currently planning to scrap the JOA. âNothing has changed, nothing has happened, nothing is imminent,â Coughlin said.
Nevertheless, Blethenâs statements at the September editorial meeting were so clearâand newsworthyâthat 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. Scottâs story never ran; it was spiked, in part because editors said Blethenâs 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 citiesâ 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 Timesâ 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-Iâs circulation has been dropping since the Times began its morning publication. As of March 30, 2002, the P-Iâs circulation stood at 164,190 (compared to 191,169 before the new agreement took effect); the Timesâ 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 neighborâs dog, and at the September meeting he reportedly called Tony Ridder, the head of Knight Ridderâthe Timesâ minority ownerââan assholeâ) 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 Blethenâs comments, and says it is taking them very seriously. Liz Brown, the Guildâs administrative officer, says the Guild is writing to both papers requesting recent annual financial statements, and has formed a âtask forceâ to plan for the Timesâ possible announcement that it intends to end the JOAâa move she expects might come any time after January 1, 2003.
âWeâre very concerned about the possible loss of editorial voices,â Brown says.
Reached late Tuesday afternoon, P-I Publisher Roger Oglesby claimed that he had not heard about Blethenâs comments. âHearst does not have any interest in anything other than the current contractual arrangement,â Oglesby said.
