The Blethen relationship with Hearst and the P-I is not the only contentious one involving a business partner, nor is it the only one in which Blethen suspects the other company has it in for him and his family. Since the 1930s, the Ridder Co. and its successor, Knight-Ridder, has owned 49.5 percent of the voting stock of the Seattle Times Co. and 65 percent of the nonvoting, preferred stock. The Blethens have struggled to keep Knight-Ridder at arms length ever since, despite having to deal with their minority representation on the Times board. In considering the possible Knight-Ridder reaction to an attempt to close the P-I, last winters Blethen family memo said Knight-Ridder might obstruct the effort.
If they believe the financial conditions and competitive position at the Times is improved and thus helps secure our stability and Blethen commitment, they will most likely oppose, the memo said. Their goal is the same as Hearst in this regardto drive Blethen out and force us to sell to them. However, the Knight-Ridder board members did finally vote to report three years of losses to Hearst and begin an 18-month clock, as specified in the JOA, to negotiate the closure of the P-I.
Christine Cox
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HOW IT WORKS
How the joint operating agreement (JOA) between
The Seattle Times and the
Seattle Post-Intelligencer splits the profit.
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Last Friday, Sept. 12, at the King County Courthouse, Judge Canova listened to the two companies attorneys and a lawyer representing Citizens for a Two Newspaper Town (CTNT) argue the merits of the Hearst lawsuit that claims the Times cant seek to dissolve the JOA based on its 2000 loss.
Times attorneys point out that had either party intended for force majeure to apply to loss calculations, they would have made sure the contract said so. The purpose of force majeure, said Times lawyer Ross at last weeks hearing, is to protect either party from liability for a failure to perform. He said there was no specific language in the contract that extended the concept to exclude any losses, even in an unusual year.
Seattle attorney Corr, meanwhile, representing Hearst and known as a tough litigator in complex cases, tried to explain why force majeure should be viewed as a principle that pervades the entire agreement. He also urged the judge to consider the intent of the parties in negotiating the JOA contractthat intent being to preserve two competing editorial voices. Corr also raised the issue of good faith performance, noting that the Times had been planning, since 1985, to find a way to close the P-I or get rid of the JOA altogether. He was referring to that Blethen family memo from last January, in which those goals were described as unchanged since 1985. Times spokesperson Kerry Coughlin has since said that no documents have been found in company files that elaborate on the goals cited in the memo.
Dmitri Iglitsin, the attorney for the union-backed CTNT, had already conceded in briefs that Hearst was not likely to prevail on the year 2000 loss issue. Instead, he argued last week that public policy and the intent of Congress in passing the 1970 Newspaper Preservation Act should outweigh the unusual loss of a single strike year. Canova has admitted the committee as an intervener in the case, but last week the judge ruled out of the current proceedings the groups claim that the right of first refusal granted by the Times to Hearst, should the Times be sold, constituted a state antitrust violation.
The prospect of Seattle becoming a one-newspaper town has some citizens concerned, but no group is more aroused than the Pacific Northwest Newspaper Guild, the union that struck in 2000 and which is backing the citizens committee. The Guild stands to lose more than 130 P-I employees, mostly journalists, if the Times effort to close it is successful. Should Hearst agree to close the P-I between now and Oct. 29, 2004, when the 18-month negotiating window runs out, it will continue to receive 32 percent of Times profit through 2083. If that comes to pass, by about this time next year P-I staffers will get their walking papers, some severance, and be dumped into a very sparse newspaper job market. And there will be only one major media force to cover the news and set the civic agenda.
Dick Clever worked for the Seattle Post- Intelligencer from 1970 to 1975 and again from 1988 to 1996. He worked for The Seattle Times from 1980 to 1987 and covered the original joint operating agreement process in the early 1980s. He recently was named city editor of the Skagit Valley Herald in Mount Vernon.
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