The Seattle Times and Seattle Post-Intelligencer agreed Thursday, March 30, to take their longrunning survival struggle to binding arbitration in a move that would break a three-year impasse and resolve the question of whether the city will have one or two daily papers in the future.
In a joint statement, the Seattle Times Co. and Hearst Corp., which owns the P-I, said the binding arbitration would determine whether the Times can exercise a provision in the papers’ joint operating agreement (JOA) that would allow it to force a shutdown of the P-I after three consecutive years of losses.
The formula determines a loss by pooling both papers’ revenue and paying the Times Co. for printing, marketing, and distributing both papers. The papers divide up the remainder, with 60 percent going to the Times Co. and 40 percent to Hearst. If a paper’s remainder is less than its newsroom expense, it can claim a loss for the year.
The Times says that under a JOA formula, it has lost money every year from 2000 to 2005.
Last July, the state Supreme Court unanimously upheld the Times Co.’s loss claims for 2000 and 2001. But industry experts expected a longer and more contentious court battle over 2002’s financial results, with Hearst challenging whether the Times deliberately spent itself into a loss for the year.
Times officials said that while they spent heavily on news coverage in 2002, the expenses were necessary to offset the loss of readers and staffers during a 49-day strike against both papers that spanned 2000 and 2001.
“Quicker resolution is by far the best option for the newspapers and for the employees of both The Times and the Seattle Post-Intelligencer,” Times publisher Frank Blethen said in the statement.
The statement also quoted P-I editor and publisher Roger Oglesby as saying, “This approach is the best option for everyone concerned.”
The agreement must still be approved by King County Superior Court Judge Greg Canova, who has been overseeing a lawsuit filed by Hearst in 2003 to block a Times move to end the JOA or shut down the P-I.
In an 11-page joint filing to the Superior Court, Hearst said the papers had agreed to choose as an arbitrator retired Superior Court Judge Larry Jordan. If Jordan does not agree to mediate the dispute, the papers chose former Judge Steve Scott as an alternate.
A “reasoned decision” by Jordan would be made public by May 31 of 2007, Hearst said.
Whatever Jordan decides, the P-I would remain operating for at least six months after that time, according to the agreement. If the Times wins, there will be a 12-month negotiating period before Hearst must shut the P-I, end the JOA, or both, according to the agreement. The arbitrator’s decision will be final, with no right of appeal, the filing said.
Resolving the Times‘ 2002 loss claim in court would require both companies to disclose “confidential and sensitive business and financial information.” Both the Times Co. and Hearst are privately held and do not normally make their finances public. Moreover, Hearst said, further court action on the Times loss claims “could take years.”
Both the Times Co. and Hearst agreed to bar a citizens group, the Committee for a Two-Newspaper Town, from participating in the arbitration. Canova had granted the committee intervenor status in the court case.
Times spokeswoman Jill Mackie said the main thrust of the agreement is to set a conclusion to the fight between the two companies. The agreement is the second attempt at mediation, she said. In October 2004, U.S. Sen. Patty Murray, D-Wash., arranged for mediation between the Times Co. and Hearst, and it lasted until August 2005, but the two companies couldn’t resolve their differences. This mediation agreement, Mackie said, was an outgrowth of that previous effort.
Bill Richards is a former Wall Street Journal, Washington Post, and Seattle Post-Intelligencer reporter who covered the JOA story for The Seattle Times under contract for three years.
