Seattle's warring newspapers renewed their fight in the state Supreme Court yesterday, with lawyers for each side filing arguments saying that, if their opponents prevail, the...
Seattle’s warring newspapers renewed their fight in the state Supreme Court yesterday, with lawyers for each side filing arguments saying that, if their opponents prevail, the city will be left with just one daily paper.
In a 20-page brief, attorneys for The Seattle Times Co. argued that even if The Times remains “chained” to its crosstown rival, the Seattle Post-Intelligencer, both papers’ futures were not assured.
A ruling by the state’s highest court against The Times, the lawyers warned, “would make it more likely that the local family that founded The Times in 1896 will be forced to sell.”
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And the most likely buyer, The Times said, would be The Hearst Corp., which owns the P-I and which The Times says wants to kill off one of the city’s dailies.
In its own 20-page brief to the court, Hearst argued that the joint operating agreement (JOA) between the two companies should continue and that a state Court of Appeals panel erred when it ruled unanimously last March in favor of The Times.
Hearst maintains it wants to continue publishing the P-I under the JOA and that it is The Times that seeks to shut down one of the city’s two daily papers.
The nine-member Supreme Court is scheduled to hear oral arguments by both sides in the dispute Feb. 15 and to issue a ruling sometime later this year.
The case before the court hinges on a basic contract dispute: whether the JOA’s language must be followed explicitly as written, as The Times attorneys argue, or whether “extrinsic evidence” can be cited to show the agreement’s true intent, as Hearst’s lawyers maintain.
Whatever the Supreme Court rules, the fight between The Times and P-I is likely to continue for several more years. Hearst has said it intends to litigate other issues it put forth when it filed the case in April 2003.
At that time, Hearst filed its case before the King County Superior Court, seeking to block The Times from exercising a JOA escape clause requiring negotiations that could lead to a shutdown of one paper or an end to the JOA.
Under the JOA, the papers publish separately, but The Times handles all non-news functions for both, including printing, distribution and marketing. The papers pool their revenue and, after The Times is paid for the non-news operations, 60 percent of the remainder goes to The Times and 40 percent to the P-I.
The agreement, one of a dozen now operating in U.S. cities, worked well during Seattle’s boom decade of the ’90s. But, according to The Times, the collapse of Seattle’s dot-com-driven economy in 2000, a costly 49-day strike, and the Sept. 11 attacks and their aftermath all combined to end the JOA’s bounty.
From 2000 to 2001, Times officials say, the paper’s ad revenue fell by $50 million, to $220 million and it has barely rebounded since then.
In April 2003, the day after Hearst filed its suit, Times Publisher Frank Blethen notified Hearst his paper had recorded three consecutive years of losses, triggering the escape clause.
For its part, Hearst contended in court that losses from 2000 and 2001 should not be applied toward the escape clause because they were caused by the strike. Hearst argued that another JOA provision exempted consideration of events beyond either party’s control, including a strike.
In September 2003, Judge Greg Canova ruled in Hearst’s favor; the ruling was later overturned by the Appeals Court panel.
The argument before the Supreme Court is specifically on the losses for 2000 and 2001.
In their brief to the Supreme Court yesterday, Times attorneys argued the language of the escape clause outweighed the “force majeure,” or greater force, clause at the heart of Hearst’s argument.
Hearst attorneys said in their brief that extrinsic evidence showed both sides in the JOA meant to include strikes under force majeure. If so, they argued, The Times’ strike-related losses for 2000 and 2001 should be exempted from the escape clause, and there would be no grounds for ending the agreement or shutting the P-I.
In rejecting Hearst’s argument, The Times’ brief said the Appeals Court showed the JOA was a “closely negotiated argument between two sophisticated parties and not some free-floating intent that the parties never reduced to writing.”
Hearst’s attorneys said the central issue in the case before the court is “the continued existence of the P-I.”
The New York-based media company disputed Times claims that financial losses were behind The Times’ efforts. Instead, it said Times officials had been planning to force a shutdown of the P-I since 1985 and seized on the faltering economy to attack the JOA.
“The end of joint publication,” Hearst said, “means the end of the P-I.”
Times attorneys said the paper has lost millions under the JOA since 2000. Continuing those losses could force the Blethen family, which owns 50.5 percent of The Times, to sell to Hearst, they said.
In 1999, the Blethens gave Hearst the right to bid first on their Times stake in return for a reported $10 million payout to the family over 10 years.
“Under any scenario this litigation will not determine whether the P-I continues to publish,” The Times said. “Hearst alone will decide its paper’s fate.”
Bill Richards is a freelance writer hired on a special contract by The Seattle Times to cover events involving the joint-operating agreement with the Seattle Post-Intelligencer. He can be reached at email@example.com.