The Seattle Times Co. has posted a $24 million one-time gain on its books from the June 2004 sale of 6 acres of South Lake Union real estate...
The Seattle Times Co. has posted a $24 million one-time gain on its books from the June 2004 sale of 6 acres of South Lake Union real estate.
Although the sale had occurred more than a year earlier, it had not been posted until “unresolved environmental contingencies” related to the parcel were completed, according to a filing early this month by Knight Ridder, a publicly traded company that owns 49.5 percent of The Times Co.
The accounting for the sale was completed in September after The Times received certification from the Washington Department of Ecology, Knight Ridder said in a quarterly filing with the Securities and Exchange Commission.
The Times Co. sold the land near its headquarters to Vulcan, the Paul Allen company that’s developing parcels in the South Lake Union area.
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The sale came as financial problems mounted at The Times, which is embroiled in a legal dispute over a joint-operating agreement (JOA) with The Hearst Corp., owner of the Seattle Post-Intelligencer.
In January, Times Co. officials said their Seattle paper had lost $12 million in 2004. They cited that loss, and growing losses over the four previous years, for eliminating about 100 jobs, raising the single-copy price to 50 cents from 25 cents and cutting back distribution to outlying areas of the state.
For The Times Co., the one-time gain means its flagship paper, The Seattle Times, will show a profit in 2005.
“Technically, it will cause us to show a gain for 2005,” company spokeswoman Jill Mackie said, “but that is the result of a one-time transaction and does not speak to the profitability of our operation.” Mackie said that without the land sale, The Times would have posted a loss for the year.
While the land sale will boost The Times’ profit for 2005, it is separate from calculations of profit or loss under the JOA, which are at the core of the legal dispute with Hearst.
Under calculations prescribed by the JOA, The Times says it has had losses from 2000 through 2004, enabling it to trigger an escape clause in the agreement. That clause could lead to ending or amending the agreement.
Hearst has sued in King County Superior Court to block The Times’ move.
Attorneys familiar with Hearst’s position said last week that because The Times, in its accounting, charged to the JOA a portion of the depreciation it took on the land, Hearst may ask in its lawsuit for part of the profit from the sale.
But Mackie disputed that. The depreciation charges went toward use of the land that was related to JOA operations, Mackie said, but the profit “is entirely outside the JOA calculation.”
“The depreciation charge was akin to a rent charge to the JOA,” Mackie said. “The depreciation was a reasonable basis to measure the rental value of the property.”
An attorney for Hearst declined to comment on the dispute.
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.