Ruling May End a 2-Paper Era

SEATTLE —  Regretfully conceding that the decision could hasten the end of Seattle as a two-newspaper town, Washington’s highest court Thursday sided with the locally owned Seattle Times in a key contract dispute with its cross-town rival, the Hearst Corp.’s Seattle Post-Intelligencer.

The 9-0 state Supreme Court ruling essentially upheld the Times’ contention that it had lost money in recent years, a finding that could lay the groundwork for the newspaper to sever its joint operating agreement with the Post-Intelligencer, its smaller competitor.

Under the deal, the Times handles all printing, advertising and circulation functions for the Post-Intelligencer, widely known as the P-I. The two newspapers have separate editorial staffs.

“We recognize this day is not a happy day in the ongoing story of Seattle as a two-newspaper town,” Judge Tom Chambers wrote in the court’s opinion. “We genuinely hope that both the Seattle Times and the Seattle P-I will continue to serve our communities and prosper.”

Both newspapers were wounded by a 2000 strike, and the Times says it lost money that year and in the following two years. The newspapers’ operating agreement, established in 1983, has a clause that allows either one to end the relationship if one party posts losses for three consecutive years.

In its ruling, the court agreed that the Times lost money in 2000 and 2001 because of the strike, and that could lead to severing the agreement. A separate fight over whether the Times deliberately lost money with a 2002 hiring spree is pending.

Both papers will continue to publish, but a bitter battle for long-term survival is in the offing. It will be a complicated one involving three major players.

They are the Blethen family, which founded the Times in 1896 and, as owner of 50.5%, is one of the few independent newspaper families left; publisher Knight Ridder Inc., which owns the remaining 49.5%; and Hearst, a publishing behemoth that has been through other bloody newspaper battles.

In San Antonio and San Francisco, Hearst eventually managed to take over its larger rivals. Hearst shut down the San Antonio Light and took ownership of the Express-News; it took over the San Francisco Chronicle and yielded control of the smaller Examiner. In Houston, the Hearst-owned Chronicle became the city’s only daily when the Houston Post went out of business in 1995, with most of its assets sold to Hearst.

In Seattle, however, Hearst faces a determined foe in the Blethen family, which switched the Times from afternoon to morning publication in March 2000 and has outpaced the morning P-I since then.

The Times’ circulation has risen slightly, from about 220,000 in 1999 to 233,000 today, while the P-I’s has dropped from 191,000 to 145,000.

The Times has won five Pulitzer prizes since 1980 -- in investigative, national, beat and feature reporting categories -- while the P-I has won two, both awarded to editorial cartoonist David Horsey.

Times Publisher Frank Blethen, in a statement Thursday, said the joint operating agreement had once “served our community well, but it doesn’t anymore.” He called the pact “obsolete and a threat to the Times’ survival.”

Hearst said it was disappointed by the ruling, but, it added, “This case is far from over.”

In its statement, Hearst said it wanted to salvage some form of joint operation that would “preserve two separate and distinct editorial voices in Seattle.”

But Blethen said the Times was losing money in the pact, under which it is supposed to get 60% of the revenue, and Hearst 40%, after the Times has paid expenses for the non-news functions of the two papers.

“A return to profitability,” Blethen said, “will enable the Times to remain locally owned and focused on quality, independent journalism for our city and our region.”