Times alleges P-I violating JOA

The Seattle Times Co. said it may try to immediately end an agreement that's keeping the Seattle Post-Intelligencer alive if the P-I's owner doesn't change its legal tactics in seeking to preserve that agreement.

In a letter faxed Friday to the chief executive of The Hearst Corp., the P-I's owner, Seattle Times publisher Frank Blethen said Hearst is already in repeated "material breach" of the newspaper's joint operating agreement.

Blethen warned in the letter to Hearst Chief Executive Victor Ganzi that Hearst will seriously violate the JOA again if it "again seeks, supports or fails actively to oppose" stopping an 18-month countdown to the JOA's automatic end. Unless Hearst prevails in court or the parties reach a settlement, that timetable will end the JOA in October 2004.

If Hearst violates the agreement again, Blethen's letter said, "we will have no choice" but to formally assert that the P-I is in material breach of the JOA.

If a judge agreed that Hearst was in violation, The Seattle Times could "immediately terminate the contract," Times spokeswoman Kerry Coughlin said yesterday.

But Hearst attorney Guy Michelson said yesterday that the company is within its rights in trying to stop The Seattle Times Co. from ending the JOA.

"We have an absolute right to challenge the validity of the loss notice issued by The Times. That's what we are doing in the pending court action, and that is what we'll continue to do," he said.

Stephen Barnett, a newspaper antitrust-law expert at the University of California-Berkeley, said he thinks The Seattle Times Co.'s argument won't prevail.

"It's close to frivolous, because it's so circular," he said yesterday. "You have a right to go to court to assert your rights under a contract. I don't think it's breaching the agreement to challenge the other party's version in court."

Blethen also warned in his letter that Hearst will breach the JOA if it supports the ongoing efforts of a self-styled citizens committee, The Committee for a Two-Newspaper Town, that last month won the right to intervene in the matter, because that group seeks to invalidate some portions of the JOA.

Hearst didn't oppose the committee's bid to intervene. By not doing so, Blethen says, Hearst violated a section of the JOA in which both papers pledge they won't make -- and in fact will oppose -- any attempt to enjoin or suspend the JOA.

Trying to stop the 18-month clock violated that provision, Blethen said.

Hearst sued The Seattle Times Co. on April 28 to block it from ending the agreement. A day later, The Seattle Times Co. formally declared its intention to end the agreement, citing three consecutive years of financial losses starting in 2000.

The Times prints, distributes and sells ads for the P-I under the 20- year-old pact, without which Hearst says the P-I can't survive.

King County Superior Court Judge Greg Canova is slated to hear the case's first arguments Sept. 12.

In his letter Friday, Blethen also chided Ganzi for not responding to a letter of May 23 asking whether Hearst will maintain that the P-I is a "failing newspaper that may lawfully be closed" under the JOA.

Michelson said that issue, relevant to whether the P-I must be put up for sale, may be determined by the Justice Department and the court.

P-I reporter Dan Richman can be reached at 206-448-8032 or danrichman@seattlepi.com

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