Judge hears Seattle newspaper JOA fight

In the opening courtroom skirmish over the joint operating agreement, or JOA, between The Seattle Times Co. and P-I owner Hearst Corp., King County Superior Court Judge Greg Canova declined to rule from the bench on motions for summary judgment in a lawsuit filed by Hearst. He said he would issue his decision on Sept. 25.

The contract dispute between two of Washington state's oldest businesses began in April, when The Seattle Times Co. formally declared it was ending the JOA. Under the JOA, The Times for 20 years has handled the business and printing functions for the P-I in exchange for a bigger share of the joint profits.

Hearst pre-empted that declaration by one day, suing The Times Co. to keep it from backing out of the JOA. Hearst says the P-I can't survive outside the agreement.

Coverage of the JOA suit in the city's daily and weekly newspapers has gone well beyond the basics, sometimes verging on the abstruse.

But the issue in today's hearing was whether The Times Co.'s losses in 2000, which were caused by the newspaper strike that year, are legally acceptable as one of the three consecutive years of losses needed to end the JOA.

Hearst says they are not acceptable, because the losses were caused by the strike --a "force majeure," or extraordinary event -- and the JOA intended only losses that reflect the untenable nature of the JOA to count toward the agreement's dissolution. The Times says force majeure doesn't apply, so the losses should be counted. And because it also suffered losses in 2001 and 2002 it should be allowed to end the JOA.

A third party to the suit, the Committee for a Two-Newspaper Town, largely supports Hearst, though it has added a twist to that company's own arguments. It says the part of the JOA giving Hearst 32 percent of The Times' profits through 2083 if Hearst shuts down the P-I -- a clear incentive to Hearst -- restrains trade in violation of Washington's Constitution.

The Times has asked Canova to disregard the committee's constitutional argument. Also -- like Hearst -- it has asked for summary judgment, meaning an expedited decision without the need for a full-blown trial, because there is no significant factual issue in dispute.

Canova could grant either publisher's motion for summary judgment, or neither.

If Canova grants Hearst's motion, Hearst attorney Guy Michelson said, he'll ask the judge in a later hearing to also knock out The Times' losses in 2001 and 2002. If he grants The Times' motion, Michelson said, he'll ask Canova to knock out 2002, using a different argument.

If Canova denies both motions, the issue of the 2000 losses, along with those in 2001 and 2002, is set for trial Sept. 20, 2004. But Michelson said he'll seek an earlier trial date. Michelson also said he'll ask the judge to halt an 18-month clock ticking toward the automatic dissolution of the JOA in October 2004.

Attorneys for The Times declined to comment.

The hearing was not televised live, but it will be telecast on TVW, Channel 23, at 6 p.m. today and again during the weekend at a time that hadn't been determined yet.

On the eve of the hearing, reporters at both newspapers said the mood was anxious.

"In sports, you know the score," said P-I columnist Robert L. Jamieson Jr. "In war, you know who's winning. Here, we get mealy-mouthed pronouncements from Hearst. That makes morale difficult. It's one of the most difficult times in the 11 years I've been here."

At The Times, copy editor Yoko Kuramoto-Eidsmoe said she thinks the mood there is "pretty nervous."

Referring to a Times account this week detailing "unusual accounting" at The Times and reports in both daily papers of The Times' longstanding goal of eliminating the P-I, Kuramoto-Eidsmoe added, "I think people were pretty surprised by this week's stories -- 'embarrassed' wouldn't be too strong a word to use. It's the kind of thing you don't really believe or want to believe about the company you work for. We're wondering what else potentially could be coming out in court."

The Associated Press contributed to this report.

On the Net: www.tvw.org

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

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