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Hearst files defense of JOA ruling

By Bill Richards
Special to The Seattle Times

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Lawyers for The Hearst Corp., owner of the Seattle Post-Intelligencer, yesterday asked a state appeals court to affirm a Seattle judge's ruling that blocks The Seattle Times from forcing a shutdown of the P-I or an end to the newspapers' joint-operating agreement (JOA).

In a 61-page brief filed with the Court of Appeals, the lawyers praised the September ruling by King County Superior Court Judge Greg Canova in Hearst's lawsuit against its cross-town rival.

The Times, in its own 61-page appeal of the judge's ruling last month, said Canova misinterpreted the JOA's terms and relied on contractual language that was "ambiguous at best."

Lawyers for both sides in the newspaper dispute are scheduled to argue their case in January before a three-judge Appeals Court panel. But any ruling by the panel is unlikely to conclude the fight.

In negotiations with Hearst in October, Times attorneys agreed to stop the clock on any deadline for a shutdown of the P-I or end to the JOA until a final legal ruling is made on all elements of Hearst's lawsuit.

That concession could continue the fight until 2007 or longer if Hearst chooses to drag out the battle, attorneys for both sides say.

Hearst yesterday made reference to another issue it could raise in its case. It charged that a drop in the P-I's circulation since the papers began competing head-to-head in the morning in 2000 was caused by The Times favoring itself in marketing the two papers.

The Times' daily circulation has been steadily growing and stood at 231,505 for the six months ending Sept. 30. The P-I, meanwhile, has been losing ground, dropping to 150,851 during the same period.

Times Publisher Frank Blethen has said his company promotes the P-I fairly under the JOA, but that the P-I's circulation has fallen because of mediocre news content.

Under the JOA, the two papers maintain separate news and editorial operations, but The Times handles printing and business functions of both papers.

Times spokeswoman Kerry Coughlin said yesterday that Hearst's lawsuit against The Times, filed in April, makes no reference to the marketing of the papers.

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"We're proceeding with what is in the lawsuit," she said.

Times officials say the P-I's declining circulation has dragged down both papers. In April, Blethen notified Hearst that The Times had lost money under terms of the JOA in 2000, 2001 and 2002, triggering a "stop-loss" provision in the agreement and giving the papers 18 months to negotiate a shutdown of the P-I or an end to the JOA.

Blethen and Times officials also have blamed a 49-day strike against The Times in 2000 and 2001 for causing the loss in those two years.

In his Sept. 25 ruling, Canova upheld Hearst's claim that the JOA's "force majeure" clause, which excludes events outside the control of either paper, prevented The Times from using strike-related losses.

"The reach of the force majeure clause is clear and broad," said Hearst's brief filed yesterday. "It applies to the entire JOA, without exception."

Times attorneys have argued for a narrower reading of the contractual language of the JOA and that "a loss is a loss."

In a separate brief to the Appeals Court, the Committee for a Two-Newspaper Town, an ad hoc citizens group that is an intervenor in Hearst's lawsuit, said Canova's broad interpretation is correct and based on the original intent of the federal law creating JOAs to provide cities with multiple newspaper voices.

"As a matter of law," the committee's brief said yesterday, "when a contract is susceptible to more than one interpretation, and the agreement affects the public interest, the interpretation that is most favorable to the public interest should be given affect."

In a separate development, The Seattle Times Co. yesterday said it had completed the sale of 34 acres in Renton for $9.5 million. In February, when the property was put on the market for $12 million, Times officials said the sale was to raise money to improve the company's deteriorating financial position.

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 brichards@seattletimes.com.

Copyright © 2003 The Seattle Times Company

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