Judge keeps clock ticking on countdown to end JOA

King County Superior Court Judge Greg Canova ruled yesterday that The Seattle Times and the Seattle Post-Intelligencer would each have to give a little in their battle over the future of the P-I.

In the opening legal face-off between Seattle's daily newspapers, Canova denied a motion by the P-I's owner, The Hearst Corp., to stop the clock on an 18-month countdown toward a possible shutdown of the P-I while several legal issues are decided. Hearst had sought to either speed up the court's normal pace or suspend the countdown.

At the same time, the judge struck a middle ground by setting a July date to hear a major issue in the case. Hearst had sought a June hearing, while The Times sought to move it to August.

Time has become a critical issue in the fight between The Times and P-I over the future of their 20-year-old joint-operating agreement (JOA).

Hearst filed the lawsuit last week, seeking to block The Times from using provisions in the JOA to force Hearst to negotiate a shutdown of the P-I within 18 months or to end the agreement under which The Seattle Times Co. handles advertising, production and distribution for the P-I.

Hearst had warned that delaying action on its lawsuit may result in "an irreversible series of events" that could lead to a shutdown of the 140-year-old P-I. It said it might have to put the P-I up for sale before the negotiating period closes and that some P-I staff members have already started looking for new jobs.

Under the JOA, put in place in 1983 and amended in 1999, the papers pool their revenues and, after the non-news expenses are accounted for, the remainder is split 60-40 between The Times and P-I. The papers then use their takes to cover their individual newsroom expenses, with whatever is left a profit or loss.

The agreement allows either paper to demand that negotiations begin for a shutdown if it can prove it lost money for three consecutive years under the JOA. Last week, Times Publisher Frank Blethen notified Hearst that The Times had lost some $10 million from 2000 to 2002.

If Hearst and The Times agree on a shutdown date during the 18-month window — which currently would end in late October 2004 — The Times will pay Hearst 32 percent of its profit, after news and non-news expenses, until 2083.

If the papers can't reach an agreement, the JOA would dissolve and both papers would be left to operate on their own. Hearst says that without its own production, circulation or advertising operations, the P-I "is not viable outside the JOA."

Hearst has argued that The Times' loss in 2000 resulted from a 49-day strike against The Times in late 2000 and early 2001. Under the terms of the JOA, Hearst said strikes fall within the agreement's "force majeure" — or "greater force" — clause and invalidate the loss for the year.

Hearst had asked the court in a motion to rule on the force majeure issue for 2000 by next month. But The Times moved to delay action on Hearst's motion for at least 90 days, or late August at the earliest.

In his ruling yesterday, Canova set the date for the hearing on the issue for July 18, effectively giving each side a partial victory. Both sides have until July 7 to gather evidence related to the issue.

Hearst attorney Kelly Corr said the New York-based media conglomerate was "delighted the court has put this matter on the fast track and rejected The Times' attempts to delay this case."

Times spokeswoman Kerry Coughlin said The Times was "pleased to comply" with the judge's timetable and happy that the issue over suspending the countdown had been rejected.

The judge's ruling was "without prejudice," meaning Hearst can renew the request later.

"We're pleased the judge interpreted the (JOA) the way the language was intended when it was signed by both parties," Coughlin said.