Group enters newspaper fight

A group headed by two prominent Seattle attorneys and backed by a newspaper union took court action yesterday that could broaden the legal dispute between The Seattle Times and the Seattle Post-Intelligencer.

The group, called the Committee for a Two-Newspaper Town, filed a complaint in King County Superior Court asking to intervene in the case. Headed by attorneys Phil Talmadge and Anne Melani Bremner, the group, which lists more than 40 supporters, held a news conference yesterday and said it represents "concerned readers, subscribers, journalists, employees, citizens and elected officials."

Talmadge is a former state Supreme Court justice and a 2004 Democratic gubernatorial candidate. Bremner is a trial attorney who has been involved in a string of high-profile cases.

Elizabethe Brown, administrative officer of the Pacific Northwest Newspaper Guild, which represents nearly 900 employees at The Times and P-I, said unions were active in forming the committee.

"We've helped organize the effort," she said, "but we can't take credit alone." She said the Guild put up $3,000 to support the move.

The group's petition, if approved by Judge Greg Canova, would add to the scope of a lawsuit filed April 28 by the Hearst Corp., owner of the P-I, and give the group a place at the table in the case.

The Hearst case, which is before Canova, seeks to block The Times from using a provision of the joint-operating agreement (JOA) between the two companies. That provision could lead to a shutdown of The Times' rival as early as October 2004. A hearing is scheduled July 18.

Dimitri Iglitzin, an attorney for the group, said if the committee's challenge is successful, Hearst and The Seattle Times Co. may be forced to renegotiate all or part of the JOA. He said that could include pushing The Times back to an afternoon paper, as it was before the 20-year-old JOA was revised in 1999 to allow The Times to switch to morning publication and go head to head against the P-I.

"You could make that argument if you were Hearst," said Iglitzin, who is also attorney for the Pacific Northwest Newspaper Guild.

Specifically, the committee is challenging the "loss-notice" provision of the 1999 revision that gives the two papers 18 months to negotiate a shutdown of one paper after either notifies the other of three consecutive years of losses.

On April 29, The Times issued such a notification to Hearst for the years 2000, 2001 and 2002.

The committee, in its complaint, contends The Times cannot validly consider its financial results to be losses for the purposes of invoking the provision. The argument parallels claims in the Hearst suit, including that losses from a 49-day strike against The Times in 2000-2001 cannot be used to trigger the loss-notice provision.

"We believe The Seattle Times is not essentially a money-losing paper," Iglitzin said.

The committee is also challenging another term in the 1999 JOA revision, a challenge it says is the core of its complaint. In return for a negotiated shutdown of the P-I, The Times would pay Hearst 32 percent of its operating profit until 2083. Industry experts have estimated the P-I's shutdown would increase the market value of The Times by as much as $500 million.

The committee's complaint says the 80-year payout would constitute an unlawful restraint of trade not covered by the JOA's antitrust protection. Washington's state constitution, it says, "prohibits entities (such as The Times and P-I) from contracting with each other for the purpose of fixing the price, limiting the production or regulating the transportation of any product or commodity."

Currently under the JOA, each paper runs its own news and editorial operation and publishes head-to-head in the morning. But non-news functions such as production, distribution and advertising for both papers are handled by The Times. The papers pool their revenue, and after The Times is reimbursed for its non-news chores, the remainder is split with 60 percent going to The Times and 40 percent to the P-I.

Times Publisher Frank Blethen has charged that Hearst is using the JOA to "bleed" The Times in an effort to buy it. Hearst denies that and says it has no plans to stop publishing the P-I.

Talmadge said his ad hoc committee has also asked both the U.S. Department of Justice and the state Attorney General's Office to intervene in Hearst's lawsuit.

A spokesman for the Attorney General's Office said it would be "premature" to take any action while the Justice Department is investigating and reviewing the JOA. A Justice Department spokesman couldn't be reached for comment.

One issue the Justice Department is believed to be looking at is the 80-year payout. The state Attorney General's Office is monitoring the entire JOA proceedings.

The decision on whether to allow interveners to participate in Hearst's lawsuit is up to Canova, said Talmadge, who spent 11 years on the State Supreme Court before leaving in 2001.

"It's a judgment call on Canova's part," he said. "He'll have to decide whether we complicate the case by being a party to it."

The committee said that because some intended beneficiaries of the original 1983 Seattle JOA and the 1999 revision were third-party groups like those supporting the petition, they have standing to sue, or intervene, in state-court cases like the Hearst suit.

A spokesman for Hearst said the New York-based media conglomerate hadn't seen the group's filing and couldn't comment.

Times spokeswoman Kerry Coughlin said the company's attorneys hadn't had time to study the group's motion to intervene in the Hearst lawsuit and couldn't comment.

She did say the goal of the group's petition isn't clear. "If it is to turn the clock back to 1998 and ensure a one-newspaper town owned by a multi-billion-dollar out-of-town conglomerate," she said, "that's one way to head in that direction."

At the news conference, Talmadge and others took pains to say they're not favoring either side in the newspaper dispute.

"Two papers offer more chances for different opinions to be heard," Bremner said, especially in controversial issues such as elections or building a new monorail system.

Nonetheless, the petition cites The Times' loss-notice notification as "the most immediate threat" to preserving the city's two-paper status. "We are getting a general sense of concern across the spectrum," Talmadge said.

Bill Richards is a free-lance 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