Times, Hearst bend a bit to try to speed JOA appeal

The Seattle Times Co. and The Hearst Corp. yesterday traded favors that could step up the pace of an appeal in the legal dispute over their joint-operating agreement (JOA).

Hearst, owner of the Post-Intelligencer, said it would not stand in the way of The Times' request for a speeded-up appeal. The Times is seeking to overturn a ruling last month by King County Superior Court Judge Greg Canova that blocked The Times from using its JOA losses in 2000 to initiate moves that could shut the P-I.

In return, Times attorneys agreed that if they lose their appeal, the ruling would be extended to cover the paper's loss in 2001 as well.

The Times is blaming both losses on a 49-day strike against the paper that extended from late 2000 into January 2001.

Both companies declined to characterize the agreement as a first step in breaking the impasse between Hearst and The Times over the future of Seattle's two daily newspapers.

The Times is seeking to use the JOA's "stop-loss" provision that allows either party, after recording three consecutive years of losses under the JOA, to demand negotiations that would close one paper within 18 months or end the agreement.

In April, The Times notified Hearst of losses in 2000, 2001 and 2002, while Hearst sued to block The Times from invoking the loss provision.

Hearst's suit challenged the validity of The Times' losses, claiming the strike was an event outside either paper's control and therefore exempt under the JOA's "force majeure," or greater force provision.

Hearst also said The Times overspent on its news operation in 2002, causing that year's loss.

Canova's Sept. 25 ruling in Hearst's favor applies only to The Times' 2000 loss.

In a statement released from Hearst's New York headquarters yesterday, the company said The Times had agreed its 2001 loss was also the result of the strike.

"Accordingly," Hearst said, "if the judge's ruling is upheld on appeal, the Times will not have had a loss under the JOA for 2000 or 2001."

Times spokeswoman Kerry Coughlin said yesterday's agreement "seemed to be a logical resolution to these issues."

"We looked at our JOA losses in 2001 and determined they were related to the strike," she said, "so it only made sense to reach some kind of agreement on this."

Both sides also agreed the 18-month countdown to a shutdown of the P-I or an end to the JOA stopped with Canova's ruling last month. It was unclear whether the countdown would resume if The Times appeal of Canova's decision is successful.

The agreement represents a gamble on The Times' part. If it loses its appeal, it must wait at least two full years before attempting to exercise the JOA's stop-loss provision again.

Times Publisher Frank Blethen has said Hearst is using the JOA to "bleed" The Times financially and force the Blethen family, which controls the paper, to sell it to Hearst.

In its statement yesterday, Hearst said it remains committed to publishing the P-I.

Generally, appeals of lower state-court rulings like Canova's can take a year or more.

The two sides are set to argue The Times' appeal request Oct. 24 before one of the state Court of Appeal's commissioners. If the commissioner accepts the request, the case would then be put on the docket for an oral hearing before a three-judge panel.

Hearst's agreement not to contest The Times' request could telescope the time frame between the hearing before the appeals panel and a decision from the usual six to nine months down to three to six months.

Either side could then move to take the panel's decision to the State Supreme Court.

However, several legal loose ends are still to be resolved, and that could extend the battle even longer.

For example, Canova has yet to rule on a motion by the Committee for a Two-Newspaper Town, an ad hoc citizens group granted intervener status in the case.

That motion challenges the constitutionality of another JOA provision that gives Hearst 32 percent of The Times' profits until 2083 if both sides negotiate a shutdown of the P-I before the end of next October.

The committee says the 80-year payout represents an illegal restraint of trade.

In his Sept. 25 ruling, Canova did not address the committee's motion, setting it aside for "another day."

Dmitri Iglitzin, attorney for the committee, said the group will decide in the next two weeks whether to move to have the issue argued before Canova.

Hearst also could go back to Canova for a separate hearing, and possibly a trial, on its contention that The Times caused its loss last year by overspending on staff and content.

That issue, like the committee's motion, also could be appealed.

Legal experts with knowledge of the JOA case said appeals courts traditionally have been reluctant to take cases before all loose ends are tied up.

Otherwise, pieces of the case could end up bouncing back and forth between Canova and higher courts like so many pingpong balls.

Moreover, it is unclear whether Canova would act on parts of the case while the appeals court was dealing with other pieces.

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