Times, Hearst move forward on JOA arbitration

Seattle's two daily newspapers said today they will proceed with plans to resolve their long-running legal dispute through binding arbitration, despite a judge's refusal to put all court proceedings on hold in the meantime.

The Seattle Times and the Hearst Corp., owner of the Seattle Post-Intelligencer, announced an agreement March 30 to arbitrate their differences in private, with no appeal. But the agreement allowed either company to pull out if King County Superior Court Judge Greg Canova didn't approve their request to freeze all legal proceedings until the arbitration is completed. The Committee for a Two-Newspaper Town, an intervener in the lawsuit that would not be included in the arbitration, objected to that request, saying its rights could be damaged irreparably if it had to wait to litigate its claims until the arbitration is done.

Canova agreed, denying the newspapers' request April 27.

The Times and Hearst could have negotiated a deal to allow the committee to participate in the arbitration, or backed out of the agreement entirely, or elected to proceed on two tracks: arbitrating their differences while continuing to face the two-newspaper committee in court.

They chose the last approach.

"While Judge Canova's decision to allow [the committee] to pursue its litigation on a separate track at this time will add to the already significant expense and complexity, we believe binding arbitration between The Seattle Times and Hearst is the clearest and quickest path to resolution," Times President Carolyn Kelly said an e-mail to Times employees this morning.

P-I Publisher Roger Oglesby made a similar announcement to that newspaper's staff this morning, Hearst spokesman Paul Luthringer said.

Neither Luthringer nor Times spokeswoman Jill Mackie would say whether they plan to do anything soon about the two-newspaper committee's claims, such as moving to dismiss them.

The two-newspaper committee, a citizens group, suffered a blow Saturday when the Pacific Northwest Newspaper Guild, which gave birth to the committee in 2003 and provided most of its money, voted to sever ties with the group.

But Mackie said the Guild vote didn't influence The Times' decision to continue with the arbitration. "The decisions were really not linked," she said, although the company was pleased to see members of the Guild, the largest union at the two papers, "recognize [the committee's] litigation is a real threat to The Seattle Times."

Luthringer would not comment on the Guild vote.

Mackie also said the "discovery" phase of the arbitration, under which the companies seek information from one another, already has begun, and a closed-door trial before arbitrator Larry Jordan, a former King County Superior Court judge, is likely to begin next year.

Under the agreement, Jordan must rule by next May 31.

The Times and Hearst have operated under the federally sanctioned JOA since 1983. They maintain separate news and editorial operations, but The Times handles business and production functions for both. In return, it gets 60 percent, Hearst 40 percent of what remains after the non-news expenses of publishing both papers are paid.

The Times notified Hearst in April 2003 that it had lost money under the JOA in each of the preceding three years. That triggered an escape clause in the contract that would have led to termination of the JOA, closure of the P-I or both.

Hearst, which says the P-I can't survive outside the JOA, filed a lawsuit challenging the validity of The Times' losses. The Times says the cost of publishing the smaller P-I has become an economic burden that threatens The Times' future.

The Committee for a Two-Newspaper Town has generally sided with Hearst in court so far, but also has filed a claim against both companies. It says a provision of the JOA that allows Hearst to close the P-I and collect 32 percent of The Times' profits until 2083 is an unconstitutional restraint of trade.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com